Here's my summary of the key events overnight that affect New Zealand with news of huge shifts coming in the energy market.
But first in China, factory output and retail sales growth both slowed in October although they are still expanding at a relatively high rate.
The German economy grew by +2.8% in Q3 2017 from a year ago, driven by strong investment. Italy said its growth rose to +1.8% year-on-year. But there were slowdowns in France, Spain and the Netherlands.
In a major assessment, the International Energy Agency is predicting "major upheaval" as the US becomes the world's largest oil and gas producer, while China overtakes it as the biggest oil consumer. It sees energy demand rising by +30% by 2040 driven by higher consumption in India. It also sees renewable energy sources gaining to supply 40% of the increase in demand. They see coal's share collapsing and oil's falling. Gas will hold its own, they say. Through all this, demand signals will be driven by China. And most of that renewables supply will originate in China. But the largest impact will be from energy efficiency - they say demand growth would be double the +30% predicted without the major strides being made in efficiency.
Standard & Poor's has declared Venezuela to be in "selective default". It's state-owned oil company has also defaulted. The country owes its creditors US$140 bln and now can't pay the interest due let alone the scheduled principal. Nor can it get any agreement to roll over its facilities.
In the US, their Food & Drug Administration has approved the world’s first digital drug, an antipsychotic pill that signals smartphones once it reaches the gut so doctors can track whether patients are taking their medication. It is the start of a pharmaceutical revolution.
In Australia, the latest survey of business confidence has it at record levels. The rises are across all industries including retail. According to the National Australia Bank's monthly business survey, business conditions rose Australia-wide by seven points to 21 points in October, a record high and up to four times the long run-average since the report began in 1997.
And staying in Australia, the ex-CEO of ANZ has apparently never heard of Godwin's Law. He is accusing their Government of whipping up mobs to turn on banks. "Hitler did it," he said.
In New York, the UST 10yr yield is at 2.38%, -2 bps lower than this time yesterday.
The price of crude oil is down -US$1.50 to just under US$55.50 / barrel, while the Brent benchmark is just over US$61.50.
The price of gold is up +US$7 at US$1,279 oz.
The Kiwi dollar's softer tone is continuing. We are now just under 68.8 US¢. And on the cross rates we are at 90.2 AU¢, and against the euro at 58.5 euro cents. That puts the TWI-5 index at 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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40 Comments
China’s Influence Game Down Under
https://www.the-american-interest.com/2017/11/13/chinas-influence-game/
Under this govt we may be headed in the same direction as Venezuela. Turns out Steven Joyce was right all along Labour do have an $11 billion hole!
https://i.stuff.co.nz/business/98870648/economists-see-government-debt-…
'may' (not have) being the key word. Robertson's budget even without NZFs reckless promises relied on heroic assumptions about future growth, increased recovery of corporate tax etc.
Labours capitulation to NZF spending demands means NZ will now be forced to borrow significantly more. Lefties can blame Peters but Ardern had a choice, as English demonstrated.
" Italy said its growth rose to +1.8% year-on-year." Looks good, but Italy was Greece before Greece was Greece, and still is by the look of it!
Quantitative easing by the ECB has worked wonders for Italy’s apparent fiscal health. It has mopped up half the gross supply of Italian debt, shaving at least 100 basis points off Rome’s borrowing costs. But it has not changed the country's underlying pathologies. “The end of QE poses a threat to Italy. As the ECB pulls back, it will have to find new marginal buyers of its sovereign bonds. This might not be easy,” said HSBC’s Europe Economist and a former trouble-shooter during the eurozone debt crisis for the UK Treasury.
The country must refinance debt worth 17pc of GDP next year – one of the highest ratios in the world – yet there are no obvious buyers to step into the breach.
http://www.telegraph.co.uk/business/2017/11/13/italy-risks-storm-qe-end…
A housing guru warns of danger!
https://www.lifetimeincome.co.nz/news/news/2017/november/martin-hawes-w…
According to Godwin you can mention Hitler if it is appropriate. I think Godwin is wrong though and he has missed an extremely important aspect about the whole concept of Hitler comparisons. People assume, incorrectly, that Godwin's Law means that whoever uses Hitler first loses the argument. Apparently this is not his 'law' (*see below) but I think it should be. The reason this corollary to the law would be a better law is that in this day and age an opponent is not allowed to counter the Hitler comparison by claiming that in this particular case Hitler was right (stirring up a mob against the banks may be arguably okay) thus it is unfair and should be considered invalid. You make a claim that cannot be reasonably countered in an age of political correctness.
As an online discussion grows longer, the probability of a comparison involving Hitler approaches 1.
Contrary to IEA's fake news, there a lot of links here on our energy trajectory... Oil being the master resource
https://srsroccoreport.com/u-s-shale-oil-production-update-financial-ca…
http://charleshughsmith.blogspot.co.nz/2017/11/mideast-turmoil-follow-o…
"Venezuela is just the first domino that's toppling. The Saudi leadership is trying to avoid being in the line of oil exporting dominoes that will fall in the 2018 global recession"
Its still a growth for ever model. Thing is being able to extract lithium or any other raw material, transport it, process it, finish it and transport it to point of use still takes and I think will always take prodigious amounts of fossil fuels.
So yeah sure some of us will have EVs but not that many. And when the panic comes I expect they'll be confiscated under emergency powers anyway.
Bitcoin is / was used on the dark net for illegal purchases however there have been several instances of people setting up escrow services and then disappearing with the money.....crims ripped off by more savvy crims....
http://nymag.com/selectall/2017/07/alphabay-exit-scam-may-be-the-bigges…
I agree Rick...check out the forward thinking Canadians..hope fully will be introduced to NZ soon.
The technology puts control of personal information directly in consumers' hands and uses blockchain, the digital ledger, to privately share details without going through a central system. That avoids creating "honeypots" of data that could tempt hackers, according to Wolfond.
"This is transformational for identity," Wolfond said in a phone interview. "It makes it easier for me to prove it's me and harder for the bad guy to masquerade as me."
https://www.stuff.co.nz/technology/digital-living/98893860/forget-iris-…
Nothing can explain it better than the original whitepaper. Here's the link:
https://bitcoin.org/bitcoin.pdf
The price of crude oil is down -US$1.50 to just under US$55.50 / barrel, while the Brent benchmark is just over US$61.50.
Hmmmm....
In other words, oil may be rising on upside risk potential, the Middle East at the forefront of those, but also the small possibility that “globally synchronized growth” does happen, that the Fed does get one thing right after the last ten years. If it was anything other than a slight probability, with actual evidence for it, WTI would be flirting with $90 or $100 because that’s how markets work.
So when the International Energy Agency (IEA) cuts its forecast for global crude demand growth, those downside risks are also factored in to the price holding it below $60. For the mainstream, however, it’s somehow a bit shocking: Read more
The marginal cost of new oil fields is in the $80~90US range and oil fields typically take 5~8 years to get on line. Assuming that is correct then it makes no business "sense" for oil companies to develop these fields while oil is $55 until they are needed ie the market price is $100+. Then the time lag bites and prices will rise, $148 caused a mega recession, the only Q is how far away is such an event.
IEA lives in lala land IMHO, it projects demand, supply will however be limited and that means longer term its rationed via a price model....
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