Dow pushes up through 20,000 level; US mortgage rates rise; China bond stress increases; Japan posts trade surplus; dodgy Aussie RE agent tactics; UST 10yr yield at 2.53%; oil stable, gold lower; NZ$1 = 72.7 US¢, TWI-5 = 78.1

Dow pushes up through 20,000 level; US mortgage rates rise; China bond stress increases; Japan posts trade surplus; dodgy Aussie RE agent tactics; UST 10yr yield at 2.53%; oil stable, gold lower; NZ$1 = 72.7 US¢, TWI-5 = 78.1

Here's my summary of the key events overnight that affect New Zealand, with news of rising bond stress in China ahead of the New Year holiday.

But first, the Dow Jones Industrial Average rose above the index level of 20,000 for the first time this morning. The gains have been attributed to enthusiasm for the new US Administration's big spending plans for major infrastructure projects. However, a growing number of conservative Congressional politicians are suddenly wary of the new direction.

The number of American mortgage applications rose last week to their highest level in seven months even as borrowing costs also rose for the first time in four weeks. Interest rates on 30-year, fixed-rate mortgages, the most widely held type of home loan there, now averages 4.35%, up from 4.27% in the previous week.

Rising interest rates hurt bond investors. Many thought the initial hurt would show up on Wall Street or London. But actually it is in China where real stress is playing out at present. They have a US$3 tln corporate debt market and paying the expected higher interest will prove to much for many in 2017. Record defaults are expected. In China, the pressure is resulting much higher levels of fraud which compounds the problems.

In Japan, they have just posted a trade surplus, its first in six years. Lower oil prices helped.

In Australia, real estate agent tactics are in the spotlight in Victoria and officials there are cracking down, handing many agents big fines. The practice of "under-quoting" is said to be "widespread".

And locally, the Auckland High Court is playing a part in helping a wealthy Malaysian family keep assets 'stolen' from the 1MDB sovereign fund, thwarting US prosecutors from recovering matters in dispute.

In New York, the UST 10yr yield has continued rising is now at 2.53%.

Oil prices are unchanged today, now just under US$53.50 for the US benchmark, while the Brent benchmark is still just under US$55.50 a barrel.

The gold price is lower however, falling to US$1,199/oz

The New Zealand dollar also unchanged from this time yesterday, holding its high level and will open again at 72.7 US¢. On the cross rates we are at 96.1 AU¢, and against the euro at 67.7 euro cents. The NZ TWI-5 index is still up at 78.1.

If you want to catch up with all the changes on 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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Trump to start building his wall, irony is those that will most likely build it will be low paid Mexicans
http://www.cnbc.com/2017/01/25/trump-says-us-mexico-border-wall-to-come-...

The even bigger irony is that most of what can be built is already built.

Just another 30 billion should get it completed. A tiny fraction compared to the money wasted in the ME wars. Good to know that a lot of the wall is already in place. Real men are in charge now. When under attack men build walls and burn bridges. Hopefully we will see some bridges burnt today.

Most of what isn't walled will be nigh on impossible to do so, not exactly sure how he intends to wall off the Rio Grande

The following link - well worth it even to brighten up your day - posted over five years ago really questions the effectiveness of "The Wall".
https://www.youtube.com/watch?v=AfVENwfeGHw

Just like his "Make America Great Again" caps were all made in Bangladesh.

I suppose the building materials will come from overseas too...like most of his projects.

Ironic is where Trump says one thing, to produce another.....it is all about me-me...Not America.

"All about me" quite agree. Since he has populated the White House with his family/extended family I guess he has a dynasty in mind.
Barron (his son) sounds good, no?
In the future his casket will rise daily from the Wall, admired by Mexicans maybe; inter alia ; just like Mao in Tiananmen Square:Immortal.

Not sure how he expects Mexico to pay for it, especially once he removes their means of making a crust. Maybe we could offer him Baycorp.
Like any security system it will only keep the good people out. I reckon Mexico needs to stop right now in its efforts to stop illegals from Central America reach the USA via Mexico.

Tariffs and tolls. It wont be just a wall, there will be layers of security and a robust border protection force. It will be quite good fun...for men.

Not women Zac??? Not sure how to take your comments..I know you are far right or are you taking the piss?

The Don is a new age guy , he is ... it is true , yes , so true .. .. and a feminist ...

... to prove that ... and it is true ... he will employ only Mexican women to construct the wall ... how great is that , employment for the neighbours ... yes ... must help the people next door ... they want to be great , oh , they do ...

Mr President will quarantee a minimum wage for these women ... $US 2.50 per hour ... better than they get here for picking our cabbage crop ... it is true , yes ...

