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Breaking news: GDP rose 0.2% in the June quarter, Statistics NZ says More soon.

US consumer confidence slips; China pushes yuan up; Aussies target insurance managers, commissions; ATO targets holiday homes; UST 10yr at 2.80%; oil and gold down; NZ$1 = 72.8 USc; TWI-5 = 73.8

US consumer confidence slips; China pushes yuan up; Aussies target insurance managers, commissions; ATO targets holiday homes; UST 10yr at 2.80%; oil and gold down; NZ$1 = 72.8 USc; TWI-5 = 73.8
28th Mar 18, 7:41am by David Chaston

Here's our summary of key events ovenight that affect New Zealand, with news there has been a sudden change in the yuan exchange rate.

But first in the US, new data out today for consumer confidence has posted a significant drop, the first in three months. The driver down is perceptions of business conditions in the next six months. A small fall was expected by analysts, but this one was more than expected. The overall index slipped from 130 to 127.7 while the Expectations Index declined from 109.2 in February to 106.2 this month.

In China, their central bank has set the yuan exchange rate sharply higher overnight, causing market watchers to scratch their heads over why the sudden shift. It is the largest change in more than 2½ years and makes it the strongest the Chinese currency has been against the US dollar since August 2015.

In Australia, legislators are proposing that their banking accountability rules (BEAR) should be extended to the life insurance industry because consumer protections are "substantially weaker" in life insurance than banking. The life insurance industry is scrambling to avoid the restrictions. This review is labeling some commission arrangements as 'corruption', adding further pressure.

And staying in Australia, their tax agency is cracking down on a rental home rort, especially as it relates to homes in holiday areas. Excess deductions for what is essentially a holiday home are in their sights.

Locally, credit union head body, Co-op Money has had its credit rating downgraded to BB with a negative outlook.

The UST 10yr yield has fallen overnight, back to 2.80%. But the Chinese 10yr is up at 3.77% (up +3 bps) and the New Zealand equivalent is at 2.82% (up +1 bp).

The gold price is down -US$11 in New York today and now at US$1,343/oz.

Oil prices have slipped slightly with the US benchmark now just under US$65.50 and the Brent benchmark just on US$70/bbl.

The Kiwi dollar will start today at 72.8 USc. On the cross rates we are now up at 94.5 AUc and at 58.7 euro cents. That leaves the TWI-5 at 73.8.

Bitcoin is now at US$7,890 and virtually unchanged from this time yesterday.

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26 Comments

by  profile  |  28th Mar 18, 8:35am 1522179320

Eat NZ steaks and save the world! For those hand wringers feeling guilty about beef and CO2- a recent LCA study in the US took Soil Organic Carbon flux into account (for once). Found NZ type grazing systems are net carbon sinks for beef production due to the increase in soil carbon over time mitigating CH4 and other emissions. No doubt this sink will be rushed into the ETS scheme and cheques will be written by joe tax payer to beef farmers. Someone tell Shane to plant a billion steers.

"Emissions from the grazing system were offset completely by soil C sequestration."

"After including SOC in the GHG footprint estimates, finishing emissions from the AMP (grazing) system were reduced from 9.62 to −6.65 kg CO2-e kg carcass weight (CW)−1, whereas Feedlot emissions increased slightly from 6.09 to 6.12 kg CO2-e kg CW−1 due to soil erosion."

https://www.sciencedirect.com/science/article/pii/S0308521X17310338?_rd…

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by  dtcarter  |  28th Mar 18, 9:13am 1522181632

But is adaptive multi-paddock (AMP) grazing the norm here?

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by  profile  |  28th Mar 18, 9:42am 1522183349

The bedrock of our farming system. Simple fact is LCA studies don't usually take soil organic carbon into account. Our ETS doesn't recognise soil carbon yet the SOC difference between cropping and grazing or farming and forestry are significant - as shown by this study.

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by  Roger Witherspoon  |  28th Mar 18, 10:23am 1522185806

Thanks for the update. Good to see a bit of sanity coming into the Climate Change discussion, rather than fanatical quasi-religous belief on both sides.

