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Local eyes on RBNZ; Trump upset roils markets; Trump program aims for large fiscal deficit spending; US inflation likely; Asian prospects under threat; UST 10yr yield at 2.06%; oil stable, gold unchanged; NZ$1 = 72.6 US¢, TWI-5 = 76.9

Local eyes on RBNZ; Trump upset roils markets; Trump program aims for large fiscal deficit spending; US inflation likely; Asian prospects under threat; UST 10yr yield at 2.06%; oil stable, gold unchanged; NZ$1 = 72.6 US¢, TWI-5 = 76.9
10th Nov 16, 7:36am by David Chaston

Here's my summary of the key events overnight that affect New Zealand, with news we start today with uncertainties high.

Locally, all eyes today will be on the RBNZ's MPS review and expecting a -25 bps rate cut. We will have full coverage.

The stunning upset by Donald Trump in the American presidential election may have brought some market volatility but the US Federal Reserve will still raise interest rates next month, according to a Reuters poll of economists. This is bolstered by the view that the US economy has been growing quickly. But whether that path can continue is already under threat. And others are not so sure the strong economic growth will continue now.

Here is a likely lineup of Trump economic appointments.

And based on what has been said so far, Asia fears it is facing a protectionist and isolationist America, one that will make its own trade realities difficult. Already, the Philippines is concerned with the pullback and having to face China without support.

Based on campaign rhetoric, it is entirely possible that the US Federal deficit may balloon on the combination of tax cuts and heavy spending. Fiscal stimulus, something Republicans have railed against for years, looks like it is on the agenda again. And it is hard not to see such a program as strongly inflationary, something any Fed would lean against.

In China, their October inflation rate came in at +2.1%, which was as markets were expecting. But producer prices rose +1.2% which was a faster rate than expected, but continues the stunning reversal of deflation in their factory sector.

Australia seems in a difficult policy position, not helped by its weak fiscal situation. A credit rating cut must be closer now.

In New York, the UST 10yr yield will start today much higher again, now at 2.06%, its highest level in eleven months. Our wholesale rates rose sharply yesterday before the US election result was known, then fell just as sharply, and will start today just marginally below where it was at this time yesterday. But with this morning quick run-up in the UST10yr benchmark yield, expect higher rates here today too.

The US benchmark oil price is marginally firmer, and is now just over US$45.50 a barrel, while the Brent benchmark is above US$46.50 a barrel.

The gold price is basically unchanged at US$1,276/oz.

The New Zealand dollar will start today lower than this time yesterday, at 72.6 US¢. On the cross rates it is now at 95.3 AU¢, and against the euro at 66.4 euro cents. The NZ TWI-5 index is at 76.9.

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 ».

Daily exchange rates

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31 Comments

by  Penguin  |  10th Nov 16, 7:55am 1478717726

All the uncertainty just makes NZ more of a safe haven.

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by  OnwardsUpwards  |  10th Nov 16, 8:00am 1478718059

Expect oil to go way down. Saudi Arabia might not exist for very long.

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by  ham n eggs  |  10th Nov 16, 8:23am 1478719432

will be interesting - US might go on an infrastructural binge a la China for a couple of years - building stuff for nobody - which may hold Oil up for a period ... but i agree - soon Saudi is in real trouble.

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by  Mike B  |  10th Nov 16, 8:11am 1478718713

New Zealanders are just waiting for their own Donald Trump to appear. (Hint It wont be Gareth)

Of course the media will do their best to destroy them. But when they win in a landslide the media will say they were shocked and this was all such a surprise.

The media are not only corrupt they are dead and decaying through their own corruption.

Oh, and they think people should pay them for their lies and deceit.

They are completely out of touch with reality
Brexit was going to cause a British meltdown and was a shock
The Global financial crisis was a shock and unexpected
Trump was a surprise
Blah blah blah

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by  Roelof  |  10th Nov 16, 8:42am 1478720567

This was the most revealing thing for me in this election.... Just how biased the media are..... its kinda ugly.

There was not much written about Trumps "policies".... and some of them are good ideas.
eg. veterans affairs, regulations....etc https://www.donaldjtrump.com/policies/

You never know.....Gareth might be our Donald Trump.... at least he is outside the "system"... and may not be PC..

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by  OnwardsUpwards  |  10th Nov 16, 8:46am 1478720818

The 'media' should pay us for giving them views.

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by  Mike B  |  10th Nov 16, 9:00am 1478721607

Roelof - The trouble with Gareth is that he wants to honor the Treaty to the point of sovereignty. That is a Maori Pakiha government.

We want less government not more.

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by  ham n eggs  |  10th Nov 16, 9:46am 1478724399

The real trouble with Gareth is hes an economist. He thinks the economy is about money.
He sees opportunities, when in fact there are none. Cheap hydrocarbon fuels are gone.

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by  Roelof  |  10th Nov 16, 10:26am 1478726775

Mike B... I think u might like this by Nassim Taleb...

http://www.zerohedge.com/news/2016-11-09/nassim-taleb-explains-who-just…

I like the term IYI.... " intellectual yet idiot.."

