Here's our summary of key events overnight that affect New Zealand, with news the signs of a global economy slowdown are starting to build.
But first, in the US consumer prices increased by the most in nine months in October amid gains in the cost of petrol and rents. This steady rise in inflation that likely will keep the Federal Reserve on track to raise interest rates again in December.
Meanwhile, US benchmark 30 yr mortgage rates hit 5.22% with points and a seven year high. Even without points, it is at the same 7 year high. That has resulted in the flow of new mortgage applications slowing and they were in fact -3.2% lower in a week and that is after a -5% drop the previous week.
Wall Street is down -0.7% so far today. Shanghai fell -0.9% yesterday.
In Canada, a new analysts shows that higher interest rates and tougher mortgage qualification rules have significantly improved the quality of new lending there. The share of new mortgages going to highly indebted borrowers - those with loan-to-income ratios of above 4½ times - dropped sharply to 13% in the September quarter of 2018, down from more than 18% last year.
But another Bank of Canada survey shows Canadians think the risk of a global economic slump is rising significantly.
In China, industrial production actually rose in October, which wasn't expected. However, retail sales came in surprisingly weak and even below weak expectations, and that will give impetus to new stimulus programs there. One closely-watch piece of data shows only a +4.8% rise in electricity production. Sadly, Chinese coal production rose +8% and coal imports were up slightly more.
Japan’s economy contracted -1.2% in the third quarter and that was slightly more than expected, hit by natural disasters and a decline in exports, a worrying sign that trade protectionism is starting to take its toll on overseas demand. Germany also contracted.
In Fiji the likely election of the current military leader Bainimarama as a legitimate democratically elected prime minister will be seen as a setback for those wanting to curb China's influence in the region. This is our local backyard 'FijiFirst' populist event with the rise and entrenchment of strongman politics.
Details of the Brexit deal are starting to leak out. It seems the UK will continue to pay into EU budgets after March 29, 2019 separation through until at least 2020. It will lose its say in the EU, but EU law will continue to apply. Northern Ireland will continue to be in the EU and be subject to EU customs rules, it seems. At least until yet another deal is agreed. And the ongoing relationship between the UK and the EU will be modeled on that between the EU and Ukraine.
In Australia, consumer confidence improved for a second month in November, with people more upbeat on their finances and the long-run economic outlook. The Melbourne Institute index of consumer sentiment rose +2.8% in November, building on the October result when it gained +1%. It is a survey that has struggled to be consistently positive over the past five years.
The UST 10yr yield are lower at 3.13%, a another fall of -3 bps. Update: It has since fallen to 3.09%. Their 2-10 curve is still just on +25 bps. The Aussie Govt 10yr is at 2.70%, also down -3 bps, the China Govt 10yr is at 3.46% and down -4 bps, while the NZ Govt 10 yr is at 2.80% and that was down -2 bps overnight.
Gold is unchanged at US$1,203/oz.
US oil prices fell again today, down another -US$1/bbl overnight and now just on US$56.50/bbl. The Brent benchmark is now over US$66.50/bbl. Maybe the price is finding some support at present however as producers race to agree production cuts.
The Kiwi dollar will start today firmer yet again and now at 67.9 USc. On the cross rates we are also firmer at 94.1 AUc which is the first time above 94 since April, and at 60 euro cents. That puts the TWI-5 up to 72.5 and a new five month high.
Bitcoin is falling significantly today and is now at just US$5,646 and a massive -10.4% slump overnight, breaking a recent period of stability. Because this fall has just started in the past hour or so, it is not yet really clear what triggered it. We will update this item when it is known. but the price is now back to where it was in October 2017. This rate is charted in the exchange rate set below.
This chart is animated here.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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23 Comments
I can see why the Canadians think they are in a slump, they are losing 100million a day in oil revenue.