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by  SimonP  |  28th Mar 18, 10:51am 1522187482

The carbon has to come from somewhere so foraging must be limited to allow the grass to decompose.
I'm not sure that the author's definition of AMP is the same as ours, e.g.:
Pastures for the AMP grazing system were not irrigated, fertilized with synthetic fertilizers, or treated for pests, and therefore no GHG emissions were generated from these processes.

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by  profile  |  28th Mar 18, 11:19am 1522189191

Beef grazing is not irrigated and fertiliser was still used so comparable. "GHG emissions from finishing with AMP grazing in our study were about 45% lower. This was most likely due to their longer finishing time, lower animal productivity, and high application rate of fertilizer on pasture."

"While not as productive as FL based on yields, the AMP grazing system produced considerably greater amounts of beef on a land basis as compared to continuous grazing, showing that improved management can increase the output of grass-fed beef. Ultimately, in a closed system, this implies somewhat lower per capita beef consumption, but greater environmental benefits from what is consumed."

The decaying root mass builds up SOC over time. Forage grazing is limited via rotation.

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by  Doris  |  28th Mar 18, 12:15pm 1522192505

Here's a couple more links to papers drawing the same conclusions. Ruminants can be a net carbon sink on grassland, especially when the land has been ploughed and cropped (and therefore depleted of carbon).

http://www.jswconline.org/content/71/2/156.full.pdf+html

http://www.beefresearch.ca/research-topic.cfm/environmental-footprint-o…

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by  Andrewj  |  28th Mar 18, 8:47am 1522180045
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by  RickStrauss  |  28th Mar 18, 9:10am 1522181417

Well...that's interesting and sobering.

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by  J.C.  |  28th Mar 18, 11:20am 1522189201

Yes. QE infinity. Deleveraging is too hard to swallow. Unpalatable politically and socially.

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by  Roger Witherspoon  |  28th Mar 18, 1:53pm 1522198438

Not to mention Militarily. Ben Bernanke's hero and inspiration, the venerable Takahashi Korekiyo, met an untimely death:

Viscount Takahashi Korekiyo (高橋 是清, 27 July 1854 – 26 February 1936) was a Japanese politician who served as a member of the House of Peers, as the 20th Prime Minister of Japan from 13 November 1921 to 12 June 1922, and as the head of the Bank of Japan and Ministry of Finance.

Takahashi made many contributions to Japan's development during the early 20th century, including introducing its first patent system and securing foreign financing for the Russo-Japanese War. Following the onset of the Great Depression, he introduced controversial financial policies which included abandoning the gold standard, lowering interest rates, and using the Bank of Japan to finance deficit spending by the central government. His decision to cut government spending in 1935 led to unrest within the Japanese military, who assassinated him in February 1936. Takahashi's policies are credited for pulling Japan out of the Depression, but led to soaring inflation following his assassination, as Takahashi's successors became highly reluctant to cut off funding to the government.[1]

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

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by  Penguin  |  28th Mar 18, 8:49am 1522180169

Jacinda is well behind the curve on dealing with Russia. 27 Countries have expelled diplomats yet nada from the NZ Govt.
Head in the sand PM?

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by  Noprogram  |  28th Mar 18, 9:50am 1522183828

Why is she behind the curve? Maybe she's not hysterically overreacting? Seems like a sensible move of a calmer head considering the stakes of yet another war. The UK have no proof in the Skripal incident, just insinuation and histrionics so far. Care to outline your evidence to the contrary as opposed to hearsay?

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by  profile  |  28th Mar 18, 9:51am 1522183876

Russians have form and are generally pretty sloppy when it comes to murder so the truth will out as per Litvinenko. Jacinda is still coming to terms with the fact she a PM.

"Hotels, restaurants and offices in the western city in which he is assassinated are drenched in radiation as his incompetent killers – unaware of the lethality of the weapon they are wielding – spread it around like so much perfume, endangering the lives of thousands of unwitting people.

...In the event, the killers left a trail of radiation through London like “the breadcrumbs left by Hansel and Gretel”.

https://www.telegraph.co.uk/news/uknews/law-and-order/11381789/The-assa…

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by  Noprogram  |  28th Mar 18, 1:18pm 1522196310

"There's nothing more deceptive than an obvious fact".....look up Casus Belli.

Tony Blair and Colin Powell were also emphatic about Iraq WMDs as well. We shouldn't make the same mistake again.

