US job openings jump; SME optimism returns; OECD sees good outlook; China still gets strong real estate growth; Indonesia slipping; Aussie AML claims widen; UST 10yr yield at 2.28%; oil and gold unchanged; NZ$1 = 73.3 US¢, TWI-5 = 75.9

US job openings jump; SME optimism returns; OECD sees good outlook; China still gets strong real estate growth; Indonesia slipping; Aussie AML claims widen; UST 10yr yield at 2.28%; oil and gold unchanged; NZ$1 = 73.3 US¢, TWI-5 = 75.9

Here's my summary of the key events overnight that affect New Zealand, with news world economic growth is mostly rolling along nicely.

But first, American labour market job openings jumped to a record high in June, outpacing hiring, the latest indication that companies are having trouble finding qualified workers.

And that was reflected in a small business optimism survey for July which rose for the first time since January. The improvement was based on a pickup in consumer spending.

And the OECD is also reporting good conditions among its seven major members. They also survey four major non-members. They are saying that growth momentum is being maintained in most countries, improving in China, and declining in Russia.

In China, Poly Real Estate Group, one of their largest real estate companies, reported strong sales growth in July despite tight regulation of the property sector. They said its sales rose +36% year on year to NZ$3.3 bln in July.

And around the world, despots seem to be gaining the upper hand against their people. Venezuela has killed off its democracy, in South Africa the ruling party has saved the country's president from any investigation, and in Malaysia the government is moving against a critic. (But at least in Malaysia, there is some pushback). It is open season now that the US has withdrawn from international engagement in support of democracy.

In Indonesia, growth in the second quarter came in a disappointing +5%. It needs its economy to grow at a 7% rate to provide employment and hold living standards for its growing 250 mln population, the world's fifth largest, and it is South East Asia's largest economy.

In Australia, the money laundering probe that is rocking the CBA is widening. It is being reported that half of the money that washed though the CBA also went through Westpac and the ANZ. As fast as CBA closed accounts in 2013 to deal with the issue, they were just shifted to these other banks. And there's more; on this side of the ditch, the claim is that ASB used the same systems as its parent and did not have the necessary limits in place to not be equally vulnerable. At this time, no-one is suggesting the loophole was exploited in the ASB system, but that is what is being investigated.

In New York, the UST 10yr yield is a little higher today at 2.28%.

The price of oil has is basically unchanged and now just under US$49.50 a barrel, while the Brent benchmark is now just under US$52.50.

The price of gold is also unchanged at US$1,257/oz.

But the Kiwi dollar will start today down again and now at 73.3 USc. On the cross rates we are lower as well at 92.6 AU¢, and at 62.3 euro cents. As a result the TWI-5 index is down to 75.9 which is the lowest it has been in over two months.

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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I recall talking to an employee of the CBA/ASB anti-laundering unit last year and he told me the laundering situation was rife throughout Australasia, particularly Australia.

"despots seem to be gaining the upper hand against their people"
" It is open season now that the US has withdrawn from international engagement in support of democracy."
Sad

Many would suggest that the USA has never engaged in the support of Democracy, just engaged in what was best for US interests. A good read on the recent history of Venezuela, for instance, ( going back to the regimes installed by the US administration in the 1950's in the name of controlling the flow of oil) gives an opposing view to that which we see on the TV every night....

Indeed, after seeing what has happened with Afghanistan, Iraq, Libya, Syria and Ukraine I'd rather they stopped supporting democracy.
Also we have the example of China, patently not a democracy, yet it was greatly assisted by the US to bolster its war with the Soviets. Why hasn't the Chinese model been applied in the Philippines or Indonesia seeing as it is so successful?

Quite right. The US is interested in resources ... democracy is the spin.

Essentially they are interested in engineering a situation where US owned corporates raid the REAL resources in exchange for US$ ... so that the US can live large off printed $$.
The US military is the strong arm of corporate america.

I agree that the major economic powers have self interest at heart - clearly shown to be the case with the European colonial powers.
However, there can also be positive benefits of this.
The demise of USSR influence and a pull back of USA international influence in the early 1990s is an example of this. The demise of the USSR led to "explosive" (pun not intended) growth in the arms trade and political unrest especially in "despot" African nations in which the USA/UN took little active interest. The genocide in Rwanda is but just one consequence of this following the removal of the Belgian colonial power and the arming of the Hutu who were able to run amuck unchecked.
Trump's pull back as an influence in international peace keeping - as well as his threats to North Korea - is just making the world a much more unsafe place for everyone including you and I.

@ham n eggs. Quite right indeed.
Remember that bumper-sticker I once before mentioned.....

