Here's my summary of the key events overnight that affect New Zealand with news of even more trouble for HNA Group.
But first, this morning's dairy auction has brought another -3.4% fall in prices, with the WMP price down -2.7%. There has been some large falls for other products however; butter is down -5.9%, cheese down -4.2% and skim milk powder down -6.5%. In New Zealand dollars the overall price is off -2.5%. Prices are now back to where we saw them in March this year. We have now had four consecutive falls since September and it is beginning to add up - that is a -10% drop over that period. Farm gate returns are under pressure. (Although it may be worth noting that Fonterra's share of this drop may not be quite as bad as the overall result; according to their update released yesterday they suffered less at prior auctions than the overall results suggested. And new season milk volumes are higher than last year.)
And on the trade front, a trade war is about to break out between the US and China. The American are readying tough punitive measures against China. New Zealand is sure to be caught up in the development and may have to navigate very carefully. Multilateral trade deals will be more difficult and more important all at the same time. Some tough choices await.
And in the US, existing-home sales rose in October. That comes after a sharp jump in new home sales. The median existing-home price for all housing types in October was US$247,000, up +5.5% in the year. That is the 68th straight month of year-over-year gains. Total housing inventory for sale at the end of October slipped -3.2%, and is now -10% lower than a year ago. Unsold inventory is at a 3.9-month supply at the current sales pace, which is down from 4.4 months a year ago.
In China, the explosive growth of online loans in recent years has been worrying the Chinese government and regulators. It has been estimated that the total amount of unsecured short-term loans in 2017 is set to be six times more than in 2016, reaching NZ$220 bln.
In Hong Kong, HNA Group is reported to have 'requested' an extension of time to pay back a NZ$650 mln loan to three local banks. But Beijing has indicated it wants banks to be generally tougher on runaway debt growth by companies like HNA, so their chances are not good. HNA’s request comes ahead of a slew of repayment obligations and concerns about rising financing costs at the indebted airline-to-property conglomerate.
Girls are much better than boys at working together to solve problems, according a new OECD PISA survey. Some 125,000 15-year-olds in 52 countries and economies took part in the test, which analyses for the first time how well students work together as a group, their attitudes towards collaboration and the influence of factors such as gender, after-school activities and social background. Singapore and Japan top the list, but New Zealand students (at #6 overall) score higher than you would think compared to their science and math scores.
In New York, the UST 10yr yield is at 2.36%.
The price of crude oil is marginally higher today, now just above US$56.50 / barrel, while the Brent benchmark is at US$62.50
The price of gold is a little lower at US$1,282 oz.
However, the Kiwi dollar will start today a little higher. We are now at 68.3 US¢. And on the cross rates we are at 90.1 AU¢, and against the euro at 58.2 euro cents. That puts the TWI-5 index at 71.4.
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 ».