Facebook hack knocks Wall Street; Liddell gets a promotion; ECB at turning point; China new home prices fall; Aussie Commission inquiry gets ugly; UST 10yr at 2.85%; oil and gold unchanged; NZ$1 = 72.3 USc; TWI-5 = 73.5

Here's our summary of key events overnight that affect New Zealand, with news Wall Street is down sharply this morning.

Firstly, Facebook is facing growing pressure after both American and European lawmakers called for investigations into reports that Trump's campaign consultants gained access to data to manipulate 50 mln Facebook users. The pressure triggered a -2% fall on Wall Street while the tech-heavy NASDAQ is down more than -2.5%.

In Washington, President Trump has named Kiwi Chris Liddell as deputy chief of staff, behind under-fire John Kelly.

In Frankfurt, the ECB is reportedly turning its attention away from QE (bond buying) and to when it should start raising benchmark interest rates. This is a key turning point for them.

In China, new home prices fell from the previous month in 12 of 15 key cities in February, up from seven in January. And staying in China, the Asian Infrastructure Investment Bank's dismissal of considering investing in New Zealand contrasts with a big investment to aid China. We may have contributed to its capital, but it is growing to be a China-benefit-only institution.

And China said it plans to build 5.8 mln subsidised homes this year to replace outdated public housing. This is more than one-third of the 15 mln such housing China said it will build over the next three years. On a population-adjusted basis, that is like the NZ Government building 18,000 new HNZ houses per year here.

We are getting a new central bank chief this month, and China is as well. They have named a technocrat to the post rather than someone with deep political links.

In Australia, the inquiry into the financial services industry turned up relatively little on the home lending side (and mostly on mortgage broking), but it is uncovering some serious issues on credit cards and insurance. The scandals revealed are likely to get worse.

In New York, the UST 10 yr yield is stable at 2.85%.

The gold price is little changed, up +US$3 and now at US$1,317/oz.

Oil prices are unchanged today as well with the US benchmark still just over US$62/bbl and the Brent benchmark now just over US$66/bbl. China reported that their crude oil production fell -4.1% in 2017. Their natural gas production jumped, but it is still small scale. China is vulnerable to energy imports.

The Kiwi dollar will start today little changed at 72.3 USc. On the cross rates we are up at 93.9 AUc (which, believe it or not is a 33 week high) and at 58.6 euro cents. That puts the TWI-5 at 73.5.

Bitcoin is now at US$8,382 which means the downward trend has revered and we are up +12% since this time yesterday.

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41 Comments

What on earth did the world talk about before Trump. Have to hand it to him, there is no sign of relenting & has in fact greatly strengthened his political power. No other President has summoned up the power of the office quite like this, except perhaps Lincoln & F D Roosevelt, at times of great crisis. Trump it seems revels in crises, creates them according to the mood of the day.

Breathtaking
Perhaps best comment on Jacinda

Hopefully the end of mortgage brokers both in Australia and New Zealand,at least in their current guise.Any benefits that the banks are able to pass on should be available for all,not a few trough feeders. A 10 year old could look at the mortgage page on this site ,and over a bowl of Rice Krispies head off to a bank with sufficient knowledge to secure the ' best deal' .

We used a broker in our first home purchase and she's proven to be an incredible benefit.

She chased up half a dozen (or more) banks on our behalf to request their best mortgage rates. She then presented the top choices back to us with explanations on the benefits and negatives on each.

When we've had issues with our mortgage manager at the bank, she's then gone off to pressure them and has begun looking around to see if any other banks are willing to take us on as a customer and cover legal/break costs.

As both my wife and I work full time, all this chasing back and forth and negotiating would have to be done over our lunch time by two people who have only had a mortgage for 8 months so pretty naive, rather than someone who's dealt with this daily for the last 10 years.

I'm sure there are some shitty brokers out there, but after dealing with ours, I would never go back, she's absolutely proven her weight in gold.

Muter , you purchased your first home in Auckland August 2017. Question,why would you have problems with the Bank mortgage manager. Why would it be so difficult to arrange a meeting directly with the bank,considering you both work during the day time. I appreciate that canvassing 6 banks for some may take longer than viewing an open home.,when arranging a mortgage,yet you comment on this website which provides a considerable amount of free information.Out of curiosity what deal did the mortgage broker obtain for you?

They seem about as relevant as travel agents. Some people still use them, but I can’t see why they bother. Borrowers would be better off without them and their skim.

Unfortunately borrowers have often had bad experiences dealing directly with the banks themselves. Indeed people have commented on this website about the poor options offered to them and inexplicably low mortgage offerings. In nearly all cases if they had organized things through a broker they would have gotten more and better options. This has been my experience anyway. The broker acts as a hardball negotiator and is not intimidated. Not sure why it has to be this way. The banks may even think a borrower is a bit naive not using a broker and you get points off for your naivety, like 200K less or something..

Zach is right I've had my mortgage broker tell me the BS response from the bank. He argued the point without me even having to instruct him. Definitely a time saver.

