Wall Street up ahead of 'tax reform'; China signals extended AML action; China's 'social credit score' draws in foreign companies; Genworth downgraded; dairy-free milk; UST 10yr yield at 2.19%; oil up, gold unchanged; NZ$1 = 72.4 US¢, TWI-5 = 74.6

Here's my summary of the key events overnight that affect New Zealand, with news that the Jian Yang scandal may be just a small local part of a wider Chinese strategy.

But first on Wall Street, the Dow is at another record high, but broader market indexes are not making the same moves. American market eyes are on the imminent release of their tax reform proposals.

China is signaling that it will be extending its anti- money laundering regulation to "real estate agencies and precious metal and jewelry sales companies".

And the country's regulators are moving to ensure there is no embarrassing financial event during their upcoming Party Congress in October. They have banned finance and brokerage CEOs from taking holidays during the period and ordered them to ensure 'stable prices' during the period. This is market control at its most shameless.

And China is moving to build a 'social credit score', a system it hopes to be in place by 2020. Basically it will use big data to rate each citizen's level of 'trust'. It could be positively Orwellian. And that big data will largely come from a requirement companies had over their 'big data', and that will include data from foreign companies operating in China. Perhaps none of this is 'new', but the extending of the data transfer to foreign companies for the right for them to operate in the country is only now being realised. Why should we care? Well some think New Zealand may be a testing ground for exploiting a wider, international effort.

In Australia, LMI insurer Genworth has been downgraded by ratings agency Moody's by one notch on "high and rising level of tail risks embedded in the Australian housing market and reduced demand for domestic lenders' mortgage insurance products".

In the US, a new dairy-free milk product based on yellow peas is making a splash, one of the first plant-based milk alternatives that can compete directly with mainstream milk. It has cost advantages over dairy milk too. Silicon Valley venture capital money is behind the drive.

In New York, the UST 10yr yield is still rising and is now at 2.19%.

The price of crude oil has also risen by more than US$1 and is now just over US$49 a barrel, while the Brent benchmark is just over US$55. There is a tightening of supply and a small rise in demand, both driven by recent US weather events.

The price of gold is virtually unchanged on the day at US$1,328/oz.

And the Kiwi dollar has fallen ½c on a stronger greenback, now just on 72.4 US. On the cross rates we are still at 90.6 AU¢ however, and 60.9 euro cents. And the TWI-5 index is now at 74.6.

If you want to catch up with all the changes on 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 »
The 'US$' chart will be drawn here.
Loading...
Daily benchmark rate
Source: RBNZ
The 'AU$' chart will be drawn here.
Loading...
Daily benchmark rate
Source: RBNZ
The 'TWI' chart will be drawn here.
Loading...
Daily benchmark rate
Source: RBNZ
The '¥en' chart will be drawn here.
Loading...
Daily benchmark rate
Source: RBNZ
The '¥uan' chart will be drawn here.
Loading...
Daily benchmark rate
Source: RBNZ
The '€uro' chart will be drawn here.
Loading...
Daily benchmark rate
Source: RBNZ
The 'GBP' chart will be drawn here.
Loading...
Daily benchmark rate
Source: RBNZ
The 'Bitcoin' chart will be drawn here.
Loading...
USD 
NZD
End of day NY time
Source: CoinDesk

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment or click on the "Register" link below a 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.

16 Comments

Nearly half of Australia's 'wealthy' households are "over-indebted" – carrying $924,000 in average property debt .....Analysis by the bureau of statistics found that 29 per cent of households – some 1.9 million families – were over-indebted in 2015-16, based on OECD debt-to-income or debt-to-asset measures.....a doubling of household debt since 2003-04 has increased the vulnerability of households to sudden shocks, such as rising unemployment or falling incomes..... debt has dramatically outpaced income and asset growth since 2003-04..... younger borrowers were particularly prone to being over-indebted, (AFR)

Is it any wonder Genworth has been downgraded!

Milk alternatives are every where. My children like Oat milk best with their coffee in the am, farmers daughters going green. Lots of competition in what used to be thought of as the only product in town and these new products can use environmental degradation as a marketing tool.

I have a friend in the UK who employs over 1200 people, he wants out due to his fears of disruptive technology wiping him out, literally overnight. He said bricks and mortar are not what they used to be.

Electric cars have become mainstream in the last few years, I now have friends with full electric cars and others who want them, just need to sort out charging when you live on a busy London street. One just purchased a new Renault full electric , loves it, quiet, cheap to run at under 4p a mile and makes her feel like she is making the world a better place.

Change is hard when you have invested for a future, which suddenly doesn't look anything like the program said it would.