My favorite lift in the gym , is the deadlift.... even more so now...!!!

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by  Mike B  |  10th Nov 16, 11:38am 1478731102

Roelof - thanks for the link

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by  economist  |  10th Nov 16, 9:03am 1478721783

The amazing thing about all this is that in spite of main stream liberal media's hysterical lies and distortions, most Americans saw straight through it and acted accordingly. This is a big win for democracy as it means the media don't have the control they have boasted they have. Now they have even less credibility.

Trump should instruct the IRS to conduct audits on all of congress and the senate and there should be an investigation into the Clinton foundation and Tim Geithner should be charged with obstruction of justice, instructing the Justice Department not to prosecute bankers after the GFC as America would loose faith in their financial system. America's faith in the system will be restored when those people who committed massive fraud go to prison and have their ill gotten gains confiscated.

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by  @tony  |  10th Nov 16, 12:10pm 1478733042

Interesting to see if Trump stays out of Jail (election is now over).
Interesting to see how many bankers end up in Jail (a lot from 2008).
Interesting to see if the inequality is reversed (Stationary money sat in bank accounts taxed at 50%p.a.)

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by  gingerninja  |  10th Nov 16, 8:58am 1478721487

I agree that the media is out of touch but not sure about the examples you have used here. Brexit might very well cause a British meltdown. Their politics is certainly in meltdown and it is far, far too soon to say in regards to their economy because nothing at all has really happened yet. After Brexit, depending on the terms of the trade deals etc, then we will know. A slow down in International investment in the UK, will take years to show up and cause a retraction in the economy.

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by  Mike B  |  10th Nov 16, 9:02am 1478721731

gingerniga - the press said "If people voted for brexit" there would be a meltdown. It never happened.

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by  @tony  |  10th Nov 16, 12:13pm 1478733209

Slowly it is...
Banks building up their teams in Frankfurt.
No recruitment in London.

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by  gingerninja  |  10th Nov 16, 12:22pm 1478733751

Is delayed melt down, less of a melt down then, if it happens?

And both sides of the Brexit argument greatly exaggerated, why are you only focusing on the side that lost? So far, not a single promise made by the Leave camp has come true either. So all we can say is that the media behaved exactly as the media always does. To express the news in the most hysterical and exaggerated fashion that it can in order to increase readership.

However, what we can't say is that there have been no effects to the British economy post Brexit. Because any such suggestions would be premature. Brexit has not occurred yet. Article 50 has not yet even been triggered.

What has transpired is that the Leave camp, had no plan for after the Referendum. Until a plan for Brexit has been made public, until anyone has a clue what Brexit might look like, any economic effects will be delayed to an extent. Although, the uncertainty is already deterring investment, and businesses are already making contingency plans.

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by  moe  |  10th Nov 16, 8:20am 1478719259

One thing that is clear in 2016:

Just because someone yells the loudest, is a self-appointed political "expert/analyst", has their face on tv every night, or owns a blog/website doesn't mean they know what they are talking about.

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by  OnwardsUpwards  |  10th Nov 16, 8:38am 1478720304

Hahaha. Lots of humble pie being eaten today.

Don't forget that "polls" are garbage.

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by  Mike B  |  10th Nov 16, 9:03am 1478721800

moe - Americans chose Donald Trump against all the expectations of the pollsters and political professionals, because they want a president who will do something to counter the quiet desperation that has afflicted them for the past eight years. Donald Trump campaigned on tax cuts and a tough stance on trade, a vague and sometimes inconsistent economic program. It doesn’t matter. FDR campaigned on a promise to balance the budget. Trump understands that something great and dramatic must be done. He may not know what it is, but the American voters have given him a mandate to try until he succeeds.

http://www.atimes.com/understand-trump-look-franklin-d-roosevelt/

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by  Learn to Socia…  |  10th Nov 16, 8:30am 1478719846

An apocalypse (Ancient Greek: meaning "uncovering"), meaning a disclosure of knowledge, i.e., a lifting of the veil or revelation.

In the Book of Revelation, the revelation which John receives is that of the ultimate victory of good over evil and the end of the present age, and that is the primary meaning of the term, one that dates to 1175

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by  Didge  |  10th Nov 16, 9:04am 1478721851

I cannot claim to have any idea of who might have won the USA election; however, I listened to a few of Trumps talks on Youtube to blue collar workers and I could see how very popular they might be. So I am not very surprised.

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by  Justice  |  10th Nov 16, 9:14am 1478722467

Always look to independent news sources. They knew

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by  Didge  |  10th Nov 16, 1:18pm 1478737094
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by  Justice  |  10th Nov 16, 9:04am 1478721877

Inflation looms? Yet they just cut the OCR? Lol

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by  OnwardsUpwards  |  10th Nov 16, 11:34am 1478730857

Hahahaha - Monty Python's Flying Circus is all I can say.

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by  Stephen Hulme  |  10th Nov 16, 9:21am 1478722898

Can the citizens recover taxes ill spent?

