90 seconds at 9 am: China to ban cryptocurrency trading

Bitcoin values plummet on news of Chinese ban; ECB prepares for monetary stimulus rollback; Trump gets his way on 'Muslim ban'; NZIER calls for bipartisan trade policy; UST 10yr yield at 2.12%; oil up, gold down; NZ$1 = 72.5 US¢, TWI-5 = 74.4

12th Sep 17, 8:07am by Jenée Tibshraeny

Here's my wrap of what’s happened around the world overnight.

Chinese authorities are dealing another blow to the US$150 billion cryptocurrency market. They’re reportedly planning to ban the trading of digital currencies like bitcoin and ether on domestic exchanges. The move comes after the central bank last week outlawed initial coin offerings. The first murmurs of China’s plans a few days ago saw the value of bitcoin plummet, yet it’s since picked up a little. An investor has told Bloomberg that as long as there are exchanges somewhere in the world, bitcoin is useful.

Policymakers are preparing the ground for a gradual roll-back of the European Central Bank’s aggressive monetary stimulus. After 2½ years of unprecedented money printing, the ECB is preparing to dial back its 2.3 trillion euros bond-buying program, which has helped boost growth in the euro zone, but is also blamed for creating real estate and financial bubbles. They say the economy is doing better and the conditions are in place for inflation to pick up and move steadily towards their target.

The US Supreme Court has granted the Trump administration’s request to temporarily lift restrictions on the President's travel ban, quashing an opportunity for tens of thousands of refugees to enter the country. The Court says the exemption will stay in place pending a response from the states involved in the suit.

The New Zealand Institute of Economic Research (NZIER) warns Labour’s proposed ban on foreign property investors isn’t permitted under the free trade agreements we have with China and Korea. It will also roadblock progress on the TPP. The organisation wants New Zealand to adopt a bipartisan trade policy, so businesses aren’t thrown off course each time an election rolls around.

Markets have rebounded, as the damage from Hurricane Irma is downgraded and North Korean tensions ease a little.

In New York, the UST 10yr yield has jumped 7 points overnight to 2.12%.

The price of crude oil is up to US$48 a barrel, while the Brent benchmark is just above US$54.

Safe-haven gold has dropped right off to US$1,329/oz.

The New Zealand dollar has fallen a little to 72.5 US cents. It’s up to 90.3 Australian cents and 60.6 euro cents. The TWI-5 index is up to 74.4.

If you'd like to catch up with all the changes from yesterday, we have an update here.

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20 Comments

by Stephen Hulme | 12th Sep 17, 9:06am 1505163966

USA needs to fix its massive global trade gaps if 'America First' is going to work

A sense of urgency is needed to fix a weak and unbalanced U.S. economy
Global commitments should be examined for excessive claims on domestic resources
Trade numbers show that the U.S. remains a widely open economy

by Stephen Hulme | 12th Sep 17, 9:28am 1505165284

China Sends One of the West’s Most Critical Materials Soaring

Tungsten prices have jumped 50 percent in the last two months

China is enforcing output quotas for the steel-hardening metal

A reminder to those that may wish to visit disruption near China's borders will pay significant collateral costs?

by Chris-M | 12th Sep 17, 9:47am 1505166429

Ban on foreign property investors

As things stand we have two trade agreements that permit foreigners the unfettered right to purchase NZ homes. National opened the flood gates to this through the Korean deal which they then had to extend to the Chinese. That explains a lot about what is going on the country at the moment.
You have to question what on earth the right to purchase property in a trading partners country has got to do with trade and question what the real motives are for wanting this. It suggest the totally different and wholly sinister objective of invasion by stealth. This is not too different from a army turning up on our shores and we need to urgently address the threat. If need be, trade deals need to be put aside because our sovereignty is under very serious threat. I would have thought that the opposition parties would have been shouting this from the roof tops leading up to the election and crucifying National over their treachery.

by RickStrauss | 12th Sep 17, 9:39am 1505165987

I'm sure it'll all be fine. We'll still have sovereignty.

