Here's our summary of key events overnight that affect New Zealand, with news equity investors are rushing back into markets.
On Wall Street, stocks are sharply higher today, up more than +1% on some indexes. Some warn that this rally is a "last hurrah" before the consequences of the trade wars start to bite. Today's rises follow strong gains yesterday in Hong Kong and Tokyo, where they were up almost +1.5%, and especially Shanghai where they were up +2.5%. The NZX was one of the few equity markets that isn't feeling the enthusiasm; it fell yesterday (down -0.3%).
In other news, in India, a weak monsoon season there is having a sharp effect on rice and other plantings. El Nino may be the cause. In any case, lower agricultural output can have a major impact on India.
In China, despite being banned internationally in 2010, a growing number of factories are using CFCs as an insulation foam enabler. That has meant the ozone hole, which had been shrinking, is now not, and is at risk of expanding again.
In Mexico, their inflation rate - which had fallen sharply from +6.8% in December - has now stopped falling and turned up marginally. In June it was running at +4.7% pa.
In Japan, a fuel consumption testing scandal at Nissan is rocking the company and its reputation. It is a scandal very reminiscent of the German diesel-gate scandal that started at VW.
In England, there is growing turmoil in public policy circles over how to progress Brexit.
In Australia, new data shows the growing travails of their housing market. They may be selling about 50% of houses that come to auction (New Zealand is about 35% success rate), but it is now taking 64 days on average to sell any house in Sydney, a big rise in a year. In Melbourne, it is 48 days. The NZ equivalent is 38 days (40 days in Auckland, just 29 in Wellington).
The UST 10yr yield is back up strongly today at 2.86%, a +4 bps rise overnight. And the US 2-10 rate curve has risen marginally. That means that more than three quarters of UST issues are now trading below par. The losses have been substantial, and they are growing. It is a very big market. The Chinese 10yr is at 3.55% (up +1 bp) while the New Zealand equivalent is now at 2.85%, also up +1 bp.
Gold is up +US$4 at US$1,259/oz.
US oil prices are up today as well and now over US$74/bbl. The Brent benchmark is now over US$78/bbl.
The Kiwi dollar starts today unchanged at 68.4 USc. On the cross rates we are also lower by -½c at 91.6 AUc and at 58.2 euro cents. That leaves the TWI-5 at 71.5.
Bitcoin is now at US$6,697 which is little changed from this time yesterday.
This chart is animated here. For previous users, the animation process has been updated and works better now.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
Daily exchange rates
Select chart tabs
30 Comments
Americans seem to be unaffected by rising interest rates. US outstanding consumer credit stood at $24.56 billion in June 2018 from $10.71 billion a month ago, a mind-boggling 140% increase.
Revolving credit - credit cards, bank overdraft etc. as well as non-revolving credit - student and auto loans contributed nearly equal amounts to the rising consumer credit.
It stands at? Nope. It grew by that much. If US consumer debt stood at $24 billion that'd only be $72 per person, not worth mentioning. Slight difference to iit increasing by that much in a month.
It stands at ~$3.9 Trillion ($11,800 per capita) according to the FRED which only has data to May . https://fred.stlouisfed.org/series/TOTALSL
From bloomberg:
HIGHLIGHTS OF CONSUMER CREDIT (MAY)
Total credit increased $24.6b (est. up $12b) and prior month revised up to $10.3b gain (prev. $9.3b)
Revolving credit outstanding climbed $9.8b m/m, after a $1.1b rise in April
Non-revolving debt outstanding rose $14.8b m/m after $9.2b increase
This aso seem relevent to New Zealand - https://www.theguardian.com/us-news/2018/jul/09/trump-trade-war-america…
What if America has to start dumping milk onto the world market?
The class III milk spot price fell 7.33% in the past 7 days on speculation as the news American cheese mountain broke out. This just a pre-cursor as a crash in price from excess supply in global markets is yet to arrive.
US dairy farmers churn out millions of gallons of milk each season with little knowledge that the American love affair with white gold has passed. American consumers have had a falling appetite for dairy products as several have moved on to non-dairy alternatives.
It could be a New Zealand company that can stimulate that appetite again.
China CFC's, no surprises there. just more cheating, thieving, corrupt, manipulative, ethically bankrupt, duplicitous and completely untrustworthy behaviour in a long list. Only those who would line their own pockets at the expense of others would deal with them and should be avoided as well.
It is one of New Zealand's weaknesses. Because we are generally law abiding people of goodwill, we tend to be a bit blind to those who would outwit us. China and Germany have to cheat to enable their current account surpluses.
We seem less blind - less willfully blind - now. Chinese affairs - internally and externally – mean it can no longer be pretended by anyone except the most indebted, foolish or mendacious to be friendly to New Zealand’s political, social and individual freedoms.
Remember the Key government’s fearful and shameful hand-wringing over the Dalai Lama, Falun Gong, the Chinese steel-dumping investigation or any other affair that might in the least upset China? All they achieved, rightfully, was increased Chinese contempt. They and their industry backers may have been happy to travel into a China-centric future. Many others here value social, political, economic, cultural and individual freedom above a handful of grimy banknotes.
