Here's my summary of the key events overnight that affect New Zealand, with news of a prediction there is about to be an explosion of travelers coming from both China and India.
But first, this morning's dairy auction saw little change in prices with the overall index up just +1.4% in US dollar terms, the same in NZ dollar terms. The cheddar cheese price was the main component that was lower, keeping a lid on the overall index, but the main volume is in the WMP, and its price only rose a modest +2.9%. Prices have essentially held for the past four auctions. This level is far off the bottom, but it is still not high enough to signal that the dairy industry is out of the woods yet. Prices at this level do not support a rising payout level.
American headline CPI inflation climbed from +1.1% to +1.5% in September, strengthening the case for a Fed rate rise this year. The increase was largely due to oil prices: the energy CPI climbed 2.7% between August and September, while the annual rate of change is now only -2.9%, a big difference from the -9.2% the prior month. Low fuel price levels seem to have passed through the American economy. Rents and electricity also recorded notable rises. These tend to be sticky, so will underpin future levels.
British inflation also took a jump in September.
In China, coal is not dead yet. In fact, prices there rose +12% in a month, taking them to a +23% rise in a year. The main customers are their dirty thermal power plants.
Speaking of products that foul the air, the international airline industry says it expects 7.2 bln passengers to travel in 2035, a near doubling of the 3.8 bln air travelers in 2016. They see a +3.7% annual growth rate in their 20-Year Air Passenger Forecast. China will become the largest travelers, but the forecast shows an eye-popping increase from India as well.
In Australia, a prominent economist has warned that their apartment market glut is "going to get ugly", predicting a -10% to -15% decline in prices with highly leveraged investors getting burned.
In New York, the UST 10yr yield is unchanged at 1.75%. Locally, our wholesale swap rates surged higher yesterday with the two year up +5 bps to a 3 month high. The five year is up +7 bps.
The US benchmark oil price is unchanged, still just on US$50 a barrel, while the Brent benchmark is now just under US$51.50 a barrel.
The gold price is up US$6, now at US$1,261/oz.
The New Zealand dollar is a higher too, at 72.1 US¢, and on the cross rates it is almost at 94 AU¢, and 65.5 euro cents. The NZ TWI-5 index is now just touching 76.
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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12 Comments
Crazy but true. I just wish i knew what will happen once the whole US banking system gets figured out and collapses so i could prepare/put my money where it would benefit the most. Fair to say China/Russia are the new (have been for a while now) world super powers. USA will be looked at like we used to look at Russia. The old superpower who had a huge collapse.
I dont think anyone can be a superpower once US banking system collapses - it will take everyone down including your money. Without US financial system the whole JIT trade system grinds to a stop, Oil stops, pensions lose all value etc. But if you are suggesting China and Russia are better prepared to deal with collapse then that may have an element of truth
Yes, indeed.
Stanley Fischer has for a year and a half suggested that the US economy is “very close” to completing its recovery cycle. In inflation terms stripped of context, that may seem by the September 2016 CPI somewhat plausible since it is as close to 2% as it has been in nearly two years. The problem is, once again, those two years (and counting). Read more
Bernanke expected QE3 and QE4 to “work” like QE2 supposedly did because, to use the Latin yet again, post hoc ergo propter hoc. It didn’t and economists have been wondering what the hell happened ever since. It’s not a mystery but a microcosm of everything that has been wrong with monetary policy theory and philosophy for decades. They really don’t know what they are doing, and without any further exogenous money coincidences in their favor they finally have to come to terms with all that. Read more
here is a visual of Central Bank Balance sheet growth...
Keep in mind... in regards to that $ growth spilling into the wider economy.. At the moment most of that money is held in the private banking sectors' Reserve accts' , held with the Central Banks.. ie.. Private Banks are largely sitting on that money...
QE'ing seems to have run its course.... and If the private sector credit growth does not pick up.... I'm guessing Central Banks will resort to other "measures"..
In this regard, and in regard to the overall debt burden..... Japan is closest to its limits.. Europe is a step behind... US is a step or 2 behind Europe and China is a few steps behind USA... .. AND... NZ is quite a few steps behind China.. ( NZ has the chance to learn from the others experiences... but we don't.. )
http://www.otterwoodcapital.com/blog/central-bank-balance-sheets-grow-a…
You're right. Many fail to realise that QE is effectively central banks forcing fiat hyper inflation on us to prop up massively unsustainable asset and market bubbles. You then get central bank apologists on here like Nymad claiming there is no inflation, cause hes been fed economic baloney and fairytales at the university of economic nonsense.
QE is an unprecedented un-tried and untested idea that I must say I think is a bit looney .
It is bound to have some unintended consequences, and we are clueless as to what those may be as they have not yet manifested themselves .
But its not going to go unpunished
Everyone studying history in the next 50 years will be saying ....... Huh? ............ WTF were they thinking?
I would guess that UK Inflation is not structural , but rather a function of the weakened Pound , which has resulted in imported price increases .
I saw a report from Reuters last week saying Tesco was pulling some EU made products from the shelves due to price increases
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