Here's our summary of key events overnight that affect New Zealand, with news markets are stable even if one key policy maker isn't.
Firstly, analysts have been delving into the mystifying bullying by the US of Canada. And nothing seems to make sense. The US does have a small annual goods deficit in trade with Canada - tiny actually - but it does also have a small annual surplus in services trade with Canada. The net is a surplus, in the US' favour, and that is based on the US's own data. On dairy, the trade is even clearer - the US runs a surplus with Canada. Facts aren't 'alternative' from Washington, nor are they absent. They are however rejected for some fact-free crazy narrative.
Japanese machine tool orders leaped +14.9% in May in preliminary data, on top of the +9.6% gain in the final data released for April. These are substantial improvements in that sector and bode well for future Japanese export trade.
And staying in Japan, their government has committed to investing NZ$70 bln into the "Indo-Pacific region". This comes as the US pulls back and China rushes to take advantage.
Japan may be a key player in a post-US trade world to balance out the equally unpalatable Chinese one. If NAFTA skids, the Mexicans are extending their options. The CTTP will also be a key institution.
In India, fears of higher inflation are growing again. Consumer prices are expected to rise +4.8% in May, driven up by sharply higher petrol costs. Their central bank recently raised their policy rate to 6.25% and there are concerns it may have to go higher still. All this is a concern because it is a reversal of some recent progress that was thought to be essential to stabilise the basis of their rapid expansion.
The rise in fuel prices is not just a concern in India. In China, truck drivers are protesting the same thing. Protests are unusual and very risky in China.
Around the world overnight, equity markets have been in positive territory. Not hugely, but positive all the same.
The UST 10yr yield is at 2.96%, up +1 bp since yesterday. The Chinese 10yr is at 3.67% (down -2 bps) while the New Zealand equivalent is now at 3.01%, down -1 bp.
Oil prices are little changed today and the US price remains just over US$66/bbl. The Brent benchmark is now just over US$76.50/bbl.
Gold has hardly moved and is still hovering at US$1,299/oz.
The Kiwi dollar will start today marginally softer at 70.2 USc. On the cross rates we are also a bit softer at 92.3 AUc, and 59.6 euro cents. That puts the TWI-5 at 73, and really, very little changed since yesterday.
Bitcoin is still at US$6,719 which is unchanged from yesterday. Traders are having issues understanding the implications of the South Korean hack.
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39 Comments
Re Singapore I was watching 1NEWS last night and was wondering what has happened to Jessica Mutch who is (was??) One's senior political reporter. One had a couple of male, stale, pale guys up there instead of her. If a woman was considered not up for such a major political event it was comical that the Sing reporting was followed soon after by a news filler on feminist marches in Europe where NZs leading role in achieving (??) equality was bragged up.
I think there are still plenty of issues over there, mostly cultural rather than official policy. There are a few policy examples which many would disagree with and would be worth marching for, for example abortion is still virtually illegal in Northern Ireland despite the rest of the UK and soon Ireland being much more permissive. Incidentally, one of the anti-abortion parties there is currently a key ally of the governing Conservatives.
https://www.irishtimes.com/news/social-affairs/abortion-referendum-afte…
Is one of those cultural issues that people are allowed to say "male, stale, and pale"?
Because the whole hypocrisy thing isn't really a good cultural trait.
Laws are about democracy.
Just because you don't agree with a specific law, it doesn't mean that the majority of people don't.
Abortion included.
Laws change over time, part of the cause of that is demonstration, marching, advertising a cause. Often laws lag behind changes in popular opinion, for example drugs laws in this country
https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11906718
and, indeed, in my original example:
https://www.amnesty.org.uk/press-releases/northern-ireland-nearly-34-pu…
https://www.theguardian.com/world/2017/jun/16/northern-ireland-strongly…
Are you honestly of the opinion that arguing for a cause should only be done when the majority already supports it? How would anything change?
I don't feel the need to defend 'male, pale and stale' because it's not something I use personally.
My point was, to your tangent of abortion, that laws are a reflection of the general consensus of the constituency.
I'm not saying that arguing for a cause should be done only when a majority supports it. I'm saying that law should only be changed when the majority supports it. That is pretty much a tenet of democracy.
Is the US behaviour that hard to understand? Canada, Mexico, and the EU has high tariffs for US goods and services and yet shriek like banshees when the US points that out or retaliates. At the G7 Trump proposed no tariffs and subsidies between the countries - of course that was a non-starter for the EU. Trump is playing hardball but he actually wants more trade with China and the EU but more access for the US.
