Here's my summary of the key events overnight that affect New Zealand with news an Aussie banking Royal Commission may be closer than expected.
But first, US consumer spending jumped markedly in September, rising +1.0% from August, +0.6% in real terms. That is the fastest rise in over eight years. On an annual basis, PCE, the Feds preferred measure of inflation, was up +1.6% which is below their targeted +2%.
The latest regional Fed survey, this time from the oil patch, has seen a reversal of sentiment, with the Dallas Fed saying its region is now surprisingly bullish.
Canada is expressing concerns about "troubling" US negotiating proposals in their NAFTA renegotiations. They are preparing "for anything". Basically, no-one seems to know what the US really wants - and that probably includes the US negotiators.
And across the Atlantic, there may be existential threats to the EU in Spain, but actually everyone else seems increasingly optimistic, consumers especially. They haven't been this bullish since just before the GFC.
London-based banking giant HSBC has said its huge restructuring drive is finally bearing fruit. The behemoth has seen its profit rise in recent months thanks first and foremost to its brisk Asia business. Overnight it reported a US$14.9 bln profit for the nine months to September, a +41% jump.
And in China, their big four SOE banks posted double-digit increases in lending income in the third quarter, validating some of the earnings optimism that has fueled a rally in their shares this year. Their gains have come at the expense of smaller rivals, and under the umbrella of regulatory restrictions on competitors.
In Australia, it looks like the Government is about to lose support from three of its own members who will cross the floor to vote for the ALP Banking Royal Commission.
In New York, the UST 10yr yield has slipped further and is now down to 2.37%. Across the Pacific, Chinese Govt bond yields jumped unexpectedly with their 10 yr now up to 3.89% - and their 5 year is leaped even higher, now at 3.94%. Fear of new market interventions seems to be driving the sharp rises in yields. These changes came as Asian stock markets had a broad sell-off yesterday.
The price of crude oil is basically unchanged today and is still just over US$54 / barrel, while the Brent benchmark is just over US$60.50.
The price of gold is up +US$7 at US$1,274 oz.
The Kiwi dollar is basically unchanged from this time yesterday but there is a whiff of softness about. We are at 68.7 US¢. And on the cross rates we are at 89.5 AU¢, and against the euro at 59.1 euro cents. That puts the TWI-5 index just under 71.9.
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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That article introduces an important idea, that of powerlessness. People are unlikely to be innovative when they feel that way. But down the track the real risk is that they will follow someone that promises to empower them. Hence the rise in more extreme politics around the world.
Investors cheering stocks to all-time highs on another tide of strong earnings might be somewhat disturbed to discover the extent to which American corporations are emphasizing numbers that don’t follow accounting standards.
That’s a warning from Michael Arone, chief investment strategist at State Street Global Advisors, who noted in a paper this past week that the difference between earnings as reported under Generally Accepted Accounting Principles and nonstandard, or non-GAAP, earnings remains relatively wide compared with recent history ( see chart below). Read more
Just in case:
Affine models of the term structure of interest rates are a popular tool for the analysis of bond pricing. The models typically start with three assumptions: (1) the pricing kernel is exponentially affine in the shocks that drive the economy, (2) prices of risk are affine in the state variables, and (3) innovations to state variables and log yield observation errors are conditionally Gaussian.
Unlike Economics, markets aren’t bound to ideology, which in practice hardens these assumptions into philosophical anchors that twist and pervert what would otherwise be straightforward meaning. Today’s report on inflation in the form of the PCE Deflator is yet another reminder of this fact.
For the month of September 2017, this version of consumer price inflation rose 1.63% year-over-year, the 63rd month out of the last 65 that hasn’t been at or above 2%. Rather, inflation in what cannot be classified as transitory tends to remain low and underneath the explicit monetary policy target defining a sustained 2% PCE Deflator as “price stability.” Read more
Hence, 10 year UST bond prices reflect a meager 2.37% yield to represent reality - a defined liquidity preference in an indifferent world of muted growth opportunities.
PM to visit Oz;
Prime Minister to visit Australia
Prime Minister Jacinda Ardern will travel to Sydney on Sunday to meet with Australian Prime Minister, Hon Malcolm Turnbull.
