90 seconds at 9 am: Shock Aussie tax fraud

Improving US data; NAFTA renegotiation triggered; China house price surge ends; AU jobless rate slips, hours worked down; ATO scandal shock; UST 10yr yield 2.23%; oil firms, gold falls; NZ$1 = 68.9 US¢, TWI-5 = 73.4

19th May 17, 7:30am by David Chaston

Here's my summary of the key events from overnight that affect New Zealand, with news of a serious shock to the integrity of the Australian Tax Office.

But first, markets have shrugged off yesterday's losses and are back in positive territory today. Some good American data releases are spurring the change of heart. Jobless claims are near 30 year lows, and a key regional manufacturing gauge has come in much more positive than was expected.

Overnight, the US has formally signaled that it wants to renegotiate the North American Free Trade agreement with Canada and Mexico.

In China, the steam looks like it is going out of their real estate markets - at least in the tier one markets which account for about 40% of sales. Prices were essentiall flat in April in those markets. And growth in medium- and long-term lending to households slowed for the second month in a row in April after a massive ramp up over the past 18 months. Steel and cement output growth both rose in April, defying the overall trend of slower industrial growth, although energy output showed little change.

Across the ditch, Australia's unemployment rate came in better than markets were expecting. The number of people employed increased by +37,400 in April 2017, but more impressively, over the full year that increase was more than +195,000. The jobless rate fell to 5.7%, and the participation rate remained steady at 65%. There was one curious aspect to the data however; those in full-time work are working less hours, one million less per month nationwide. It might be a key weakness.

And staying in Australia, one of their very top tax official is to be charged in relation to a AU$160 mln fraud case - involving tax rorts. It has been described as one of the biggest white collar fraud investigations in Australian history. The tax community is 'shocked' at the charges, and there are suggestions "wider stains" may be revealed.

In New York, the UST 10yr yield has recovered a little today to 2.23% but is ending the week sharply lower.

The price of oil is marginally firmer today. The US crude benchmark is now just under US$49.50 a barrel, while the Brent benchmark is just under US$52.50.

Gold has dropped today by US$12 to US$1,246/oz.

The Kiwi dollar is lower today and is now at 68.9 USc. On the cross rates the Kiwi is at 92.9 AU¢, and 62.2 euro cents. The TWI-5 index is at 73.4.

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 ».

Daily exchange rates

Select chart tabs

Source: RBNZ

Source: CoinDesk

We welcome your comments below. If you are not already registered, please register to comment

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

12 Comments

by Peri | 19th May 17, 8:46am 1495140376

"Shock Aussie Tax Fraud", seems an oxymoron to me.

by Gummy Bear Hero | 19th May 17, 10:37am 1495147076

... it's only a shock that someone finally got caught ...

But give them their dues ... it's more classy to go down , having duped the tax man out of $A 160 million , than to go down having beaten an Indian shop owner senseless and nicked $ 200 and some cigarettes ... ahem ... the Kiwi way ...

by Henry_Tull | 19th May 17, 11:36am 1495150564

Give them their dues, then get a half cash back down in the carpark
take classes for that?

In hidden camera footage, obtained by the ABC, a staff member inside a 7-Eleven store can be seen withdrawing large amounts of cash before walking through a secure door and handing the money to a man believed to be her boss.

The woman, who spoke on the condition of anonymity, said her boss claims they can’t afford to pay “the government rate” and needed workers to “give some of the money back”.

by Stephen Hulme | 19th May 17, 8:57am 1495141055

The jobless rate fell to 5.7%, and the participation rate remained steady at 65%. There was one curious aspect to the data however; those in full-time work are working less hours, one million less per month nationwide. It might be a key weakness.

Certainly. A definite precursor to falling Aussie inflation rates, just as the US has encountered. View accelerating graphic evidence

What did a state implemented collapse of official interest rates really achieve?

I guess the RBA will not be far behind the Fed in it's endeavour to normalise rates after a catastrophic failure to achieve any of it's previously stated goals.

The markets "wanted" the Fed exit to be the one that was described three years earlier, where "overheating" was a more common term slipped consciously into policymaker speeches and media presentations. But the Fed only disappointed, with Janet Yellen at her press conference forced by less fawning questioning to admit, complete with the deer-in-headlights stare only she can give, that none of the models foresaw any uptick in growth whatsoever. Worse, the FOMC statement confirmed that though the CPI was nearly 3% at that moment, it was indeed going to be just a temporary artifact of oil price base effects, and that officially inflation was not expected to return to "normal" until after 2019. Major, major buzzkill.

The May 2-3 FOMC meeting presented policymakers with another chance to if not dazzle with optimism then at least undo some of the damage to sentiment. They disappointed all over again, thus perhaps further confirming what we have said all along - the Fed "raises rates" not because anything is actually improving but rather because things remain so bad there is nothing left for monetary policy (as it is currently construed) to do. Read more

by Roger Witherspoon | 19th May 17, 9:22am 1495142556

I read somewhere that it usually pays to be long stupidity...

by bw | 19th May 17, 9:46am 1495144006

...also known as 'the trend, is your friend'.

by dictator | 19th May 17, 9:26am 1495142785

There's a lot of money that's originating from the Fed that's going into investments/trades outside of the US. Any benefits from printing money have long since gone.

by murray86 | 19th May 17, 10:36am 1495147015

Seriously did Janet Yellen actually admit that nothing the Fed was doing would actually stimulate growth?("...none of the models foresaw any uptick in growth whatsoever.") The question must be asked, what then were they trying to achieve?

by Yvil | 19th May 17, 9:38am 1495143514

TradeMe's property price index to April 2017 below

https://property.trademe.co.nz/market-insights/property-price-index/hou…

by Groen_mamba | 19th May 17, 10:30am 1495146652

Thanks Yvil.

This shows an ever widening gap in the Auckland market (sales -31%) between seller expectation +9.7% yoy, and actual settlements +3% yoy in April. I believe the actual difference in April is much lager due to REINZ settlements data lagging.

by viking60 | 19th May 17, 11:20am 1495149657

Maybe one of the banks employees working under cover, to pay the first years premium on the levy that the banks are liable for. We all know what those Aussies are like, 160 million wow poor kangaroo.

by Alter Ego | 20th May 17, 6:23pm 1495261403

Aussie Banks have been stealing for years....Billions not millions.