Here's my summary of the key events overnight that affect New Zealand, with news of more backward steps in China.
But first, there is something of a presumptive relief rally going on on Wall Street markets today - anticipating a clear Clinton election win. Equities are racing higher, up +2% in mid afternoon trading. Bond yields are also sharply higher. And gold is down -US$23/oz.
Markets would usually be on hold at this time if they thought a result would be close, but clearly they don't. Lets hope they are right.
If Clinton wins, a new way to redress income inequality might come from an attack on "monopsony" - where a renewed focus goes on bolstering competition in many markets. It is certainly an economic policy trend to watch out for. If applied in New Zealand, firms selling building materials, supermarkets, and telecoms would be in the firing line. Big unions might struggle with the concept too.
In Europe, the consequences of Brexit are starting to bite for London. Global banks are quietly building up their investment banking teams in Frankfurt as the German deals-market hots up on the back of some large Chinese transactions, and marking an important shift in financial muscle.
In China, they published their foreign currency reserves data today and while it was lower again, the fall was no-where near as sharp as some were speculating. The outflow was a relatively modest -US$46 bln, leaving them with a hoard of US$3.12 tln. Mind you, that is an outflow of US$320 bln over the past 12 months. They also raised their gold stake to 2,030 tonnes, a +15% gain since the start of 2016.
And economic reform seems to be on the back-burner in China. Today, Finance Minister Lou Jiwei, widely seen as a voice for reform, was abruptly removed in the latest sign that President Xi is filling key roles with more trusted allies. China is also showing less tolerance for views it doesn't like in Hong Kong. Instability there could see even more migrants here.
Today, Moody's ratings agency said that climate change vulnerability will become "an increasingly dominant" factor is sovereign ratings. At this time, however, they say "Western Europe, North America and Australia as well as the huge landmasses of Russia and China were least vulnerable".
In New York, the UST 10yr yield will start today much higher at 1.83%. Here as well, wholesale swap rates will start higher after another strong gain yesterday.
The US benchmark oil price is holding, and is now just on US$44.50 a barrel, while the Brent benchmark is above US$45.50 a barrel.
The gold price is down sharply and now just under US$1,281/oz.
The New Zealand dollar will start today pretty much where we were this time yesterday, at 73.2 US¢ and staying with a resurgent US dollar. On the cross rates it is now up at 95.1 AU¢, and against the euro at 66.3 euro cents. The NZ TWI-5 index is at 77.1.
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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But first, there is something of a presumptive relief rally going on on Wall Street markets today - anticipating a clear Clinton election win. Equities are racing higher, up +2% in mid afternoon trading. Bond yields are also sharply higher. And gold is down -US$23/oz.
Hmmmm..
Hillary Clinton will NOT light up the sky over NYC if she wins the Presidency -- her campaign is calling off a planned fireworks show ... Read more
A few quick notes - we’re hearing the perennial arguments about “cash on the sidelines” waiting to gush into stocks. As always, one should remember that every security that is issued in the financial markets has to be held by someone, in precisely the form it was issued as (currency, Treasury bills, commercial paper, stocks, bonds) until that security is retired. What people observe as “cash on the sidelines” is nothing other than a mountain securities that have been issued in the form of short-term money market instruments, and those instruments will remain “on the sidelines” until they are retired. In the meantime, every single one of them will have to be held by someone. They do not “flow” anywhere. They simply change hands, and changing hands doesn’t affect their quantity. Read more
Loose lips sink ships.
Greenspan said that “if the early stages of inflation, which are now developing, would take hold, you could get -- fairly soon -- a fairly major shift away from these extraordinarily low yields on 10-year notes, for example,” Greenspan said in an interview on Bloomberg Television on Monday. “I think up in the area of 3 to 4, or 5 percent, eventually. That’s what it’s been historically." Read more
His last major policy initiative was to “tighten” starting in June 2004. Though he did, the global economy didn’t, leaving his infamous “conundrum” to more aptly describe his tenure than anything else ever could. Inflation remained high, the eurodollar system raged, and the stage was set for a condition that in all likelihood should have been avoidable if not in some parts avoided. Read more
It is buried in Awkland.
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=117…
Rising construction and labour costs, combined with more restrictive bank lending, have been cited in many of the deal cancellations.
Is repetitive central bank "stimulus" policy responsible for this type of bursting property bubble event?
If so, when will the government demand the RBNZ protect banks' unsecured lenders and first call financial system underwriters, under OBR, with higher interest rate returns consistent with offsetting decidedly higher investment risks? A so called "free market" would demand nothing less.
Almost out of time for the FREE viewing of Before the Flood by DeCaprio.
Whilst making the doco he decided to give the world the opportunity to see it for FREE for 1 week.
https://www.youtube.com/watch?v=90CkXVF-Q8M
His speech to the UN at the end is brilliant.
De Caprio is just a another deluded celeb (a la Elon Musk) flying around in a private jet thinking we need to put out the recycling faster....
The problem is massive human population overshoot - there is no easy fix - its too late to unwind population and fossil fuel dependent infrastructure. Remove fossil fuel and you have to kill the economy and food supply.
And yet we are still talking about sustainable growth .... its a systemic wide delusion
I seem to remember you was a fair fax proponent at one stage....Gummy...Did you not work for them in your youth?. What makes you shudder at the thought of their 90% control of our media....Now.
You have the inside experience, we should all listen to.....then maybe we can all oppose the Draft Plans of the high and the mighty.
I am opposed to Corp-orates in General ruling our existence.
As usual, we need to know......WHY.
And as most here are in it for the money, we need to see what are the negatives, not buy into their mantra.
... the only country in the world with greater than 90 % print media concentration in one entity is .... ( drum roll , please .... da da da da da dum ) ... China !
We'd be in good company , Chairman Alter Ego ...
... but , I shudder not , friend : I present the facts , just the fax ... just the fair facts .... nyuk nyuk !
I sometimes wonder if our wonderful democratic system would have pulled 500 million people out of poverty in the relatively short time frame that China has achieved,
45 new nukes under construction - one coming on stream every 90 days.
15 Airports bigger than Heathrow where they have argued over new runways since 1946.
More rail track laid in a decade than exists in Europe.
As LKY the founder of Singapore mused in his last few weeks " I'm not sure about this democracy thing "
A welcome story of Country Folks....but you did not answer my question...
Or do you still have a few shares in the Co....and decline to improve...on that point.
I know China has a fixed agenda. I know it has borders that cannot be crossed.
He who controls the media, owns the masses..I get it...
I know we are inundated with trivia....I just want the facts, as you see it...in plain black and white. Pretty Please....I want to suck it and see...GUMMY.
Sure is...
Some places are already on dry wells.
http://www.stuff.co.nz/environment/82723202/Canterbury-residents-face-w…
Facts & Science:
http://ecan.govt.nz/news-and-notices/news/pages/Drought-Update-0916.aspx
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