Also when I was looking for a house the price range was not suitable so I just called my broker to get more finance available.

You are so right Zachary

Nice piece of propaganda disseminated widely by Russian TV
Suggest a visit to Perth & witness the fleets of ships loading for China
China certainly has a long term strategy & its influence has been given a boost by Trump withdrawing US from TPP.

"The campaign against RT, against people working on RT, is McCarthyite," he added. "It is a part of this propaganda, of this carefully constructed drama, of trying to discredit RT."

He spoke specifically of RT London, "which I know very well, as I'm often there." Pilger said RT is run by "highly experienced, respected people" who previously worked for other major outlets, including the BBC.

https://www.rt.com/uk/421744-british-media-campaign-against-rt/

Andrew, if you're relying on state run Russian media for your news, I'd encourage you to keep in mind how many Russian journalists get beaten up and/or murdered. A major incentive to not rock the boat...

https://en.wikipedia.org/wiki/List_of_journalists_killed_in_Russia

https://cpj.org/data/killed/europe/russia/?status=Killed&motiveConfirmed%5B%5D=Confirmed&type%5B%5D=Journalist&cc_fips%5B%5D=RS&start_year=1992&end_year=2018&group_by=year

Definitely not perfect, however i have a friend in the Russian system and he tells me Putin is Okay and some of these guys that get dealt to are really not nice people. He tells me he can walk around any of the parks in Moscow and feel safe. It's a big country and had some serious problems with mafia, Putin has done wonders for the average Russian.

https://www.theguardian.com/world/2015/may/06/vladimir-putin-15-ways-he-...

I just don't trust our side as much as I used to. The WMD , Gulf of Tonkin, Libya, Syria and I'm sure a lot more we don't know about.

... there's a lot of skewered media reporting on my second home , the Philippines too ... and I spend a lot of time patiently imploring people to think for themselves , when they slag off against President Duterte , copying the western media line that he's a very bad man ... sure , he's no angel ... but the scum sucking pond dwelling dealers of drug death he's ousting are many many times worser than him ..

And , in the same vein ... we ought to not jump to the obvious conclusions in condemning Vlad the Bad , Putin ...

... question : Which country state sponsored an act of terrorism in New Zealand .... Russia ? ... China ? ... Cuba ? .... no , no , no .... our good friends and war time allies , the French ! .... OOOOOPS !!!

What about the US hypocrites making a fuss about the Russians support of the Syrian Government. When the US and it's coalition remorselessly bombed Mosul and Raqqa to bits so recently that the stench of tens of thousands of dead civilians lingers there right now.

... true ... and lest we forget who initially blundered into the middle east , sparking this ongoing widespread destabilization and slaughter , with their lies about Iraq's weapons of mass destruction ... the USA , Britain , Australia ...

The 2.7 million tonnes of bombs the USA dropped on Cambodia, more than on Japan in WW2 gave us Pol pot.

They bombed Nth Korea back to the dark ages, 7 million tonnes https://apjjf.org/-Charles-K.-Armstrong/3460/article.html

And now in the UK serious concerns about gangs grooming young girls is getting out to the public
https://www.steynonline.com/8528/of-the-remenant-nedeth-nat-enquere

And the 576,000 children that died in Iraq due to sanctions.
https://www.nytimes.com/1995/12/01/world/iraq-sanctions-kill-children-un...

Oh well, if your friend says he's ok, all must be fine then. That confirms what you can 'learn' from RT and Sputnik News. Don't know what I was worrying about ...

If you grow up under authoritarianism (and vodka), these standards obviously set a great benchmark, especially if you start with a paranoid/Pilger world view.

David, plenty of journalists have come forward stating the freedom RT.com gives them

Like, Max Keiser

"When I worked for @BBC I was told by Paul Gibbs to stick to the govt’s ‘unwritten but understood’ script. In protest I quit. I have never encountered anything like this at RT, France24, Press TV, Al Jazeera, or CBS."

https://www.youtube.com/watch?v=w_x8_i15LB4

Andrew, a point worth noting on those US atrocities you list is many were ultimately exposed by US & other western journalists. You may have seen the Pentagon Papers recently. Not sure how many Russian atrocities over the years have been exposed by Russian journalists working for Russian media outlets.

And Daniel Ellsberg amongst others paid a huge price. If the Western democracies behaved like that way back when, who's to say they are not much worse now? Power corrupts.

Adam Curtis - Oh Dear

https://www.youtube.com/watch?v=wcy8uLjRHPM

George Orwell wrote in 1984

"To know and not to know, to be conscious of complete truthfulness while telling carefully constructed lies, to hold simultaneously two opinions which canceled out, knowing them to be contradictory and believing in both of them, to use logic against logic, to repudiate morality while laying claim to it (…) To tell deliberate lies while genuinely believing in them, to forget any fact that has become inconvenient, and then, when it becomes necessary again, to draw it back from oblivion for just as long as it is needed, to deny the existence of objective reality“ . George Orwell doublethink 1984

Gareth, I never saw this reported in NZ.

