Here's my summary of the key events over the weekend that affect New Zealand, with news of tax dodgers facing exposure.
But first, the American labour market added 215,000 jobs in March beating most analysts forecasts. That's 5 of the past six months where growth exceeded +200,000, and 9 of the past 12 months. There was growth in just about every domestically oriented sector. The unemployment rate edged up to 5% in March, but that was largely due more Americans joining the labour force. And wages rose +2.3% year-on-year.
Backing up this good data is the widely-watched ISM PMI. It showed that activity in the American manufacturing sector expanded in March for the first time in the last six months, while the overall economy grew for the 82nd consecutive month.
In Europe, tensions between the IMF and Germany are threatening to scuttle the Greek bailout process. Leaks suggest the IMF wants to directly threaten the Germans to choose between Greece or its new sudden commitment to the refugee flood it instigated. The Greeks are very tichy.
In China, they are facing massive spring floods due to the worst El Nino since the 1997/98 weather pattern which wreaked havoc in the Asia-Pacific region. The extreme flooding China experienced almost 20 years ago started at the country’s longest river – the Yangtze – and two major waterways in the northeast. The floods they are facing now could swamp Hong Kong and Macau as Chinese scientists predict the Pearl River Delta may rise by over a metre.
Also in China, Beijing's controlling hand in financial markets has been intensified with their currency agency taking equity stakes in four large financial institutions. This is further 'nationalising' already state-owned banks. They are becoming government departments rather than true trading enterprises. (ICBC has a banking license in New Zealand and its local chairman is Don Brash.)
Closer to home, New Zealand is being fingered as a 'quiet achiever' as a major tax haven. The International Consortium of Investigative Journalists has released its 'Panama Papers' that apparently show New Zealand involved in a relatively minor way in schemes designed to shelter tax by the wealthy. ANZ also gets an 'honorable mention' as a key facilitator. This story will grow over the next few days. The Aussie tax authorities have 800 of their wealthy in their sights. The New Zealand equivalents are yet to be revealed.
In New York the benchmark UST 10yr yield fell further in final trading on Friday and will open the new week at 1.77%.
The oil price is sliding too and is now well under US$37/barrel in the US, while Brent is well under US$39/barrel. Record Russian output undermines the talks about restraint by producers. Most attention has been on the Saudi-Iran spat. It is clear no-one is going to cut output.
The gold price fell as well, down $11 to US$1,223/oz.
The NZ dollar will start today essentially unchanged from where we left it on Friday at 69 US¢, at 89.8 AU¢, and at 60.6 euro cents. The TWI-5 index is at 72.
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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11 Comments
How far into the deflation spiral is NZ?
As much as it needs to be to socialise the losses of our banks' poor lending decisions with lower saving rates to fuel double digit credit growth and residential property price inflation.
No, March quarter should come in higher, due to increased rents/household costs. Petrol /airfares /holidays /transport will push CPI lower food /veges flatlined, tradeables given current TWI will go no where.Gut feeling 0.0 on the quarter, negative on an annual basis , lowest since 1999.
Also in China, Beijing's controlling hand in financial markets has been intensified with their currency agency taking equity stakes in four large financial institutions. This is further 'nationalising' already state-owned banks. They are becoming government departments rather than true trading enterprises. (ICBC has a banking license in New Zealand and its local chairman is Don Brash.)
I am not sure which is worse - this or US state sponsored crony capitalism?
A dive into GM’s filings with the Securities & Exchange Commission reveals that while the carmaker makes nearly all of its profits in the U.S., it pays virtually no U.S. federal, state or local taxes. The carmaker paid just $5 million in federal taxes last year, its SEC filings show. For its total federal, state and local bill, all in, it booked zero taxes, the filings show. Meantime, in 2015, GM paid more than $908 million in taxes to China, due to its profits from its joint ventures there... Read more
"... the IMF wants to directly threaten the Germans to choose between Greece or its new sudden commitment to the refugee flood it instigated."
Is this the first mention at "interest" of Merkel's epochal blunder inviting illegal Muslim mass immigration? High time, as it will have grave economic and social consequences that will also be felt in NZ.
Within months of Merkel's autocratic border opening move terrorism issues have escalated in Europe, the rich are starting to pack up (http://www.cnbc.com/2016/03/31/why-millionaires-quit-europe-for-sunnier…) and the ensuing capital flight towards the antipodes could change everything around here. Secondly, Merkel's open border stunt will sooner or later be used by the usual suspects to blackmail our politicians into uncontrolled illegal immigration. Turnbull across the ditch is, for example, already caving in and not sending Nauru illegals back to Nauru despite a Supreme Court decision.
I find it hard to believe that this highly significant topic is only mentioned en passant many months after the Merkel disaster has begun. Cant at least old Germany-basher Hickey pick up on it and explain to us how Germany 70-odd years after the war has once again become a singular threat to European stability?
Australia appealed because of its safeness, strong education and health systems, small population and pleasant climate, Amoils told CNBC. With economic growth seen averaging 2.6 percent per year in 2016-20 by the Economist Intelligence Unit, its strong economy is another attraction.
Domestic interest rate cut lobbyists could not disagree more.
“We’re just sitting here on a slow glide path lower in terms of growth; unfortunately at the same time the currency’s appreciating, which exacerbates the slowdown,” Gor said in an interview last week. Read more
Commonwealth Government Securities owners must be on the edge of their seats anticipating future capital gain windfalls.
The revelations from the Panama Papers are proving interesting. Here is a link to the Guardian which is running a few lead articles on Putin's involvement as the link to the actual papers seams to be having trouble on my computer.
http://www.theguardian.com/news/2016/apr/03/panama-papers-money-hidden-…
Interesting to see that NZ is tied up in it and interesting to note that Key has previously declared his intention to make NZ a magnate for this sort of activity. I was on a pacific island a while ago and noted that Lord Ashcroft of Belize jetted in. Given the islands involvement in this activity, now I suspect that I know why he was there. I was told that he has previously been in NZ and in the context of these references I am totally surprised at who he was reportedly talking to. All I can take from it is that you cannot trust the appearances of any politician. We should also carefully note his and his attempted involvements in British politics.
I hope that a lot more is revealed.
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