It reads:

You better be nice to America or we will bring democracy to your country

Score - Money Launderers 100 - Austrac 10 - RBNZ 0

Anyone who thinks money-laundering "hasn't been" happening in NZ is deluded
Scandals galore in the Oz banks which seemingly aren't scandals in NZ
If the scams worked so well for the Oz parents you think they didn't do the same here
Where do you think CBA CEO Ian Narev got his training wheels from
Where did ex CBA Chairman Ralph Norris get his stripes

And the OECD is also reporting good conditions among its seven major members. They also survey four major non-members. They are saying that growth momentum is being maintained in most countries, improving in China, and declining in Russia. [my emphasis]

Hmmmm.... Re China;

Total exports were, as of now, 8% less than those in July 2014 three years ago. That is not expansion in any meaningful sense of the word, a distinction that gets lost in the focus on the plus sign at the expense of the degree of it in relation to context.

This is more than just a historical oddity. It tells us what to expect in the near future and how that could further evolve according to a more reasonable analysis of the global economic trend. The lack of momentum as well as the lack of success in inflation are together indications of the same thing. The trade figures tell us of a persistent economic drag that won’t go away even after heavy cyclical forces on the upturn should have been evident long before now.

The inflation piece merely indicates what it is that is causing the drag. This is all textbook monetary tightness, which unfortunately has been corrupted in mainstream, conventional terms. The popular imagination assigns October 1929 to March 1933 as the only possible result of such tightness, therefore if the global economy and every single market is not all at once experiencing a great crash a monetary issue is immediately overlooked and dismissed.

Milton Friedman, the presumed father of monetarism, described how this was a false assumption in the course of destroying (as the kids say) the idea that low rates are somehow stimulus. And this was 1967, meaning he was making a prediction that within just a few more years was empirically settled for all time (or so it should have been):

As an empirical matter, low interest rates are a sign that monetary policy has been tight-in the sense that the quantity of money has grown slowly; high interest rates are a sign that monetary policy has been easy-in the sense that the quantity of money has grown rapidly. The broadest facts of experience run in precisely the opposite direction from that which the financial community and academic economists have all generally taken for granted.

We have today around the world all the same signs; low interest rates, low inflation rates relative to specified targets, and economic growth that has been overall seriously deficient as well as more recently unable to break out of that state despite what otherwise seems to be everything going for it to do so. Until the issue of monetary tightness is resolved not for the US or dollars, but for “dollars” meaning global money, there should be no expectation for a change in economic conditions, even if we don’t know exactly how far from healthy they may be. Read more

In August 2014, to some mild fanfare, the Federal Reserve debuted its Labor Market Conditions Index (LMCI). The justification for such a statistic was its broad reach; as a factor model, it would seek to isolate outliers in favor (meaning greater weight) of those among its nineteen inputs that corroborated each other.

Within a few months, however, the LMCI began to suggest serious weakness that didn’t comport with the dominant everything-is-awesome narrative. Janet Yellen preferred the hope expressed in the unemployment rate, which by the middle of 2015 became that outlier statistics and therefore surely (we don’t know for sure, the guts of the LMCI have to my knowledge never been released) and increasingly isolated from the rest of the overall outputted number.

Having accepted that the LMCI was actually correct in suggesting looming weakness, as GDP following several revisions now corroborates in no uncertain fashion with a near-recession starting in Q4 2015, the statistic’s real transgression has been in the aftermath. Despite a now ridiculously low unemployment rate, having been low for nearly two years, the LMCI has failed to accelerate off the downturn. Its reward for this treachery?

As of August 3, 2017, updates of the labor market conditions index (LMCI) have been discontinued; the July 7, 2017 vintage is the final estimate from this model. We decided to stop updating the LMCI because we believe it no longer provides a good summary of changes in U.S. labor market conditions. Specifically, model estimates turned out to be more sensitive to the detrending procedure than we had expected, the measurement of some indicators in recent years has changed in ways that significantly degraded their signal content, and including average hourly earnings as an indicator did not provide a meaningful link between labor market conditions and wage growth.

Sometimes it is truly hard to defend the stupid from accusations of nefariousness. I have to believe this official reference to “detrending” was as described above; the unemployment rate is increasingly alone in its indication for robust growth, therefore as a factor model it would be given much less weight so long as nothing else agrees with it (such as wages and labor costs). It really does appear as if the Fed wants to believe in the unemployment rate no matter what. Read more

The Federal Reserve is not a cabal of evil geniuses dedicated to bringing down the global order so as to create a new one with its Wall Street masters in complete control. They are instead a clown-show, a remedial class of halfwits and empty suits opining on topics they would in a just society be banished from entirely.

I like it, bang on!!