... and it's so hot on the border , hot and dusty work ... the Mexican ladies can work on constructing the wall in Hi-Viz bikinis and steel-toed-capped high heals ... they can be great too , as Melania is ... it's so true ....

It won't be good for men. Only for chickenshit bullies masquerading as men.

Ah yes, I guess we all figured that , but he was going to impose tariffs anyway, so scratch that, as for tolls, you must be thinking no-one from the US will be traveling south.

Maybe showing the movie Dusk 'til Dawn will get him support for building the wall.

" But actually it is in China where real stress is playing out at present. They have a US$3 tln corporate debt market and paying the expected higher interest will prove to much for many in 2017. Record defaults are expected."

Should we expect this to occur in our mortgage market if interest rates climb high?

The Chinese are themselves not blameless for this reality, as the seeds of disorder were sown by China's monetary system taking the easy path to its economic "miracle." A foundation so established on monetary growth, foreign no less, is obviously highly susceptible in any period lacking such growth. Prolonged absence simply creates fissures in exactly the way you would expect, including highly volatile money markets. Source Alhambra

Didn't ANZ warn New Zealand about unsustainable household debt at a record high of over 167% of disposable income? Read more

Didn't they also warn borrowers and savers alike about the implications of rising foreign funding costs?

In its statement announcing the 10 basis points cut to its floating and flexible home loan rates, ANZ said over the past 18 months offshore wholesale funding costs had increased significantly. International volatility had proved to be more than temporary, and these extra costs now need to be reflected in ANZ's lending rates. Read more

Foreign currency funding stats can be viewed here Section A3

China clearly has problems they are hiding , and that's not an alternative fact, but the secrecy , misinformation and downright lies that come from the regime makes it all but impossible to know exactly what is going on there

Goes to show the consequences when principle is allowed to balloon under guise of low interest rates. What happens if rates begins to rise is often an after thought, hence the GFC.

The Trump Bump.
So, Trump is great for business. The Dow over 20,000.
.
CEOs encouraged by Trump dialogue and direction.
http://www.usatoday.com/story/news/2017/01/25/boeing-ceo-says-trump-good...
.
“I give a lot of credit here to reaching out and directly engaging. President Trump has had business leaders at the table. He’s listening, he’s engaging and making decisions that will help us grow the economy and ultimately U.S. manufacturing jobs,” Muilenburg said. “I’m encouraged by that dialogue. I think having direct, open dialogue is productive and very good for the future.”
.
Now, how can the Media put a negative spin to this news?
"Trump causes over exuberance on stock exchange, and business leaders overconfidence" Perhaps CNN.

The truth is that Trump really couldn't care less what the media thinks or says , and he just riles them up every now and again by challenging them in a back-handed fashion , and this gets the fake outrage and indignation to which which have become accustomed from the US Media

The idea is to get in on the Trump Bump, and get out; but nobody knows when to get out of course.
The Trump Bump is probably because he is going to borrow another 10 trillion dollars and throw it at corporate America (meaning himself and toadies?) at the taxpayers expense.
So the bump could last awhile.

We have some interesting competition at our local petrol stations. My long run model of petrol prices at an average profit margin of just under 24 cents per litre suggests that the price should be $1.58 per litre. I paid $1.56 /litre after discount this morning. Quite a difference from the profit gouging that we have seen previously. Credit where credit is due.

Wow its only 3 days , and I have already got sick and tired of hearing and seeing President Trump's name on EACH AND EVERY NEWS WEBSITE , LOCAL TV NEWS BULLETIN , INTERNATIONAL NEWS CHANNELS , NEWS AGENCIES , NEWSPAPERS AND RADIO STATION

Even Al Jazeera has added a dedicated Trump segment to each of its News Broadcasts :-
Local Middle east news
News from Europe
International
"Trump in Power"
The Markets
Sport, and
Weather .

Its just crazy

The Media have been sprung and exposed for their bias, their financial backing and their false predictions, so they are livid and simply cannot accept the current reality.
So we have a constant stream of antagonistic articles, including trivia / personal attacks from the Media.
The Global agenda has been interrupted, so the prime aim will be to remove Trump, reverse Brexit, stamp on any other 'uprising' by all means then continue where they left off.

Have you seen Donald trump's cabinet? It's hardly an upstart bunch of outsiders, and the stock market reaction shows how 'unpopular' they are with the finance world.

Johnson: Elites Eying the Exits Signals America's Crisis

Institute President Rob Johnson interviewed by the New Yorker on hedge-fund managers and the market for air strips in New Zealand

https://www.ineteconomics.org/perspectives/blog/johnson-elites-eying-the...

Yep we really need to bring in that Foreign Buyer tax, just think of all that revenue for NZ. :)