Here's my summary of the key events overnight that affect New Zealand, with news ANZ has been slapped with yet another lawsuit based on a very dodgy corporate culture among their traders.
But first, today's dairy auction came in pretty much where the derivatives market had signaled - a +4.5% rise underpinned by a +3.2% rise in WMP prices. That confirms and embeds the +20% rise at the previous auction. And because the Kiwi dollar has weakened a little since the last auction, the rise in NZD is a respectable +5.6%. Prices for SMP and cheese both helped boost today's result, which will have more analysts talking about a NZ$6/kgMS payout level for the new season, maybe even higher. That will means dairy farmers are profitable again.
In the US, retail sales rose more than expected in October - up +3.3% from a year ago - as people bought more cars and a range of other goods, and signaling sustained economic strength that could allow the Fed to raise interest rates next month.
And staying in the US, defaults are rising in the commercial real-estate debt market just as borrowing costs are set to jump. This raises the likelihood of a slowdown of the US$11 tln American commercial property sector next year. The problem is based on rising vacancy rates from exuberant building recently, and a wall of more than $100 bln in debt maturities coming due. It is also a sector the US president-elect is exposed to, and one reason he wants to get rid of the Dodd-Frank reforms.
Germany's economic growth slowed in the September quarter and only up +1.5% year-on-year. It was held back by weaker exports, figures have shown. Somewhat in contrast, there was a surprisingly good growth result for Italy in the same period. Actually, Italy hasn't had negative growth since 2013.
ANZ is being stung with yet another lawsuit, this time from their New York office, again alleging a terrible corporate culture among traders.
In Australia, the IMF has called on them to boost infrastructure spending, to avoid the symptoms of a mediocre economy and despite their gloomy deficit track.
In New York, the UST 10yr yield is now 2.22%, and little changed from this time yesterday. In the interim however, it has been quite volatile, at one point trading almost at 2.30%.
The US benchmark oil price is +US$2 higher today and is now just over US$45 a barrel, while the Brent benchmark is on US$46 a barrel.
The gold price is higher as well, up +US$7 to US$1,225/oz.
The New Zealand dollar will start today essentially unchanged from this time yesterday, at 70.9 US¢. On the cross rates it is now at 94 AU¢, and against the euro at 66.1 euro cents. The NZ TWI-5 index is at 75.9.
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 ».
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25 Comments
Maybe we could import some Japanese expertise to assist in North Canterbury.
http://www.independent.co.uk/news/world/japan-fixes-30-metre-sinkhole-i…
Rest easy.
There were a great many ridiculous things we witnessed last year, but among them was the unshakable desire for the media and economists to label consumers and consumer spending as “strong” regardless of any other considerations. In most cases, whatever month-over-month change would seem positive, but it was so only in that very narrow view. Misunderstanding natural variation, they all would have done better by not seeing only what they wanted time and again.
...September 2016, total retail sales grew nearly 4%, but that was, as usual, the exception to the high side. The just-released figures for October 2016 show that once again retail sales are incredibly weak; year-over-year up just 2.15%.
In a truly healthy economy, retail sales would be concerning where the growth rate fell below 6%, now it is unusual to find them above 3% even in a year following one in which retail sales barely registered any growth at all. Read more
And let's not get ahead of ourselves while US 3mth TBills hover around 50bps, attentively discounting that elusive short end rate rise.
The world’s most-traded currency is becoming a fear gauge.
That’s the opinion of Hyun Song Shin, head of research at the Bank for International Settlements. A stronger dollar can depress demand for credit while reflecting reduced investor appetite for the riskiest assets, Shin wrote in a report released Tuesday by the BIS.
The research signals that the dollar’s surge after Donald Trump’s U.S. electoral victory shouldn’t be interpreted as a clear sign of confidence across markets. In fact the dollar has become a new fear gauge, replacing the Chicago Board Options Exchange VIX volatility index, Shin wrote.
“The mantle of the barometer of risk appetite and leverage has slipped from the VIX and has passed to the dollar,” he said. “Given the dollar’s role as barometer of global appetite for leverage, there may be no winners from a stronger dollar.” Read more
A big reason why Chinese banks struggled yesterday in their daily bid for “dollars” (CNY DOWN) was the relatively unchanged economic statistics for November. Many in the media have tried to frame China’s economic situation in 2016 as if stabilizing were a positive outcome. Markets, especially funding markets, aren’t so enthused about the prospects for “weak but not getting weaker.” It does seem as if many were betting on the usual cycle, where avoiding a recession or “hard landing” earlier in the year was supposed to kick off acceleration. Read more
Just a few days after his latest tweetstorm attacking Donald Trump, the NYT house economist was once again unleashed on Twitter lashing out, only this time he took aim not only at president-elect Donald Trump but also his campaign, contradicting Ray Dalio's optimistic assessment of America under a Trump administration, instead predicting that Trump would turn the US into an "all-out kleptocracy, along the lines of what happened in Russia or Ukraine."
The Keynesian expert took aim at Trump's still to be finalized public and private infrastructure plan, and suggested that instead of boosting public spending it would "be largely about privatizing public assets." His allegation is that instead of infrastructure investments, the upcoming spending spree would convert public assets into private projects: "His transition team is basically all lobbyists and his infrastructure plan, such as it is, sounds as if it's going to be largely about privatizing public assets" Krugman tweeted. Read more
Could Krugman's criticisms be leveled against the New Zealand national party endorsing an ever creeping takeover of state function via PPP schemes? Prisons, roads, hospitals and schools come to mind.
Well wouldn't worry about what the New York times has to say. They have proved themselves unable to see clearly or make rational judgements about even the most simple of matters - their coverage is so biased as to be useless as a guide to what is happening or making decisions. L:ikewise Krugman has become so politicised that his advice is next to useless. Dont waste your time reading it.
Interview Donald Trump on 60 minutes.
Worth a watch.
VIDEO: President-Elect Trump on 60 Minutes
http://buchanan.org/blog/video-president-elect-trump-60-minutes-126013
I was hoping to highlight state wealth transfer operations undertaken by certain governments to benefit private enterprise recipients, and in particular our own.
Genesis Energy will buy New Zealand Oil & Gas's stake in the Kupe gas and oil field for $168 million, which the country's biggest electricity retailer expects will immediately boost annual earnings.
NZOG currently sells gas from the field to Genesis and LPG to Vector, and the state-controlled power company expects the increased ownership will give it access to 160,000 extra barrels of oil and 13,000 additional tonnes of LPG.
Genesis estimates the acquisition will lift pretax earnings by $15 million and net profit by $2 million in the 2017 financial year and the additional cash flow will help it to keep imputing dividends at the current 80 percent level.
NZOG said the sale needs to be ratified by shareholders at a special meeting next month, where the board will recommend the deal with the offer fully priced and at the higher end of its valuation range.
If it goes ahead, $100 million will be returned to investors in 2017. Read more
Of course...
It's not like its their money...
http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11747368
This stupidity is repeated endlessly...then added to next years budget to compound the problem, for ever and ever.
If this was just one small instance, it could be forgiven, but this is endless.
Unfortunately someone will say..."It is ONLY 500,000 dollars" but that is a fortune to most.
Screw Awkland....I say. But it appears to be the other way around.
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