The conversation has changed over the last year or so. For example, we are now allowed to openly question aspects of immigration without automatically being called racist. These are difficult issues that because we couldn't discuss them we weren't able to figure out what the fish hooks actually were. My personal thanks to Michael Reddell for his work on the downside of bringing in more people than we can cope with. I still think there is a way to go though, the Auckland house price hyper inflation is still being blamed on too little building. To me it is more about a massive pile of money washing ashore, aided and supported by too many new people and too little building, all enabled by clueless bureaucrats and politicians of both parties.
There is also the darker side to people from Mainland China. An authoritarian state views its people as its property, for life. So they are expected to to what they are told wherever they are. Or else. Expect the occasional gruesome mafia hit just to remind them. I do hope the media understand this.
Yes, Roger, the conversation has changed, and politically I see one significant driver. The agricultural and primary sectors, led predominantly by Fonterra, have been the key influence in New Zealand’s policy alignment with China. Together they and compliant governments have led to the privileging of the FTA and Chinese interests over any other national consideration. Thus overwhelming immigration, the money inflow, the fake education industry and the rest of it. Behind it all, fear of upsetting the Chinese dairy market and other ag trade.
The industry lobby is now a busted flush. The dairy industry has lost respect – via Fonterra’s litany of professional incompetence and craven decision-making in China, but also socially (with its thousands of low- or minimum-waged immigrant workers), environmentally (across a host of data fields), and financially (an immensely indebted industry supported by land value inflation not revenue). Our economy, thankfully, looks to be heading another direction – exampled by technology now being our number-three earner. Using our brains, not just our climate, our grass.
Crudely, I think China offered a new colonial relationship to industry sectors unwilling to break dependence on high-volume, low-cost, largely unimproved commodity production. And its players and lobbyists have been like those three monkeys – hear no evil, see no evil, etc.
And Jian Yang is still there. Untouchable.
https://croakingcassandra.com/2017/11/01/jian-yang-againstill/
Oh great. I had noticed the last couple of early summers one could venture out on ones four wheeler moving stock through the middle of the day and not feel like you were being sizzled alive by UV. I thought it was my imagination, but no sunburn was proof of the pudding. I guess it will be back to before 10 and after 3 again. Bummer. And it took around 30 years to get to this point.
Welcome to the world of ever-more frantic triage. China came too late to the finite game - could only do it by faking it. We are the same - driving fossil-fuelled vehicles daily while lamenting CFC's. And we will increasingly triage, increasingly ignore, increasingly avoid.
May you live in interesting times.
Yup thats me pdk. I was being a bit flippant. I had/have seriously noticed the sun hasnt seemed as bad in the last couple of springs when the skin is a bit white n tender. It all seemed a little hopeful that if we could beat the cfc problem, mebe the world could come together on other issues. Its a bit of a downer to hear we cant even do the cfcs. I should get out the horse but I reckon I wouldnt survive the experience. Worksafe have no idea the injury and death saved by our quads. Its not the other way round.
Yeah I get that whatever we do we want to be safer than in years gone by. What I dont get is the public and the government telling us we are are a bunch of cowboys because we still have accidents. Everyone has accidents. We have car accidents, we slip in the shower, we do all sorts of nutty things. Personally I think its a miracle we do so many miles over such hilly terrain full of bull holes and other terrors yet most of us survive it day after day year after year. Worksafe want us to ditch our quads for side by sides. Now that gives me the terrors more than a horse. Stupid stupid things.
The fatal and serious accidents are in part due to the design, better to improve the vehicles in parallel with reviewing where they are currently used. Serious disablement is a possibility in many of the accidents, something which is incredibly costly for the drivers and taxpayers. Think of it like the helmet law. Better to reduce the known serious injuries down to just the rare occasional accident. Like motorcycles given the proportion of injuries to the use there are many above other injury rates which can be saved. But ditching the quads in reasonable terrain is an overreaction. More likely someone looking at the work they need to check for issues, machine maintenance and training throwing their hands up saying stuff it can't be bothered. There is not even decent training for variable terrain use in many areas. That being said any machine or vehicle training in this country leaves a lot to be desired.
"We have enjoyed a significant rise in asset prices, be they in equities, fixed income, or real estate. However, this has coincided with continued stagnation in income - and this rise in asset prices has only highlighted the disparity between income and asset growth. So resentment has simmered in the electorates of the developed world."
https://www.zerohedge.com/news/2018-07-09/one-banks-striking-admission-…
Of course China is dumping large amounts of CFCs into the atmosphere, they also are the largest contributor dumping plastic waste to the point a few Asian countries added to Chinas ocean plastic dump make the most of the world look negligible. They also are the largest demand for poaching nearly extinct species. If there was an environmentally & socially reprehensible practice China will have marketed it to a staggering degree. After all the world and humans in it are just more leeks for the harvest. Having national & environmental responsibility is a lost cause unless there is serious cash to be made.
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.