US retail strong; US CPI rising; China ups infrastructure stimulus; EU ratifies Canada trade deal; AU to target property investor tax concessions; UST 10yr yield at 2.51%; oil up, gold down; NZ$1 = 72 US¢, TWI-5 = 77.5

US retail strong; US CPI rising; China ups infrastructure stimulus; EU ratifies Canada trade deal; AU to target property investor tax concessions; UST 10yr yield at 2.51%; oil up, gold down; NZ$1 = 72 US¢, TWI-5 = 77.5

Here's my summary of the key events overnight that affect New Zealand, with news a crackdown is coming in Australia on capital gains tax concessions for property investors.

But first, January retail sales data was strong in the US. They rose +5.6% above the same month a year ago and more than expected as households bought electronics and a range of other goods, pointing to sustained domestic demand that should bolster American economic growth in the first quarter. Also assisting the positive view, business inventories were +2% higher in December than the same month a year ago.

But that is actually lower than the rate of price inflation which has come in at +2.5% pa in January. This CPI data is now running at its highest level since February 2013 and underpins the US Fed's recent signals that they are on track for three rate hikes this year. Financial markets haven't believed the Fed's dot plots recently, so there may be some reassessments going on about now.

It is not all rosy news however; industrial output was unchanged in January compared with the same month a year ago.

In China they are back singing from the old economic script. In January they approved more 18 large fixed asset investment projects with investment totaling NZ$31 bln as they try to "stabilise economic growth by boosting infrastructure investment". It was lower than the NZ$37 bln investment approved in December but higher than the monthly average of NZ$29 bln reported for 2016.

In Europe, their parliament has ratified their trade deal with Canada, one agreed in 2016. This comes despite the usual trenchant opposition from farmers in the EU.

In Australia, their Federal government is deep in deficit and is looking at ways to return to surplus. Many options are blocked by uncooperative States. But one getting renewed focus is a crackdown on capital gains tax concessions for property investors. It is understood the policy being worked on will not apply to investments such as shares and nor will it wind back negative gearing, which is a major rort in the Aussie property market.

In New York, the UST 10yr yield is sharply higher on the US inflation data, now up at 2.51%.

Oil prices are essentially unchanged today and still just over US$53 for the US benchmark, while the Brent benchmark is just under US$56 a barrel. In the US, they installed a record 14.6 gigawatts of generating capacity in 2016, almost double the total from 2015 and enough to make photovoltaic panels the country's largest source of new electric capacity for the first time. Solar panels on rooftops and fields accounted for 39% of new generation and that beat the 29% contribution from natural gas and 26% from wind. There is a substantial revolution going on there, and it doesn't involve Trump's coal - at all.

The gold price is marginally higher today and now at US$1,224/oz.

And the New Zealand dollar is higher this morning as well. It is now at 72 USc. On the cross rates we are at 93.6 AU¢, and against the euro at 67.9 euro cents. The NZ TWI-5 index is at 77.5.

If you want to catch up with all the 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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meanwhile apple prices have hit an high of $6 a kilo, helping the CPI move up.

http://www.stuff.co.nz/business/farming/cropping/89391628/apples-in-nels...

Won't be long lived...the season is late is all.

what I find interesting is how it effects the CPI and personal knowledge of where most of apples are sold.
the local market is secondary to the export market, its the same as how our local milk or lamb price at the local shop is effected.
so in essence some parts of CPI are effected by overseas demand as we are still a major primary exporter.
was not the theory behind a bigger domestic economy (more people) supposed to mitigate the effects, or do they in fact enhance it due to the nature of our industries

China back on the infrastructure path ... adding more capacity for nobody - like an upscaled Shonky flag referendum . They know its crash the economy OR the environment ... and no-one wants the economy to blow.
But building more and more supply doesn't compensate for lack of demand, as the central banks are discovering.

Any recent stats on China's treasury holdings? Trying to pinpoint where the USD selling pressure is coming from. Could simply be a Trump hedge?

The Greeks have it all wrong. Dollar for Dollar, ours is better than Yanks, if they invest in New Zealand Real Estate. No taxes, no risk, always on the up...Poor Greece should have taken a leaf out of Kiwis Financial Book....and learned how to really take off and...Fly.
Comparing Apples with Apples, is all very well, but one cannot go wrong with NZ Real Estate .....can one. Have they learned nuffin, since time immemorial. Them Greeks and Romans, got nuffin on us. We ain't cash strapped...we got dem Houses...way betta.
Us newbies, can beat em, whatever the odds.

http://www.mirror.co.uk/news/world-news/cash-strapped-greece-contemplati...

I dont see how converting to the US$ will help , its just moving from one deck chair t the next , the debt remains

This CPI data is now running at its highest level since February 2013 and underpins the US Fed's recent signals that they are on track for three rate hikes this year.

Hard to find punters betting the farm on a March hike, despite the official jawboning.

As prognosticators ohh and aah over the soaring consumer price index (up 2.5% YoY - the most since March 2012), driven by a 14.2% YoY spike in gasoline prices, it appears they missed the fact that real average weekly earnings plunged by 0.6% YoY - the biggest wage collapse since November 2011. Read more

Auckland Trade me listings go thru 10000. It is obviously only a number, does not account for multiple listings or indeed vacant land. All that can be said is that is rising fast.

China should stop investment spending and start to facilitate consumer spending instead

Does anyone know what they mean by crackdown on capital gains tax concessions??

in Australia you pay capital gains tax, but there are discounts for investment in certain products.
they are talking about cutting the discount on rental properties but leaving shares brought for retirement alone.
a step in the right direction in my mind, their companies need more capital to expand worldwide