WTO red flags costs of Brexit; global watchdog warns regulators don't have a grip on shadow banks; Fed President calls for looser regulation of small US banks; UST 10yr yield 1.85%; oil up, gold lower; NZ$1 = 67.7 US¢, TWI-5 = 71.8

WTO red flags costs of Brexit; global watchdog warns regulators don't have a grip on shadow banks; Fed President calls for looser regulation of small US banks; UST 10yr yield 1.85%; oil up, gold lower; NZ$1 = 67.7 US¢, TWI-5 = 71.8

Here's my summary of the key events overnight that affect New Zealand.

The global Financial Stability Board is red flagging risks around the world's US$35 trillion shadow banking sector. It says regulators have yet to get a good grip on the firms that carry out services similar to banks, with supervision and data gathering still too patchy to spot risks properly. The Board's concerned more heavy regulation of the banking sector since the GFC has seen some of the risk shifted to more loosely regulated shadow banks.  

Meanwhile the Dallas Fed President is calling for looser regulation of the US's smaller banks. Suggesting there's more room for fiscal policy to boost the US economy, Robert Kaplan says the Fed's been suffocating its small banks, which is hurting local business formation. He says monetary policy isn't "the be-all and end-all" and the US hasn't seen a lot of fiscal policy in the last seven of eight years. 

The head of the World Trade Organisation warns just how hard a Brexit will hit Brits' pockets. He says British consumers would have to pay 9 billion pounds, or US$13 billion, in annual additional import tariffs, if it was to leave the European Union. Britain's exports would be also burdened with 5.5 billion pounds of new tariffs in overseas markets, and leaving the EU would require a full reboot of Britain's trade relations.

In New York the benchmark UST 10yr yield has dropped to 1.85%. 

Oil has made decent gains overnight, following new data showing a drop in inventories. The US crude and Brent benchmarks have risen by around a dollar to just below US$50/bbl. 

The gold price has continued to decline today to US$1,219/oz.

The NZ dollar has strengthened slightly (as at 7.30am before the Fonterra announcement) to 67.7 US¢, 94.0 AU¢, and 60.6 euro cents. The TWI-5 index has jumped 50 points to 71.8.

We can expect to the see fluctuations in the NZD today, further to Fonterra announcing its opening milk price forecast for 2017 this morning, and the Government announcing the Budget this afternoon. ANZ expects a small OBEGAL surplus for the 2015/16 fiscal year, with this surplus set to increase to over 2% of GDP by the end of the forecast period. Health and education are also likely to get the lion’s share of extra funding, while previously flagged tax cuts for have been dropped in favour of debt repayment.

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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BREXIT THE MOVIE - REGULATED PEOPLE living REGULATED LIVES

For the full video:
https://www.youtube.com/watch?v=UTMxfAkxfQ0

3 min clip on regulations:
https://www.youtube.com/watch?v=MGeDX-6DINM&feature=youtu.be

BREXIT THE MOVIE is a feature-length documentary film to inspire as many people as possible to vote to LEAVE the EU in the June 23rd referendum.

BREXIT THE MOVIE spells out the danger of staying part of the EU. Is it safe to give a remote government beyond our control the power to make laws? Is it safe to tie ourselves to countries which are close to financial ruin, drifting towards scary political extremism, and suffering long-term, self-inflicted economic decline?

BREXIT THE MOVIE shows a side of the EU they don't want us to see: the sprawling self-serving bureaucracy, the political cynicism, the lack of accountability, the perks, the waste, the cronyism, the corruption.

BREXIT THE MOVIE cuts through the patronizing intellectualism of the noble, higher goals of 'Project Europe', to reveal the self-interestedness of the political-bureaucratic class which runs and benefits from the EU.

BREXIT THE MOVIE highlights the danger of becoming a prisoner in an insular, backward-looking Fortress Europe. And it explores the exciting opportunities that open up to us when we look beyond the narrow confines of the EU.

BREXIT THE MOVIE looks to the future, arguing forcefully and persuasively that it is safer and wiser to live in a country which is free, independent, self-governing, confident and global.

I found the part about the German manufacturing renaissance after WW2 extremely interesting. Basically, post WW2 there was a feeling in Britain that government was a good thing so there was extensive nationalisation of more or less everything. I think a similar thing may have happened here.

In Germany by contrast, government was discredited and so Ludwig Erhard went about revitalising the private sector and minimising government involvement in industry. The Brexit doco missed that part of Ludwig Erhard's brilliance was in eliminating 90% of domestic debt.

https://www.youtube.com/watch?v=a0D1RAY5NZ8
https://www.globalfinancialdata.com/gfdblog/?p=3142

Another good documentary is 'Requiem for the American Dream'. It sets out how large industry and the wealthiest 0.1% fought back against the increased force of democracy movement of 1960 -1970 (ish), to capture the political process and most of the econometric gains since. As Michael Stiassny said to the NZ Asian leaders event, Our leadership needs to change away from putting money first to one where leaders have a clear and ethical moral compass. (paraphrasing part of it) (that sure rules out Key and a bunch of his mates) Otherwise we will totally disenfranchise the population as per the USA, with the risk that they will turn to Donald Trump or other Hitler like leaders.
One can view the Brexit movement as a reaction to the increasing loss of democracy and disenfranchisement that the public are experiencing, be it from the EU or their own government, and behind it all, the forces of the top 0.1%.

All failures of all societies are first and above all else, moral failures.

A truly excellent comment, Ralph. For what are ethical and moral systems - where they're worthy of the name - if not means to ensuring the continuing well-being of humanity? Our well-being rests on recognition that we are all interdependent (as it's said, all life depends on all other life). And from this follows the ethical maxim asserted in the so-called Golden Rule, a theme that has run through all responsible thought in all history - that of treating others as we wish to be treated ourselves. Where this is forgotten, social indifference and social exploitation, driven by selfishness and greed, work to destroy the potential and value in individuals and in society. And we're travelling that direction.

Well worth the time to view. 10,000 unaccountable eurocrats who earn more than Cameron! What a sad joke of an institution. The UK is emasculating itself by remaining.

And today is "Happy Tax Freedom Day"......that's right people the second half of the year can go in your pocket.....although I suspect some of us will still have some months of paying to do!!!

The EU is a huge mess....bureaucracy is an evil empire!!!

I suspect if Mr Kaplan of the Dallas Fed would just wait a couple more years the current policies will have bankrupted the same players and it won't be an issue anymore. Much like the now non existent financial advisors in NZ.