Internet tycoon Kim Dotcom sues New Zealand for $6.8bn
https://amp.ft.com/content/945754f2-0001-11e8-9650-9c0ad2d7c5b5?__twitte...

For what it's worth, it was.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11978619

http://www.newshub.co.nz/home/new-zealand/2018/01/kim-dotcom-marries-girlfriend-and-sues-government-for-multibillion-dollar-damages-on-same-day.html

I confess, I don't read newspapers anymore.

And some more:

https://www.paulcraigroberts.org/2018/03/16/killing–diplomacy–dmitry–orlov/

And here Chris Martensons take on it:

https://www.peakprosperity.com/blog/113845/russia–did

Plenty of reasonable other opinionpieces not from RT but also not brainwashed by CNN etc.

Another humdinger vlog from this guy on the Aussie mortgage market. Again, it’s fairly scary stuff. He has an interesting take on the banking inquiry: while Turnbull intended it as something to “clear the air” and reduce uncertainty in the sector, it has instead operated as a Trojan horse that has exposed just how flimsy the foundations of the Aussie property market really are. Interesting comments on tightening lender credit standards and their impact. Essential viewing.

https://youtu.be/rmZ6pJ-5q-I

Aussie banks
The only reason they failed to fall victim to GFC was the restriction on amalgamation by Peacock years ago.
Now they’ve been more reckless Thankfully their NZ branches are separate subsidiaries
Witness the fact Aussies have used their personal super funds to purchase extra rental & holiday homes
So much for happy retirement

Excellent article from Bernard Hickey illustrating the huge tax imbalances here in NZ. It's no wonder we have a property obsession. Time for a rebalance with more investment into productive assets.

https://www.newsroom.co.nz/2018/03/19/98111/our-economically-cancerous-a...

While I hugely respect Bernard and his writings, i find this article too narrow in focus. He seems to wedded to conventional wisdom on taxing capital gains. His discussion on productivity provides an interesting contrast to David Chaston's piece about productivity. But there is a big gap in the discussion that most people seem to ignore.

Taxing on capital gain is essentially unfair unless the gain is realised, either by borrowing against it, or selling to make the profit. to tax against unrealised capital gains would then also require the ability for a tax break on capital losses. Otherwise his point about investing in residential property is well made (I am still against taxing the family home), but should go further. There is plenty of anecdotal commentary around empty homes in AK. some research should occur to quantify this to identify how big a problem it really is, and then we could discuss what to do about it.

The other point BH seems to make is getting people to invest somewhere other than houses. but where? Buying shares on the stock market is no less speculation than investing in property, albeit returns are taxed when the dividends come. But the companies themselves do not benefit, unless it is a new issue to raise funds. Variations in share value might make it easier for a company to borrow, but can also work against it when the change is negative. So as DC points out, large companies investing in NZ seems to be our best hope to change productivity, but if the ordinary Kiwi is to invest, what is the best option?

Narrow in focus....? What I read from you is small island mentality. Don't tax my coconuts because that's all I have to make my wealth seem great. The article I think explains, in a simple way, that NZ is going to become less and less competitive if we continue our narrow focus of the family home wealth and everything else borrowed against it.

And if nothing is borrowed against it?! What if a person is mortgage free, and his house value varies? Why should he pay tax on a change in the paper value of the house? You think that's small island? I want to see investors pay tax, and multi-nationals pay tax, but the small minds in this country want home owners to pay tax on a change in the paper value instead. Prove to me that you are the one with the real world view that makes more sense rather than just some unproven theory that only penalises people who put a secure roof over their head before wasting their money on something else?

Bye bye kiwis I’m off to China myself

Enjoy the smog

i asked my bank directly if i could borrow some more money, bank said no. so i tried a broker for the first time and Hallelujah! he gave me a couple of options. the best was with my bank, the one that said no! he said the bank uses a different calculator with brokers. so i got my money at a great rate and with no effort on my part. he also showed showed me how to restructure my loan so now with more borrowings i am paying less interest. bloody good mate

Bitcoin price but non-reporting of various activities and fraud in the crypto market, along with bitcoin transactions taking too long for it to be useful as a currency.

Here's some crypto news.
https://www.cnbc.com/2018/03/19/bitcoin-is-unfolding-like-the-dotcom-cra...

Sure the transactions may take too long even to cover daily purchases across a small country but many random people are live testing secondary and tertiary layer additions to try to speed things up (so long as they don't get added to the blockchain for a while...). With the user issues being enhanced, more hacks & refunds impossible still... yeah well the community did have to switch to say it is limited for purchases as a currency, (including the tax complications), and really is more like an investment. The transaction rate dropped like a stone so it is not such an issue now, (with less traffic it is faster).

Libor stress gauge hits post-Lehman high as Fed drains liquidity
https://www.telegraph.co.uk/business/2018/03/19/libor-stress-gauge-hits-...