China exports fall, surplus rises; Japan GDP fall in Q4; ECB moves to calm markets; Brazil has credit crisis; UST 10yr yield 1.75%; oil rises; gold drops; NZ$1 = 66.5 US¢, TWI-5 = 71.1

China exports fall, surplus rises; Japan GDP fall in Q4; ECB moves to calm markets; Brazil has credit crisis; UST 10yr yield 1.75%; oil rises; gold drops; NZ$1 = 66.5 US¢, TWI-5 = 71.1

Here's my summary of the key events over the weekend that affect New Zealand, with news China is back working after their Spring break.

But Chinese trade started 2016 on a weak note as January exports declined far more than expected, down -6.6% in the face of weak demand and slower production ahead of the Lunar New Year holiday. But imports also fell, down even more at -14% lower. The net result was a sharp rise in their trade surplus, up to US$63.3 bln for the month.

The holiday break was not a good time for real estate sales in Shanghai. They fell -94%. The reopening of their share market saw modest losses which is somewhat surprising given the trade data. Their currency was fixed modestly higher again in a continuing effort to thwart those trying to short it.

And China's bad loans rose to their highest level in ten years in December.

In Japan, there was a disappointing end to 2015 with GDP falling slightly in Q4. For the year, Japan recorded economic growth of +1.5% even after the Q4 decline. What was especially disappointing was that wages fell, but profits rose, showing that Abenomics is not really on track to deliver anything meaningful. Consumers are understandably reluctant to spend. Their recent and sudden shift to negative interest rates seems unlikely to be enough to do anything meaningful either.

The ECB has tried to calm markets overnight after recent sharp falls in bank share prices. Mario Draghi said he is ready to ease policy further in March, by highlighting risks from financial market volatility, the global slowdown in growth, and low oil prices. He has also defended central bank efforts to tackle low inflation, reinforcing the importance of their 'core mandate'.

The situation in Brazil is going from bad to worse. Bankruptcies are on the rise and Fitch has declared their commercial economy is in a credit crisis.

Wall Street is on holiday (Presidents Day) with the benchmark UST 10yr yield unchanged at 1.75%.

Markets are trading commodities and the US oil price rose, now just under US$30/barrel while Brent is just over US$33.

The gold price fell sharply to US$1,205/oz, down more than US$30/oz.

The NZ dollar still holding. It is still at 66.5 US¢, at 93.2 AU¢, but higher against both the yen and the euro which is now at 59.7 euro cents. The TWI-5 will start today at 71.1.

If you want to catch up with all the local changes on Friday, 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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10 Comments

Is the world is heading for a sharp correction?

How do you spell “Disaster?” There are two spellings”

AP Moller-Maersk

and

Sotheby’s

This week two companies had some very interesting things to say about their respective markets that have implications far beyond their individual niches.

First, AP Moller-Maersk, owner of the largest container shipping company in the world, said it saw, “massive deterioration,” in its business last quarter, even, “worse than in 2008.”

Next, Sotheby’s most recent London art auction was held on Tuesday where the company saw sales fall by nearly 50% from the very same auction last year. Furthermore, the famed auction house is now seeing former buyers turn into forced sellers.

The following picture is worth a 1,000 words.

http://www.peterlbrandt.com/two-charts-that-everyone-stock-trader-must-see/

http://www.businessinsider.com/this-week-was-a-complete-disaster-for-sot...
http://www.ft.com/intl/cms/s/2/1d8fd496-cfd1-11e5-986a-62c79fcbcead.html

Lol, they have probably moved the goods to airfreight right!?

hey David can you do a weekly "gareth hughes' funny moments" you'll be good at it

You think ridicule should replace rigorous debate?

seems to be what our David likes to do in this comment thread: http://www.interest.co.nz/personal-finance/79974/elizabeth-kerr-wants-yo...

In Australia NEG gearing has become an election issue with both sides coming up with proposals to water it down.
http://www.smh.com.au/federal-politics/political-news/tax-breaks-on-rent...

Ouch on the Shanghai property sales but might be distorted by the CNY.
Hong Kong property is definitely on the slide as is Singapore.

http://www.bloomberg.com/news/articles/2016-02-15/hong-kong-land-price-p...

What happens if they have to sell off shore assets to fill the hole in the bank balance?

Don't worry AJ Christchurch real estate agents have got it all covered according to some who I have had the unfortunate task of having to endure their company......

They will probably go bust over there but live off the assets overseas....Unless they have an IRD number where the assets can be linked to an individual.