Political controversy surrounding Hilary Clinton’s philanthropic efforts has found its way to New Zealand, reports Jason Walls. New Zealand taxpayer funding, through MFAT to the Clinton Health Access Initiative health initiative, will continue with $6 million more budgeted to be donated to the fund on top of $7 million already donated, NBR has learned. Read more

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by  Ergophobia  |  10th Nov 16, 12:53pm 1478735604

I doubt it SH, Jokey being so thick with Goldman et al the next tranche will be paid too. Outrageous. Methinks Trump will likely turn out like Australia's Clive Palmer but even if so, the world owes him a debt of gratitude for consigning the Clinton perverts to the dustbin of history.

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by  @tony  |  10th Nov 16, 12:31pm 1478734316

Nigel Latta

Why did this happen? Simple. He's the price that has to be paid.

Most of us are waking up today wondering if we dreamed it all. Did that really happen? Is that terrible, terrible man really the president elect? Is the guy who openly advocated racism and intolerance in charge now? The same guy who bragged about sexually assaulting women, and called women all kinds of horrible names. This strange orange man who acts like a bully and pretends to care for others when his whole life, his actual life, the things which are incontrovertibly and undeniably true, show that in fact his life has been spent profiting from others, exploiting people, and serving no one and nothing but his strange orange self?

Nope, you didn't dream that, it really happened.

And why? Is it because everyone who voted for him, all the people who believed in him are similarly bad?

Are they similarly self interested, and bigoted, and hate-filled?

I don't believe that to be true. Some of those people are bigoted, and racist, and hate-filled, for sure. We've seen that segment of his supporters, and that also cannot be denied.

Mostly, though, I believe the people who supported him were just people.

Mr Orange is just the price that has to be paid. It's that simple.

When we live in a world where the top 1% continue to reap more and more of the economic benefits the rest of us have produced, someone has to pay for that. When the majority finally taste the bitterness of being forgotten and pushed aside, then someone has to pay for that. When we lose faith in the people we have entrusted to run all of this on our behalf, then someone has to pay for that. When we feel like hope is being stolen from us, and our kids, then someone has to pay for that. When we prize conflict and outrage over debate and conversation, then someone has to pay for that.

When all of us feel like the game is rigged - really rigged, deeply, profoundly, and intractably rigged - then someone has to pay for that.

Mr Orange is that price, he's the cost we all now have to pay. But it's not about him, it's about the way the world has been going these last few decades that made people - and the vast majority of the people who voted for him are good people - feel like this petty, vengeful bully was their great hope.
So let's take our dose of salts and get through whatever Mr Orange is going to drag us through before he goes the way of all bullies and shuffles off to his tower... and then let's make stuff better.

Mr Orange is a warning about what happens when we stop caring about each other, and turn on each other. So let's not do that any more. Let's build a future where we all have a place, and we all have hope, and we recognise we have a collective responsibility to ensure that every single person matters.

Every. Single. Person.

We'll get through this. And my hope is we'll get through this stronger, and wiser, and more compassionate. In years to come maybe we'll say that Mr Orange really did us all a favour. Maybe we'll say he was a tipping point? Maybe this is the moment when we all finally realised we'd lost our way, and we stopped, and came together a little more, and we found our way?

That would be ok. Don't you think?

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by  Zachary Smith  |  10th Nov 16, 12:44pm 1478735091

I wonder what planet Nigel Latta is living on?

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by  ham n eggs  |  10th Nov 16, 1:15pm 1478736938

Im not sure if this is all completely tongue in cheek, but this is a good (copied) comment summary of why Trump (or any alternative) won't take everyone to a better place ... by early 2020s things are ugly.

1 we know that the world economy runs on hydrocarbons, and there are no alternatives
2. Those fuels are depleting and getting harder to find.
3 Trump has promised that oil supplies are virtually unlimited
4 he promises unlimited jobs at high wages (which need unlimited oil)
5 his supporters imagine return of ‘heavy industry’ jobs
6 they dont know that the 50s/60s was a fuelburning run on from WW2
7 no awareness of the link between fuelburning and jobs
8 USA produces 10MBd, but burns 19Mbd oil– constant imports needed
9 Saudi selling shares in ARAMCO now, thus Saudi oil is running low
10 Saudi oil supply begins to falter by 2020 (ish), triggering more conflict there
11 Oil prices rise drastically, becomes unaffordable to support jobs.
12 Disaffected Trump voters react violently, realising he was a charlatan
13 Civil order breaks down with mass unemployment
14 Trump (or successor) reacts in the only way possible, military suppression of mobs
15 With low energy supplies USA becomes ungovernable
16 Secession begins, (say 2022/3) cannot be prevented (EU also)

As the above scenario plays itself out to an inevitable conclusion, virtually no one will understand what’s going on, So there will be violent reaction to it, still with the certainty the prosperity comes through votes. The politicians are always to blame, but we the people burned the oil, we the people spawned Trump et al. An inevitable conclusion to generational thinking of an infinity of everything.

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