"IF YOU THINK THAT WTI AND/OR BRENT CRUDES ARE CHEAP... then consider for a moment what is happening in Canada these days where Western Canada Select crude (WSC as it is always referred to) trades below $16/barrel or a stunning $43/barrel “discount” to WTI! WCS is a “heavy” crude type with an API of about 20 while WTI is a “light” crude with an API “gravity” rating near 40 and so by definition given the greater difficulty in refining WCS compared to WTI it has always sold at a discount to WTI. It had to; there had been little choice."
https://www.alhambrapartners.com/2018/11/14/live-by-the-oil-price/
Seventies repeat but with Moslem terrorists not Irish ones. Why has the West repeated the mistake of state sponsored immigration that gave us the Northern Ireland low level civil war and the Palestinian/Israel civil war? Some cultures just don't seem to mix well, whether it's Protestant Scots and Catholic Irish or Palestinian Arabs and Jewish Israelis. What a minefield, and it seems it cannot be resolved, only managed well or badly.
I've been looking at that for a while and my best guess would be three reasons. 1 - Feelings over facts (ideological based decisions). 2 - Western countries are having issues with aging populations so immigrants are imported to keep the ponzi style political and social schemes going. 3 - For a more conspiratorial view where the parties promoting these policies typically are the ones to gain votes from the new immigrants, so a political power play of sorts.
Just been in Montenegro, Croatia, Bosnia, Slovenia. Very ethnically pure, and indeed they are still getting rid of each other's citizens. (The differences are important to them, but for me, it's hard to tell em apart)
Quite different societies with no evident ethnic mixes.
Maybe, although it's not the first time the Brexiteers have threatened this kind of thing and May is still standing.
Underlying their failure to oust her is the issue of who if anyone would either Remainers or Brexiteers agree on to take the premiership if they cull May? Toppling May in all likelihood would cause a rift so wide within the Tory party that they are compromised to the extent they risk losing power. Red and blue are now neck and neck in the polls and all the Tory internal squabbling is doing nothing to engender confidence in the British populace. And let's not forget that Labour are polling more or less equal to the Tories even after the anti-semetism scandal.
But also, the proposed plan is only a temporary one, so it will be a tough sell to get parliament to believe that a temporary compromised deal with a two year best_before_date is worse than a no deal drama. The Ukraine style deal has often been described as a compromise between Norway and Canada style deals, so it's not as if the Chequers plan is an entirely "soft" Brexit either.
The train from Manukau was half full of Indian students this morning. Seem like lovely, ambitious people.
But you can't tell me that these immigrants will be having much impact on property.
I understand from an Indian friend that many live in homestays. Often family or friends of family,
It's a good illustration as to why aggregate data around things like immigration and impacts on property need to be treated with caution.
There are two things which are just about opposites: low wage immigration and high wage immigration. One brings 3rd world wages and often corruption and the other brings talent, creativity, productivity and challenges and educates the best Kiwis.
So half my comments are grumbles about how easy it is to become a kiwi if you are a drug smuggling kick boxer or a cleaner in fast food restaurant and the other grumbles about how INZ are putting obstacles in the way of the top PhD graduates in science, maths and engineering arriving from India, the Phillipines, Africa, etc.
Could this be the start of the demise of crypto?
https://www.fxstreet.com/cryptocurrencies/news/breaking-news-bitcoin-cr…
But but but... Bitcoin will BOOM! ‘All-conquering economic JUGGERNAUT’ - EXPLOSIVE theory revealed
"bitcoin economist Dr Saifedean Ammous" Hmm, adding bitcoin to economist. Does that mean he(?) has tarot cards AND tea leaves?
"As such, Communist officials are driving toward another mandate, somewhat in a panic, where the goal is not really growth. In a sense, they seem intent on managing the decline as best as they might, realizing it’s not going to get better anytime soon (“L”) but not wanting the downward slope to accelerate too far toward an impossible-to-control scenario (the so-called hard landing).
I’m not sure it’s possible, though at this point what other choice may they have realistically available?"
https://www.alhambrapartners.com/2018/11/14/china-softly-weakens-some-m…
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