Here's my summary of the key events overnight that affect New Zealand, with news that August data out of China indicates slowing growth there.
Firstly however, American consumer prices rose faster, up +1.9% year-on-year in August, from a jump in the cost of petrol and rents, signs of firming inflation which is at a seven month high and which has boosted the probability of an interest rate increase from the Federal Reserve in December. However, that rise ate into wage gains. Meanwhile, the number of jobless claims fell after the previous two week jumps following major weather disruption in parts of some southern states.
In China, bitcoin exchange BTCChina said it would stop all trading at the end of this month, setting off a further slide in the value of the cryptocurrency that left it over -30% down from the record highs it hit earlier in the month.
And foreign direct investment into the Chinese rose +9.1% year on year to US$9.6 bln in August, according to data released overnight from their Ministry of Commerce. The is a big turnaround from earlier outflows and so now they are about all square. In the first eight months, FDI has dropped just -0.2% year on year to US$84.1 bln.
But there are some worrying signs that the usual areas of growth are slowing in China. Cement production is down sharply in China, down -3.7% in August from the same month a year ago. Meanwhile, retail sales rose +10.1% year on year, but that was the slowest gain this year. And industrial production rose +6.0%, extending a sharp 2017 slowing in growth. Tellingly, electricity production grew only +4.8% in August year on year, its slowest growth in a long time.
Oddly, a big real estate listing platform, Juwai.com, is apparently claiming that Chinese authorities are about to loosen their capital control rules to permit easier funding of overseas real estate by Chinese citizens. They may have inside information but there is no official confirmation of this. And the flow to New Zealand is unlikely to be large as market gains in China are still substantially positive whereas ours have evaporated. It is hard to see why Chinese investors would forsake those for our declines.
The OECD is reporting that G20 growth is rising, up to +3.6% pa in the second quarter of 2017.
In the UK, the Bank of England signaled it is preparing to raise interest rates within months to restrain accelerating inflation.
In Australia, employers have taken on an additional 325,000 staff in the past year, most of them full time workers, in the strongest burst of hiring since 2000.
In New York, the UST 10yr yield is still rising and is now at 2.20%.
The price of crude oil has risen just slightly today and is now just over US$49.50 a barrel, while the Brent benchmark is just over US$55.
The price of gold is down -US$4 at US$1,324/oz.
And the Kiwi dollar has also slipped, now just on 72.2 US. On the cross rates we are at 90.3 AU¢ however, and 60.5 euro cents. And the TWI-5 index is now at 74.2.
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 ».
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19 Comments
should not all MP's be checked by the SIS, we now have many that were not born or grew up here and we are voting them in to make laws for us. Russel norman comes to mind he was and still is an Australian citizen
i can only see one reason national picked him over the candidates they had to chose from and that was money and contacts that he can bring them, not votes as they already have that seat sown up.
"there are some worrying signs that the usual areas of growth are slowing in China. "
This nice simple 30 minute video outlines why growth is coming to an end.
https://www.youtube.com/watch?v=VOMWzjrRiBg&feature=youtu.be
Will have to wait and see but it seems unlikely that the Chinese govt would reverse its capital controls on buying foreign property that quickly. Surely it would have put it in place initially for more than just a currency control reason. There must have been a philosophical reason as well.
All the (Aussie) banks are exposed to millions in money laundering
"Chinese national Jun Yu Huang was an old hand at exploiting the banking system.... he had endured multiple stints in prison, including for setting up bank accounts with false IDs to commit fraud. Police documents reveal that for five months in early 2013, Huang paid a Chinese woman to ferry large amounts of cash in green Woolworths' bags to "various banks" in Sydney's CBD. Huang then took over, using false IDs to set up accounts at money remitting businesses which specialise in moving funds offshore." etc etc
http://www.afr.com/it-pro/its-not-just-cba-all-the-banks-are-exposed-to…
Despite being touted publicly by Justice Minister Michael Keenan as a major blow to organised crime, senior police described it as a pyrrhic win in a fight in which they have been overwhelmed by money launderers easy ability to evade banking controls.
If the AU police are losing control, imagine the situation in NZ where the police have never been in control
This is anecdotal, so doesn't carry much weight, an acquaintance works for a luxury car brand, their financial services branch are apparently doing a roaring trade with certain people taking out finance. Within a couple of weeks the entire loan is paid off in cash.
The latest CPI update despite another monthly “gift” in rising oil prices remains underneath 2%. Since the Fed prefers the more understated PCE Deflator as its standard, because the CPI so often exhibits a higher beta (more so why it does), the 2% target is in CPI terms more like 2.75% or 3%. Though gasoline prices were up 10.4% year-over-year in August, the index rose in total by only 1.9%. Read more
While we've yet to experience any large municipal pension failures, which is just a matter of 'when' rather than 'if', the small pension failures sprinkled across the state of California are starting to pile up. As The Sacremento Bee points out today, public workers in Trinity and Imperial counties are just the latest to have their pensions slashed by up to 90% as their cities admit what most of us have known for some time, namely that they're running ponzi schemes which simply don't have the funding required to payout the benefits they've promised. Read more
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