Here's my summary of the key events over the weekend that affect New Zealand with news that jobs, growth and trade are all expanding.
American employment grew at a healthy clip in November with +228,000 new jobs created. And for the first time on record, new jobs have been created in 86 straight months. Pay is rising too, +2.5% and far faster than inflation. Employers are now reporting wage cost pressure is their number one cost concern. The US Fed is all but certain to raise interest rates at its meeting on Thursday and has signaled it will do so three times in 2018 as well. But if inflation starts to pick up, they could be forced to act more quickly, with unpredictable effects on financial markets and the economy. And don't forget, their naive tax cuts will deliver fiscal stimulus right at a time they actually don't need it, but accentuating the inflationary pressure. That mis-timing will cost them (and us?) later when the cycle inevitably turns down.
China also reported very strong export and import trade data for November. Imports were up +17.7% and exports jumped +12.3% from the same month a year ago. These gains come as the pace of world trade rises, but the size of the gains has surprised many analysts.
Also surprising analysts was the revision higher in Japan of their Q3 growth rate. It was +2.5% pa and that nearly matched the surprisingly strong +2.6% of the second quarter. Japan has been expanding far more vigorously recently that we have come to expect over the past few decades. The one worry though is that this growth is powered by business investment and not private consumption.
Not all the weekend data was positive. Germany reported higher October imports and lower exports and a smaller trade surplus. Actually, I suppose this is positive for Germany's trade partners.
Back in China, the world's largest automated container terminal started its final trials over the weekend. This is a key area where the robotisation of jobs will hit home. In fact, contract extension talks in the US for waterfront workers have hit a nasty snag over the issue with union negotiators walking out over it. The stress will extend worldwide as high-paying manual jobs disappear to automation. But the last to change will be the biggest loser.
In Australia, China has reacted with some fury over being accused on interfering in its politics, elections and some MPs. China is not used to being called out for its shameless influence peddling and has reacted angrily at being caught. The Aussie PM is holding firm. China has been courting politicians of like-minded persuasions aggressively. In fact, the President of the New Zealand Labour Party was at a Beijing conference earlier this month and issued a very fawning embrace, one that the Chinese appreciated enough to include in their news reviews of the 'conference'. New Zealand political parties on either side of the political spectrum have shown vulnerability to China's 'soft power'. It might work for us economically but I have my doubts about the long-term consequences. Winston Peters is showing similar vulnerability to Moscow.
In New York, the UST 10yr yield is now at 2.38%.
The price of crude oil is up slightly higher, now just under US$57.50 / barrel, while the Brent benchmark is just under US$63.50.
The price of gold is down another -US$6 at its new lower level of US$1,246 oz, a five month low.
The Kiwi dollar is basically unchanged and now at 68.4 US¢. And on the cross rates we are similar at 91.1 AU¢, and against the euro at 58.1 euro cents. That puts the TWI-5 just up a tick at 71.6.
Bitcoin lost almost a fifth of its value in 10 hours over the weekend, having surged more than +40% in the previous 2 days. (See the bitcoin tab in currency chart below.) This is raising fears the market may be heading for a price collapse. Today it is at US$15,419 and at one point got down to US$13,161. Remember, this is an 'item' (?) that traded at US$17,134 at its peak at 3pm on Friday (NZT). It has only just occurred to me that the about-to-be-launched bitcoin futures trading opens up the opportunity to short this market. That actually might have a restraining influence.
If you want to catch up with all the changes on Friday, we have an update here.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».