AndrewJ I always enjoy your perspective. Can you comment on the move back to butter from margarine etc? How does this fit with your dairy perspective? Also don't you think emerging economies will support milk powder due to cost and distribution factors. There are potential health concerns with legumes also. See https://paleoleap.com/beans-and-legumes/ . Don't want to start a Paleo conversation here although I did follow some of its principles for a while and found it very good so could be something in it.

I have been a fan of Gary Taubes for a while now. Milk powder is interesting, I see the EU has opened up it's intervention program again, so more going into stock and even less coming out. Butter in the UK is a lot more expensive than a year ago, they say due to a rise in home baking but it's still a lot cheaper than here.

https://www.amazon.co.uk/Case-Against-Sugar-Gary-Taubes/dp/1846276373/re...

"makes her feel like she is making the world a better place."

In that Electric cars are the ultimate delusion.

But if overlook the need for plastic, battery manufacture and disposal, steel chassis, fossil fuel powered industry in manufacture & distribution, installation of totally new infrastructure, tar for roading, tyres, a reason to joyride (a job? funded by fosil fuel), subsidies off fossil fuels for retailers... then yes, they are quiet.

National and other conservatives are only in power thanks to the over 75's. Give it 5- 10 years and nothing is going to be the same in the West.

So as they grow older, think of their children and grandchildren's future, gain more life experience etc the Left voters gravitate to the Right? There's a Freudian slip if I ever read one. My 96 year old grandfather was still extoling the virtues of Communism when he passed. He must have missed the memo.

Everyone alive today below 37 years old has never known any other way beyond wealth inequality, corporate greed, deregulated employment, sluggish growth and social austerity. By contrast, one of the things that keeps the purist concept of socialism alive.... is death. Every thirty years or so, enough voters with traumatic memories of the last time it gained power have died, thus allowing a new generation of ideologues to become the majority....

https://hat4uk.wordpress.com/2017/09/11/freeing-britain-a-matter-of-birt...

More quality immigration...

http://www.radionz.co.nz/news/national/339373/migrant-worker-describes-m...

Apparently our Labour inspectorate is adequately staffed though...

Very sad story

Agreed, sad story. Both parties are complicit though. Immigrant knowingly cheats the system and conspires with an employer to gain illicit residency. The employer should be investigated and the immigrant should be held accountable for his actions.

I see that the Commerce Commission is lamenting the rise in complaints about microlenders and cash -pay-day lenders .

Its time we did something to protect the vulnerable from these predator business practices who prey on uneducated or naive folk in the lower income deciles .

Its one of the markets that requires regulation because the present set-up is open to abuse and sharp practice.

We need a Usury Act that limits interest to no more than the sum borrowed AND we need reckless lending laws to prevent reckless lenders, who dont do an affordabality analysis and fully expect borrowers to default, from taking defaulters to court .

Its not hard to do , there are many countries with Consumer -Lending legislation .

Seeing as how Winnie the Wizened is all for taking GST off of 'basic food', here are a few examples from the Big Dry Red Country across the ditch about how blindingly simple it really is..../sarc

Simple definition of 'food' https://www.ato.gov.au/Business/GST/In-detail/Your-industry/Food/GST-and...

Simple definition of food along the food chain: https://www.ato.gov.au/Business/GST/In-detail/Your-industry/Food/GST-and...

Simple definition of GST-free food https://www.ato.gov.au/Business/GST/In-detail/Your-industry/Food/GST-and...

Simple definition of food-which-isn't-food https://www.ato.gov.au/Business/GST/In-detail/Your-industry/Food/GST-and...

Simple definition of how to see if your 'food' is taxable https://www.ato.gov.au/Business/GST/In-detail/Your-industry/Food/GST-and...

Simple definition of your business accounting needs if you deal in food https://www.ato.gov.au/business/gst/accounting-for-gst-in-your-business/...

See? It's Simple!

Looks reasonable to me. In short, processed and prepared foods are taxable, basic food and food ingredients are not taxable. Not so hard, unless one is intentionally obtuse.

Or in the food business in Oz....try the Simplified Accounting Methods (SAM's) here....https://www.ato.gov.au/Business/GST/In-detail/Your-industry/Food/GST-for...

Simple!

One of the few mainstream academic economists to have predicted the 2008 financial crisis, warned that the present situation in markets "looks to me to be very similar to the way it looked in 2008.... he warned investors not to rely on central banks to ride to the rescue. "The fundamental problem is that we do not have a liquidity problem that central banks can solve"... the underlying problem is too much debt....
http://www.afr.com/opinion/columnists/financial-markets-look-very-simila...