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by  profile  |  28th Mar 18, 10:57am 1522187861

Who else has access to this nerve agent? You are drawing a long bow between invasion of an oppressive dictatorship and expulsion of intelligence operatives.

"The use of a Novichok in the attack on the Skripals makes it highly likely that Russia was involved, because no one else knows how to make them, says John Lamb at Birmingham City University, UK. “The Novichok family was specifically created by Russia to be unknown in the West and as such it’ll be one of their most tightly guarded secrets,” he says.

But why would Russia employ such an incriminating nerve agent? “It could have been a demonstration of capability,” says Lamb. After allegedly poisoning ex-Russian spy Alexander Litvinenko with radioactive polonium-210 in 2006 without serious consequences, they may simply have felt that they could get away it, he says."

https://www.newscientist.com/article/2163502-what-are-novichok-nerve-ag…

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by  stp  |  28th Mar 18, 11:17am 1522189035
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by  MikeM  |  28th Mar 18, 10:07am 1522184849

Aussies having to crack down everywhere at the moment, including their cricket team. :D

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by  Cowpat  |  28th Mar 18, 10:12am 1522185129

In Australia,3600 dwellings to be constructed on 9 hectare site 30k from the city of Sydney. Starting price 500k.Pack them in.

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by  Pragmatist  |  28th Mar 18, 10:48am 1522187326

First thing google found was Rhodes East, but that must be a different project, because this one says the area is 36 Hectares, and its not 30kms from the city.. 20kms by bicycle so about 15km straight line from the opera house.

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by  Cowpat  |  28th Mar 18, 11:21am 1522189282

3 billion project 35 k northwest of Sydney,within the Showgrounds station precinct .Awaiting approval by Hills Shire Council. 9 hectares

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by  J.C.  |  28th Mar 18, 11:51am 1522191092

Re the yuan exchange rate,

China and Russia are actively reducing dependence on the dollar in bilateral trade. In October 2017, Beijing launched a payment system for transactions in yuan and Russian rubles. This means that settlements for Russian oil deliveries to China, which have reached 60 million tons per year, can be done without using the dollar.

After Monday's launch of the yuan-backed oil futures in Shanghai, there have been negotiation between Russia and China on mutual promotion of oil futures in national currencies, RIA Novosti reported. In 2016, the St. Petersburg exchange in Russia launched Urals oil futures in the Russian ruble, and support from China could prop up Russian crude futures

https://www.rt.com/business/422472-russia-china-petro-yuan/

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by  stp  |  28th Mar 18, 11:55am 1522191305
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by  Andrewj  |  28th Mar 18, 11:59am 1522191575

The How, What and Why of Spiraling Borrowing Costs for Aussie Banks

https://www.bloomberg.com/news/articles/2018-03-27/how-what-and-why-of-…

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by  Noprogram  |  28th Mar 18, 1:45pm 1522197907

"Who else has access to this nerve agent?" -Anyone anyone that has read Vil Mirzayanov's book "State Secrets" and has access to a military grade lab apparently.

Mirzayanov was a Soviet defector and chemist at the Chemical Research Institute 'Nukus' in Ubekistan that was abandoned in 1992 and dismantled by the US and the chemicals destroyed. -All documented. Link attached below.

The base formula is published in Mirzayanov's book but there's no evidence that they were ever 'sucessfully' produced since they're highly unstable compounds. The OPCW doesn't even recognise 'Novichoks' as a chemical weapon because it found no evidence they exist. -If they can identify it it means they also have a sample of it and therefore it's been produced elsewhere.

The name 'Novichoks' is a westernised name recently featured in the recent US/UK TV drama series 'Strike Back' but otherwise they refer to organophosphorous compounds.

Dr Steven Davies from Salisbury District Hospital where the Skripals' were taken, seems to doubt it was a nerve agent and so does former British Ambassador Craig Murray.

https://www.nytimes.com/1999/05/25/world/us-and-uzbeks-agree-on-chemica…

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by  Retired-Poppy  |  28th Mar 18, 3:05pm 1522202741

A2 Milk now facing massive competition in China. Nestle has launched brand "Atwo". A2 share price currently down 5% http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=120…

Mind you, it's still up %%% from a year ago!

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