US growth based on consumer spending; PCE, confidence and house prices up; India growth surprises, China birthrate focus, AU RE agents face disruption from within; UST 10yr yield at 2.35%; oil and gold lower; NZ$1 = 72.3 US¢, TWI-5 = 77.6

US growth based on consumer spending; PCE, confidence and house prices up; India growth surprises, China birthrate focus, AU RE agents face disruption from within; UST 10yr yield at 2.35%; oil and gold lower; NZ$1 = 72.3 US¢, TWI-5 = 77.6

Here's my summary of the key events overnight that affect New Zealand, with news markets are waiting for details of the US federal budget plans.

But first, American economic growth slowed in Q4-2016 to +1.9% pa with strong consumer spending offset by downward revisions to business and government investment. Personal consumption expenditure, the US Fed's preferred measure of inflation, rose to +1.6% for the same period, and the highest rate since Q3-2014.

That improved consumer confidence is supported today by the Conference Board's consumer sentiment survey, which rose to a 15 year high, and the Case-Shiller home price index, which reported its fastest full year growth since 2013.

But the gloss may come off this optimism as we are about to get data on US car sales, which are expected to be flat despite recent heavy discounting. Unrealistic growth assumptions by the new American administration may get markets backpedaling too

There were also growth figures out overnight for India which were a bit of a surprise. Growth there slowed in the December quarter, but the pace of expansion still beat expectations. The 7% rate was slower than the previous quarter's rate of 7.4%, but analysts' expectations were for just 6.4% because of the turmoil involved in their government's decision to withdraw high-denomination banknotes as part of its anti-corruption drive.

In China, they are getting practical about encouraging families to have more children. In 2016, an additional +1.3 mln more babies were born in the country than in 2015, but for their sustainable demography, it was not enough. Affordability has been identified as a key constraint, so subsidies and transfer payments are on the table. One thing for certain is that infant formula, and dairy products will be in increasing demand.

In Australia, RJ Hooker, one of their real estate heavyweights is launching a discount brand, Settl. It is a move that will no doubt unsettle its vast ranks of commissioned agents. Low cost agency distruptors are starting to gain traction across the ditch, and it is just a matter of time before it happens here.

In New York, the UST 10yr yield is basically unchanged at 2.35% ahead of the 2017-18 budget launch.

Oil prices are down today and now just over US$53 for the US benchmark, while the Brent benchmark is just over US$53 a barrel. Interestingly, the US is now exporting 1.2 mln barrels per day, and that is not something OPEC was counting on.

The gold price is also a little lower at US$1,256/oz.

And the New Zealand dollar starts today up slightly at 72.3 USc. On the cross rates we are at 94.1 AU¢, and against the euro at 68.1 euro cents. The NZ TWI-5 index is still in its three-week tight range at 77.6.

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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It's the beginning of the end for oil. Technology advances will see to it.

You're saying its the beginning of the end for ... freighting, plastics, road seal, food manufacture, tyres, industrial mining & manufacture, solar panel manufacture... the electric grid ....
Dont believe the Musk ponzi/handout scheme ... Oil is doing all the heavy lifting in industrial society - the end of Oil is the end of the industrial age.

Not suggesting it will happen overnight. I'm sure many thought the horse would never go out of use.

the horse didnt go out of use - it just got replaced with a far more potent energy source... coal ... then Oil. Horsepower still exists...

There is no more potent/viable/adaptable/portable source of energy than Oil - our whole industrial society has been built around it.

There ia a mystery surrounding "the turmoil involved in their government's decision to withdraw high-denomination banknotes as part of its anti-corruption drive." Why? Usually these things are not what they seem. In a communist country it is a sign of a purge of one's political rivals. Often "crackdown on gangs" is code for a corrupt police force eliminating their competition. Anyone have an insight into what is driving this latest madness in India? Did Ragan get the boot because he opposed the idea? The government story just doesn't stack up, it feels like a cover.

The logic behind the ban is meant to be that the Govt is missing out on tax revenue since the cash economy is a huge part of Indian commerce ... so it battles to capture sufficient tax revenue to build infrastructure etc.
But I dont think they will tax themselves to greatness.

Yeah right. The logic is someone benefits and they have the power to transfer wealth in their direction.

LJ Hooker launching a discount brand in Australia, and others gaining traction!
In Christchurch we have had agencies several agencies charging 1 per cent commission rates for years!!!
They are solely turnover agencies, and if you want your house sold they will sell it for you.
You may not necessarily get the best price for it, but they will turn it over
.

Then you might as well sell it yourself and keep the 1% commission if they won't get a decent price for it.

Started on Kapiti Coast, now also in Wgtn. Tall Poppy, $10K commission + GST. Nil push for print advertising, trademe + realestate.co.nz driven. The agents tend to be locals who have left other companies. Good thing is nil caravans, only listing agent shows prospective buyers.

Chinese Birthrate
They are killing themselves at an ever increasing rate from pollution; and they want to increase their population even more. Unbelievable!

http://www.huffingtonpost.com/entry/air-pollution-china-deaths_us_55cd9a...

they need growth to maintain the Ponzi ... and their population is ageing ..

"https://www.theautomaticearth.com/2017/02/not-nearly-enough-growth-to-ke...

"China’s core population is essentially peaking this year and beginning a decades long decline (not unlike the world. The chart below shows total Chinese core population peaking, energy consumption stalling, and debt skyrocketing."

This is probably also why they're desperate to halt the capital outflows. Can't have all the ones who've done well skipping the country and buying up Vancouver, East Coast Bays et al and leaving behind the seething walking-framed masses to lean on fewer and fewer young workers.

Yep, 1.4 billion of them is not enough. MUST have more!

Growth growth growth!

Not going to happen. "If China follows the current trend, Prof. Yi adds, its population will fall from 1.35 billion today to 450 million at the turn of the next century."

http://www.theglobeandmail.com/news/world/dementia-crisis-in-china-publi...

Every 7 years with an economic growth of 10% china's economy doubles, just where is the materials and energy coming from to maintain that on a finite planet at Peak oil?

Spot on. They cant. Somehow the media turn a "negative" for the financial system ..

http://abcnews.go.com/International/wireStory/chinas-coal-consumption-fa...

.. into a conscious decision to do good. The ugly truth isn't so simple..

https://www.nytimes.com/2017/01/15/world/asia/china-gansu-wind-farm.html...

"On the edge of the Gobi Desert, the Jiuquan Wind Power Base stands as a symbol of China’s quest to dominate the world’s renewable energy market. With more than 7,000 turbines ..

But these days, the windmills loom like scarecrows, idle and inert. .., have been shut off because of weak demand.

Inevitable that cut price disrupters will increasingly erode the privileged positions RE agents have held. Accounting and law are starting to head the same way, driven by technology and a new breed of young turks challenging the status quo. You can get conveyancing for half the price that you used to pay, by using an on line law firm.

Confimation bias. A good read and lesson for us all (except me of course..I'm always right)

http://www.newyorker.com/magazine/2017/02/27/why-facts-dont-change-our-m...

Here is a very interesting legal judgement.
http://www.radionz.co.nz/news/te-manu-korihi/325593/supreme-court-rules-...
I wonder if it will carry precedent to any other tribes? Didn't the original Ngai Tahu land sale (34 million acres) carry a similar provision.