US consumer confidence slips; US house prices rise, US commercial property prices jump; China trade surplus narrows; Russia wants its money back; UST 10yr 2.42%; oil and gold stable; NZ$1 = 70.7 USc; bitcoin falls -US$700

Here's our summary of key events from overnight that affect New Zealand, with news China's trade surplus is shrinking.

But first in the US, consumer confidence slipped in December, after hitting historic highs in the previous month. The Conference Board's index declined to 122.1 in December, a fall much greater than the 128.1 expected by analysts. The November reading was 128.6.

And staying in the US, pending home sales were flat in November, but prices are rising steadily. Sales prices were up +5.8% – more than double wage growth – and the 3.4-month supply of homes on the market was the lowest since records for this metric began in 1999.

And it is not just residential property that is rising, prices for industrial land have shot up this year due to strong demand for warehouses and a diminishing supply of viable sites. Average prices in the US shot up about +25% in 2017, according to real estate services firm CBRE. Driving the demand is warehousing for online shopping.

In China, they are looking to change their Constitution in a style reminiscent of what Russia did. The President is limited to two terms, but dictators don't want that little detail like that to limit them.

China's trade surplus narrowed to +US$28.8 bln in November 2017 but was still higher than analysts' estimates. One reason for the slippage was a growing services deficit.

That trade surplus may narrow further. China's crackdown on pollution is shuttering many industrial facilities until they can sort out their issues and that is driving imports. Copper, for example hit a four year high overnight on Chinese demand for exactly that reason.

And Russia is feeling the pinch, trying to get its oligarchs to repatriate US$1 tln. There is nothing but delicious irony is a scheme by a corrupt government wanting those it favoured with corruption to return corrupt money laundered from their activities. But it is hard to think of a reason why its oligarchs would succumb to such an appeal. Russia is also planning a national biometric database in 2018 to control its citizens financial affairs. And this is just after it banned a key opponent to Putin.

The UST 10yr yield is down sharply to 2.42% today. In China, the equivalent 10yr sovereign bond is yielding 3.91% while the equivalent NZ 10yr sovereign bond is yielding 2.75%.

Oil prices are marginally lower in the US today with the WTI benchmark at just under US$59.50 a barrel, while the Brent benchmark is just under US$66.50.

Gold is up US$1 to US$1,286/oz.

This morning the Kiwi dollar is just under 70.7 USc, and on the cross rates it is at 90.9 AUc, and against the euro it's at 59.4 euro cents. That puts the TWI-5 at 73.3.

Bitcoin is down -US$700 today and now at US$15,080, a -5% fall.

The easiest place to stay up with event risk today is by following our Economic Calendar here ».

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9 Comments

And Russia is feeling the pinch, trying to get its oligarchs to repatriate US$1 tln. There is nothing but delicious irony is a scheme by a corrupt government wanting those it favoured with corruption to return corrupt money laundered from their activities.

hmmmm....

If charges are formally brought against Chubais–undeniably one of the most hated of the Yeltsin-era kleptocrat “reformers” who worked with the CIA during the 1990’s to plunder Russian state assets worth hundreds of billions for just pennies–it will signal that Putin feels in a strong enough position to purge the pro-free market liberal mafia that still holds a lock grip on the development of the Russian economy. Read more

You neglect fact Putin is one of the worst offenders with billions in Russian assets controlled by him through oligarchs
Foreign Affairs not your strong suit ?

https://www.whitehouse.gov/presidential-actions/executive-order-blocking...

Very interesting reading ?

I, DONALD J. TRUMP, President of the United States of America, find that the prevalence and severity of human rights abuse and corruption that have their source, in whole or in substantial part, outside the United States, such as those committed or directed by persons listed in the Annex to this order, have reached such scope and gravity that they threaten the stability of international political and economic systems. Human rights abuse and corruption undermine the values that form an essential foundation of stable, secure, and functioning societies; have devastating impacts on individuals; weaken democratic institutions; degrade the rule of law; perpetuate violent conflicts; facilitate the activities of dangerous persons; and undermine economic markets. The United States seeks to impose tangible and significant consequences on those who commit serious human rights abuse or engage in corruption, as well as to protect the financial system of the United States from abuse by these same persons.

It's quite interesting googling the names on the annex.

Especially Goulnora Islamovna Karimova.

How could she be an extraordinary threat to the national security?

Foreign Affairs not your strong suit ?

Nonetheless, part of the gold sold, mentioned in the article, was traded through a Reuters dealing machine in my trading area, located in a London subsidiary of a US trading firm.

But, but, but Northern Lights, the military/industrial/banking/CIA/political/bureaucratic complex must have an enemy otherwise the everwar cannot be justified to the people, now can it?

The UST 10yr yield is down sharply to 2.42% today...

Indeed. The T10yr minus T 2yr spread is down to 51bps- a new recent low.

Core rates that strip out energy prices, such as the Dallas Fed’s trimmed mean, continue to undershoot and therefore suggest no momentum and zero upon which to base expectations for acceleration. It’s not nothing that monetary policy has missed its target for sixty-five out of the last sixty-seven months, and ninety of the past 110 months going back to October 2008 and the botched monetary response to Lehman and everything before it.

Because of all that within the realm of inflation, meaning the monetary system, it has been more than fair or reasonable to ask whether economists really know what they are doing. Up until 2016, that was a question you weren’t allowed to consider unless well outside of the mainstream. Since then, more and more policymakers are actually asking of themselves the same idea. Read more

Let's hope Orr will do better.

Russia
There is delicious irony in a scheme by a corrupt government wanting those it favoured with corruption to return corrupt money laundered from their activities. But it is hard to think of a reason why its oligarchs would succumb to such an appeal

America
There is delicious irony in a scheme by a corrupt government wanting those it favours with corruption to repatriate it's trillions of un-taxed profits stored away in tax-havens for so long. It is hard to think of a reason why these captains of industry would succumb to such an appeal when a reduced corporate tax rate of 21% is still a lot higher than the 1% they enjoy in off-shore jurisdictions

China
Still hunting Tigers and Flies and Foxes

Australia
The Australian Tax Office is about to name and shame the top 40 tax plunderers by publishing their details

New Zealand
Still talking about it

Er, it's not at all hard to think of a reason why the oligarchs might ask their London bankers to return a bit of money.
https://en.wikipedia.org/wiki/Poisoning_of_Alexander_Litvinenko

Presumably the Chinese use the same methods to keep their past and present citizens in line:
http://www.zerohedge.com/news/2016-04-15/drone-flies-through-rotting-aba...

Citizens are considered property by most governments, they are expected to do what they are told, and there is nothing like a few well publicised murders to bring them to heel. Wherever they now live.