I never said I agree with Trump's position, I said it isn't hard to understand it. Also I think he wants more trade. Jim Crammer also makes a good point regarding Trump and the market:
https://www.thestreet.com/video/jim-cramer-analyzes-president-trumps-tr…
There was a great cartoon (which wish I had the skill to paste the link into here) in The Independent 2 days ago.It depicted a very heavy Trump grinning at the bottom of a seesaw with the other lightweight six desperate, stranded and clinging on, high up at the other end
Worse for Canada, the USA gets oil from Alberta cheap because there is no way out but south. Canadian tanks roll down the tracks to California every day and the reserves in Canada are massive.
https://oilprice.com/Energy/Crude-Oil/Canadian-Crude-Could-Remain-Cheap…
The morning laugh...our donald.
Dont know if you noticed donald turned up in singapore in a fleet of cadillacs and north korea turned up in a yellow bus, but they all had fun.
Apart from that....
https://www.theguardian.com/commentisfree/2018/jun/11/trump-world-order…
Very interesting link, thanks.
The tactics this guy is running (and his manner of 'execution', excuse the pun!) make for rich case study material, that's for sure.
He's a bit of an international Michael Cullen: 'we won, you lost, eat that' ... and what's more extraordinary is we get it all via his Twitter (un)diplomacy.
If, as that article suggests...
In my rare optimistic moments, I imagine an alliance of Bernie Sanders, Jeremy Corbyn and our Democracy in Europe Movement, DiEM25, giving the Nationalist International led by Trump a run for its money. A few years ago, a Trump triumph in the US, Europe and beyond sounded even more far fetched than this. It is worth a try.
...is the best opposition that can be mounted against Trump's new world order - I don't hold out much hope. It will really require someone other than Sanders in the US to take on 'Make America Great Again' as a the prevailing narrative.
It's the young guns like Trudeau and Macron that need to change the narrative from an international perspective, but their age is telling and they (and the rest-of-the-world) seem to have failed to consider their BATNAs. Defending the status quo, globalist narrative isn't one of those alternatives.
http://socialsciences.people.hawaii.edu/publications_lib/JPI%20Ideologi…
Kate you were born there and I have lived and worked there and the good people of the USA are really quite unique in comparison to the population of any other country. For instance our neighbours didn’t really care much about anybody else’s backyard provided their own, was in good order. Whereas here in NZ we are overly keen, strident in fact, to tell everybody else what to do in their own backyard. I think it is as basic as this. At the back of Trump’s mind he doesn’t care if he doesn’t get a second term. He is in the history books as a President just like the Roosevelts. He knows unless he is caught lieing where it matters or is actually convicted of a crime he cannot lose the presidency. And then he thinks about Reagan and realises that the affect of his [Trump’s] administration will not hit the fan until long after he has passed. Mission accomplished. What you think?
I think there will be a global reset - whether by war, famine, plague, financial crisis or orderly redefinition (i.e., a Bretton Woods type of agreement) of global settings.
Someone else on here mentioned that Trump is simply responding to the inevitability of that reset (i.e., planning under conditions of uncertainty) by re-positioning the US to emerge as the last man standing.
He's got major security concerns at home, when/if that reset occurs, especially so should it occur as a shock (i.e., in a disorderly manner). A majority of Americans have substantial home arsenals such that citizens are unlikely to line up in 1930s style bread lines again. Imagine trying to impose martial law nationwide.
That's why I believe him when he states that a healthy metals manufacturing sector is a matter of national security - the rest-of-the-world misinterpreted that tariff policy defence line as meaning 'security from without', but he actually means 'security from within' (and the ptb of the administration aren't going spell that out for the int'l leaders/community that don't 'get it').
So, yes, you've read the average American pretty well - they are very parochial and insular. And I don't say that apologetically... it's a big place with rich resources and a pretty amazing history in terms of the vision of its Founding Fathers. But recent history with respect to the three-letter agencies (as Trump calls them) did meddle in other people's backyards to a unacceptable degree. But this is what the swamp was doing, not the public - and I think Trump might sense the mood of the public wanting to simply tend their own backyard.
