Here's my summary of the key events overnight that affect New Zealand, with news Australia is taking aim at the behaviour of corporate tax lawyers and accountants.
But first in the US, their Federal government ran a budget deficit in June amid higher government spending and steady revenues. Government spending exceeded revenues by US$90 bln last month. The deficit was about US$96 bln higher than it was in June 2016, when their government recorded a US$6 bln surplus. Not only are they going backwards on the budget now, new analysis shows that with the new Administration's plans, things will not improve materially either - if it can be implemented. The promised 'balanced budget' is nowhere in sight. And improved economic growth is not on the horizon either.
China's non-financial outbound direct investment dropped -45% to NZ$66 bln in the first half of the year from the same period a year earlier, according to state-run Xinhua News Agency, which cited data from the Ministry of Commerce. That drop is being reflected is the sudden halt of deals being done at HNA, one of its most prolific overseas acquirers. But the word is that deals already agreed - like their takeover of UDC via their wholly-owned TIP Trailer Services - will be completed
In data released early this morning, China's trade surplus came in unchanged for June from May. But there was a surprisingly strong rise in both imports and exports. Their export trade levels grew +11% from the same month a year ago, and imports were up +17% on the same basis. These are strong signals their economy is gaining momentum. A part of this is new data that suggests China will import more than 1 bln tonnes of iron ore this year.
In Australia, there are calls to rein in the activities of accountants and lawyers who give tax avoidance advice, and especially those who create the vehicles for their clients to do so. They have a Black Economy Taskforce, and the head of that said tax agents are either assisting their clients make fraudulent claims, or are blind to techniques and systems used in the black economy. Essentially they are questioning the ethical behaviour of corporate tax lawyers and tax accountants, claiming they regularly cross the line.
In New York, the UST 10yr yield has risen today and is now at 2.34%.
The price of oil has also risen and is now at just over US$46 a barrel, while the Brent benchmark is now just on US$48.50. The IEA says the oil market could stay oversupplied for longer than expected due to rising production and limited output cuts by some OPEC exporters, especially Nigeria and Libya. The IEA also says that demand for oil is rising.
The price of gold is basically unchanged at US$1,217/oz.
And the Kiwi dollar has recovered further and is now up ½ cent at 73.2 USc. On the cross rates we are at 94.7 AU¢, and at 64.2 euro cents. The TWI-5 index is back at 77 and close to a three month high.
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
2 Comments
"Tax agents". For a person in small business like myself it seems to work well for the NZ IRD. The accountant - my accountant, who is a tax agent won't let me away with anything. Usually I am suggesting some capital expenditure is really an expense. They laugh and shake their heads. Sometimes they get quite jolly about it.
The way it works is that as a tax agent they have a special relationship with IRD, online access is one example. They need to be trusted by the IRD, and won't do anything to lose their status. They listen to the IRD, not me, even if I am paying the accountant bills.
Clearly in the Aussie Corporate situation though the big corporates and their advisors there are no holds barred. These guys will do anything - anything.
Their export trade levels grew +11% from the same month a year ago, and imports were up +17% on the same basis. These are strong signals their economy is gaining momentum. A part of this is new data that suggests China will import more than 1 bln tonnes of iron ore this year.
Hmmmmm......
Graphic view of China's export history
It is still a ghost recovery. Read more
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.