“The Trans-Tasman relationship is New Zealand’s most important. Our economies are among the most integrated in the world with strong trade, people and investment flows. And we are stronger together on the international stage,” says Jacinda Ardern.
“I’m looking forward to this early opportunity to meet with Prime Minister Turnbull and to establishing a close working relationship. As well as taking stock of the Trans-Tasman relationship, this will be an opportunity to discuss the upcoming APEC and East Asia Summits, as well as other international issues.”
The Prime Minister will return to New Zealand later on Sunday.
Even the Herald editorial is making noise about the inaction to a possible spy amongst our MPs.
http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11938708
As the Herald states - "Just last month the High Court ruled a man who failed to declare criminal convictions when applying years earlier for residence should be stripped of citizenship. "
The billshitter can't seem to remember why he was removed from critical committees.......
http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11938766
Put all this together with the police pulling out of the Barclay investigation yesterday as they don't deal in "innuendo and hearsay" even when they have a statement from the chief billshitter, the PM of the day that" the idiot done it", Goodfellow confirmed it and the young tyro virtually confirmed it in what was one of his last appearances at the Beehive 3 months before he left paid public life (for good I hope) and I really don't think you have "one of the least corruptible countries in the world"
Not a good look for the police,National, possibly even Ardern if nothing is done and lastly poor ol NZ.
Least corruptible - bullshit!
The PM Bill English said he was aware of the recordings.
NZ Police: "Yeah, nah, not enough evidence sorry!"
Some highlights from [Newsroom Article]:
An investigation by Newsroom.co.nz reported on Tuesday morning that Barclay's former electorate agent Glenys Dickson was paid hush money after learning of a dictaphone left running in the Gore office and then engaging an employment lawyer.
Yet according to the NZ Police in [this article],
Chambers said the re-investigation included looking at suggestions that there had been "an element of coercion in relation to certain key witnesses". "We have found nothing to substantiate these suggestions."
And yet:
Then-Prime Minister John Key’s parliamentary budget was used to pay part of a confidential settlement to Dickson, in an attempt to avoid “potential legal action”.
How did this never happen, when it was confirmed the payout came from the PM's discetionary budget, taxpayer dollars?
And on it goes:
Police investigating the case received a range of evidence, including a text exchange from English to electorate chair Stuart Davie which said Barclay had recorded Dickson.
"Not enough evidence." - NZ police.
In the texts, English who was deputy Prime Minister at the time, said Barclay recorded Dickson by leaving a dictaphone running in her office
"Not enough evidence." - NZ police.
The texts also reveal Dickson’s “settlement was larger than normal because of the privacy breach” and had to be “part paid from the Prime Minister’s budget to avoid potential legal action”.
"No evidence of coercion." - NZ police.
Interestingly, it seems likely the recordings included women talking about health issues:
Dickson was referring to female constituents she believed had been recorded when they consulted her about sensitive health and personal issues.
Dickson said third parties had relayed information back to her that could have only come from a secret recording made in her office.
And when Dickson approached the National party:
“I was told if I didn’t withdraw the police complaint I could potentially take down the National Party, and there was an [implication] that if National didn’t have Barclay in Parliament they were one short to pass legislation.”
"No evidence of coercion." - NZ police.
No evidence of integrity, more like.
Next question: did National then pass taxpayer money to a private citizen without reason? Those who wanted Turei gone (quite rightly), what do you think?
Well put it all together and make a formal complaint to the IPCA. Also CC a copy of your complain to various media outlets so the IPCA know they have to act.
Or another pathway open to you as a taxpayer is a complaint of fraud where taxpayer money has been passed to a private citizen without cause.
Shine the light on it. Make it too difficult for the Police so that their jobs are on the line if they don't act.
From now on every time I see a Rugby player visiting a hospital I'll be asking myself...how much are they being paid to look like they care???
"Waikato Hospital paid the Chiefs rugby franchise $50,000 after a contract bungle created by an executive member and only narrowly avoided being liable for $200,000"
https://www.stuff.co.nz/national/health/96702302/waikato-hospital-forme…
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