Historically, Americans don't shy away from making hard decisions in an attempt to protect/defend their cohesion, or notion of nationhood. More Americans died in the Civil War than all other internally fought wars combined.
https://www.history.com/news/civil-war-deadlier-than-previously-thought
How does any nation rebuild form that? Yet they did. The present level of partisanship in the US has to end. Whether Trump's the man for that - who knows? He needs to find some common ground on the other side of the House. Like Reagan, he's a legend in his own time - but one from the gritty, uncouth genre of reality TV, as opposed to the polite romanticism of the big screen.
Trump has become: the 'Greatest show on earth', literally.
PS - and yes, the good people of the USA are indeed unique. My son who just moved there said the other day, why aren't we (NZers) as overtly proud/patriotic as Americans?
I explained to him that every day of my undergrad education in the US, started with this in the classroom - each adorned with its own flag;
"I pledge allegiance to the Flag of the United States of America, and to the Republic for which it stands, one Nation under God, indivisible, with liberty and justice for all."
It was written by a Union Army Officer during the Civil War.
And then there's the Star-Spangled Banner - again inspired by a poem written about defending the homeland against the British in the War of 1812;
https://www.youtube.com/watch?v=G11O4uZg4-c
My favourite recent clip of it.
Tks Kate & we know what you mean. We loved living there and our friends. People ask me why & I have two basic answers. Americans really know how to have fun & are unabashed in doing so. And over there, as opposed to here, you don’t get punished for being polite. Big sigh!
I'm so glad you enjoyed it!!!!! I wouldn't move back, but I truly love to visit! Whereabouts did you live?
PS. When I first moved here and my husband said we had to get up at midnight to watch a sports game, I asked why in the world would they be playing in the middle of the night. He said it was not 'why' in the world, but 'where' in the world. I had no idea that international competitions existed outside the Olympics. True story.
South Jersey. Semi rural. Catholic, Italian, Irish mostly. Patient, tolerant, caring, full of fun. Wonderful people to be amongst. And just across the river in no time at all Philadelphia, which amongst all the cities we have been fortunate enough to have visited in the States, will always be our favourite. Go the Eagles!
ps. re my post earlier. See if you can find that see saw cartoon in The Independent a couple of days ago. Think it is a brilliant depiction that sums it all up & beats easily a thousand words
Yes, I'm Irish Catholic stock too :-). Mom was Canadian, Dad an American. Have a brother in Pennsylvania - that's a lovely state (reminds me in many ways of NZ North Island topography) and yes to Philly being one wonderful town :-). Being a girl from Chicago, it did always seem more of a town to me! Always amazed to think of the great minds that walked there.
Is this as low as bitcoin will go? You can now buy one shiny bitcoin for $10,000 NZD. It is tempting as I never fancied part of a bitcoin, I want a whole one.
I predict good results in Singapore this week. NK won't denuclearize, after all even a child could work out that option is not on the table after what happened to Gaddafi. It was a huge mistake on the part of Western powers not to guarantee and ensure Gaddafi's survival.
Anyway I suspect that both Trump and Kim know what the outcome will be already. This is all just theatrics.
Trump will go from strength to strength. Those that think Pence would be better are insane. Trump is not a religious nutter but a rather practical and pragmatic man.
Zach re bitcoin;
Btc has a history, it may not accurately predict the future, but there has been something of a cycle to cryptos.
There have been two main peaks. One late 2013 and one in late early 2018. The last cycle didn't bottom out till Oct 2015, so basically it took a good 2 years.
So far the crypto cycles have looked like this;
Btc leads rally. Top altcoins follow. Eventually the remaining alt coins follow, plus a bunch of dodgy new coins appear....looks like a bubble...pop.... correction follows, including Btc. However, the correction sets a new (higher) floor price of Btc (and top altcoins).
Over the last 6 years hubs also noticed a bit of a seasonal cycle with coins appreciating over the year and crashing at the end of the year or early in the new year. Could be coincidence obvs, but just an observation.
Btc might not have found it's floor yet and the next upswing might be awhile away. But if you buy and hold for a few years, that might not matter.
I'd add an obvious warning, crypto currencies are much more likely than most investments to go to zero. I can't see the world becoming so complicated that we need to transact in thousands of different currencies so expect some enormous consolidation and many worthless coins. Any investment in crypto should be an amount that would not cause you grief if you lost it entirely.
I don’t normally agree with Simon Bridges, but I certainly agree with him on this re Winston suing his own govt. A major sign of weakness from Jacinda..
http://www.nzherald.co.nz/national-video/news/video.cfm?c_id=1503075&ga…
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