I mean...this has happened before...and the local population suffered no loss of sovereignty over their land :-/

by Chris-M | 12th Sep 17, 9:49am 1505166553

I guess we shall have to forget teaching Maori as a second language and replace it with Mandarin

by dollar_bill | 12th Sep 17, 10:02am 1505167372

The One Nation, One Law for all people like Winston will be happy. Plus, we'll have inside access to the Tung Sten.

by meh | 12th Sep 17, 12:12pm 1505175137

Nice one Rick. This time round saves everyone a boat trip too.

We gave away sovereignty when we allowed banks to create money from debt.

by meh | 12th Sep 17, 12:16pm 1505175392

The result of foreign capital investment dogma without distinguishing between beneficial capital investment and non beneficial.

$$ in their eyes.

We can't get rich by selling property to fellow citizens at affordable prices.

by Ngrrk | 12th Sep 17, 9:46am 1505166373

How have we gotten ourselves into 'trade' agreements where we are unable to block the purchase of land? How is this even vaguely democratic?
As far as I understand Australia negotiated its position within its own free trade agreements with China and the TPP which did not include the inability to stop foreign ownership of land.

by RickStrauss | 12th Sep 17, 10:06am 1505167580

Would it surprise you to know that the same crack team with commercial nous that got hoodwinked by Sky City also made the deals that allowed NZ land to be scooped up at grand scale?

Well, the optimistic reading is that they were hoodwinked. The pessimistic reading is that they were sadly complicit.

by dollar_bill | 12th Sep 17, 10:11am 1505167870

Is there anything specific to Residential Houses? Surely there are loopholes and scaremongers are just mongerel-ing. We could always do a Trump and flick the FTA's the bird " Let's make New Zealand great for the first time"

by kiwimm | 12th Sep 17, 11:13am 1505171615

Given that China does not want its money disappearing offshore, surely they would agree to a variation on the FTA?

Otherwise, just change the OIO threshold so it applies to any purchase over $100k - no change to existing law and within the FTA.

by kiwimm | 12th Sep 17, 11:16am 1505171789

From http://www.linz.govt.nz/regulatory/overseas-investment

Overseas people must get consent through the Overseas Investment Office (OIO) before they can invest in New Zealand’s sensitive land, significant business assets and fishing quota.

Investors who need consent:

- generally aren’t New Zealand citizens or are people who don’t ordinarily live here
- are bodies, such as companies, trusts and joint ventures, with more than 25 per cent overseas ownership or control
- can include associates (including New Zealanders) of overseas investors.

Just deem all residential land sensitive and all investment property significant business assets

by two otherguys | 12th Sep 17, 11:22am 1505172159

Too easy

by gingerninja | 12th Sep 17, 10:10am 1505167811

No QE = No asset bubble.

I mean, central banks know that pensions are underfunded because of QE and low interest rates. And they know that there has to be a global deleveraging at some point. You can't steal from the future indefinitely. The question is... have they left it too late for there to be a healthy (more historically normal) deleveraging or are we about to see the mother of all economic disasters?

Everyone is indebted up to their eyeballs, most governments also, interest rate lowering has not had the desired effect and only asset class investments have seen any growth (although as history testifies, that growth can disappear as quickly as it arrived).

by ham n eggs | 12th Sep 17, 12:12pm 1505175174

There simply cant be a deleveraging .... growth (even fake growth) must be maintained at any cost.
So its to delay the "mother of all economic disasters".
But we cant hold off the inevitable - because money games dont trump physical laws.
https://medium.com/@GeeeBee/looking-down-the-barrel-the-tooth-fairy-the…

by Andy Rodgers | 12th Sep 17, 11:44am 1505173478

Surprised that there was no mention of the U.S. Debt going over $20 trillion today.
http://www.usdebtclock.org/

by Stephen Hulme | 12th Sep 17, 11:58am 1505174321

It was noted elsewhere.

by ham n eggs | 12th Sep 17, 12:14pm 1505175262

thats fine - they will pay it off down the track ... im sure its just a shortterm cashflow issue

by Foyle | 12th Sep 17, 3:48pm 1505188117

No doubt party members had shorted Bitcoins before this announcement was made public. Cryptocurrencies have been a major avenue for getting money out of china of late - to the extent that practically all the mining in the world was being done in China.