Here's our summary of key events overnight that affect New Zealand, with news global trade is in the spotlight today.
Firstly, international airfreight in May was +4.2% higher than the same month a year ago, but that is down from the +5.2% growth we reported in April. Expansion is clearly slowing now that these very high levels have been reached. American inventory-to-sales levels are starting to rise and the previous decline in those was a key driver in world airfreight. Future growth will be modest. Pricing however is likely to be much more competitive as capacity is still growing faster than sales volumes, and has done now for the past four consecutive months.
Trade restrictions are on the rise however, as has been widely reported. A new WTO report says they doubled in the period from mid-October 2017 to mid-May 2018, compared with the previous review period. They said a total of 39 new trade restrictions were applied by G20 economies including by Germany, France, the UK, China, and Japan, mostly in retaliation for protectionist moves by the United States.
China's service sector is expanded faster in June, according to a private survey. It is their best improvement since February. The June data is impressive given the rising trade issues which mainly affect the factory sector.
And in other news about China, for all their troubles and recent rush to deleverage, the HNA Group chairman has died in France by falling after posing for a risky tourist photograph. HNA could well unravel quickly now.
The OECD is reporting that as at December 2017, there are now more people employed in the group's countries than before the GFC. Europe has been the laggard, Australia and New Zealand the stars. But in their report they finger 'superstar' tech firms as the root cause of low wage growth even though labour demand is rising strongly everywhere again. Those tech firms have changed the way we work, capturing benefits that used to go to labour in higher wages. Wage stagnation may be a permanent international trend.
In Europe, the English Supreme Court has sided with the Portuguese Government in the long-running commercial claim against the Bank of Portugal and their arbitrary confiscation of Novo Banco. That means that the NZ Super Fund's US$150 mln investment is unlikely to ever be recovered. Politics rather than law seems to be at the heart of the decision, with the English deferring to Portugal on the matter, even though the contract specified UK law.
In New York, one of the famous investors who shorted Bear Sterns and Lehman Bros in ahead of the GFC, David Einhorn, (and made famous in The Big Short) is crashing and burning himself.
In Australia, their service sector expansion slowed sharply in June. That was the weakest result in the 26 month history of this survey
The UST 10yr yield is unchanged at 2.83% on the US holiday. The Chinese 10yr is at 3.52% (up +1 bp) while the New Zealand equivalent is now at 2.81%, unchanged.
Gold is higher again today, up +US$4 at US$1,257/oz.
US oil prices remain high, now just over US$74/bbl. The Brent benchmark is now just over US$78/bbl.
The Kiwi dollar starts today little changed at 67.6 USc. On the cross rates we are marginally firmer at 91.6 AUc and at 58 euro cents. That puts the TWI-5 at 71.1.
Bitcoin is now at US$6,680 and +1.6 higher than this time yesterday.
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8 Comments
Not sure that Portuguese decision can be seen as political David. The decision seems to be was the debt transferred, no. Did the Portuguese government have the authority to make that decision, yes. It is an interesting test case, though. The decision was a unanimous one. However, seeing things from the Imperial Union's point of view is a possibility and Portugal is England's oldest ally, I believe, predating the EU by something like 500 hundred years.
First of the whistleblowers out the gate telling how Westpac NZ staff selling dodgy mortgages here; https://www.nzherald.co.nz/personal-finance/news/article.cfm?c_id=12&ob…
Selling pressure on bank workers remains high here; https://www.nzherald.co.nz/personal-finance/news/article.cfm?c_id=12&ob…
Now the property market has stagnated, we will soon get to hear it from the disgruntled customers perspective. For over a decade banks have made a concerted effort to get FHBs and speculators across the line. Now comes the fallout.
One for Professor Brady, Kuangchi Science ( 0439 HKSE ),whose Chairman has been likened to the Chinese Elon Musk,a company which obtained OIO approval to takeover Martin Jetpack, had a publicised MOU,with NZ airways and Shanghai Pengxin,to use NZ airspace to fly inflatable dolls into near space ,based from the owner of Crafer farms.Yesterday share price plunged 20 percent on heavy volume down 80 percent in past year,down 90 percent since John Key witnessed MOU. As for Martin Jetpack,that's gone, gone from the ASX,just gone.When a companies profit comes primarily from a non public share offering in a car parts manufacturer,something was always about to happen. As for Shanghai Pengxin of Crafer farms fame,its major 'asset' Pengxin international Mining,again sees its shares suspended,possibly as it renogoiates ,Glencore style with the Congolese government its copper stake,or similarly bemoans the loss in value in its auto shares .I will be watching my computers Professor Brady as I log in to the HKSE,to see whether the Chinese Musk can catch knives.
'And in other news about China, for all their troubles and recent rush to deleverage, the HNA Group chairman has died in France by falling after posing for a risky tourist photograph. HNA could well unravel quickly now.'
'No, not quite, you need to step back a bit, bit more, little bit more, oh bugger.'
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