Here's our summary of key events overnight that affect New Zealand, with news that equity markets are in turmoil over the future of trade talks between the US and China, but some economic data elsewhere is encouragingly positive.
However, Wall Street has opened the week sharply lower as investors react to the US threats to a US:China trade reconciliation. The S&P500 is down -0.4% in afternoon trade although it opened even lower. Overnight, European markets were down more than -1% on the news, and yesterday, Tokyo was down -0.2%, Hong Kong was down -2.9% and Shanghai was down an eye-popping -5.6% at their close. That is the biggest one-day drop in more than three years. (Both the ASX and NZX markets lows -1% on the day as well.)
The latest PMI assessment of China's services sector shows one that is little-changed in April from March, expanding at a good rate. But clearly May has brought new risks.
The Chinese government has not yet reacted to the Trump tweet threats, planning to continue its talks with the US. It has however banned republication of those tweets in China.
And China's central bank has cut its reserve ratio requirement for SME lending to 8% from 13.5% for most other lending. They hope it will add as much as NZ$65 bln in stimulus support to help cover the bumps in the road while the trade tussle with the US plays out.
In the US, here is something 'new' - a Fed official saying that there will be at least one rate hike in 2019 and another next year. It seemed that recent events had taken these off the table, but apparently it is not so.
In Canada, a quite different report from Toronto and their housing market from the very downbeat Vancouver one. Toronto is reporting a strong rebound in sales, up an impressive +17% year-on-year in April. Prices are rising again as well.
In Europe too, small signs of optimism. Their services PMIs came in slightly better than expected, and a well-watched investor confidence survey has very positive.
Indonesia is reporting sharply lower growth, at the rate of just +5% in Q1 2019. Investment dropped ahead of elections and consumer spending failed to sustain their growth momentum which was expected to run at a +7% rate.
The UN is reporting that the natural world is in more trouble now than at any other time in human history, with extinction looming over 1 mln species of plants and animals. The claim comes in their first comprehensive report on biodiversity.
The UST 10yr yield is now at 2.50%, and that is -3 bps lower in trading today so far. But their 2-10 curve is little-changed at +19 bps and their negative 1-5 curve is still at -9 bps. The Aussie Govt 10yr is at 1.76% which is -4 bps lower since this time yesterday, the China Govt 10yr is at 3.38% and -3 bps lower, while the NZ Govt 10 yr is at 1.89% and also down -3 bps.
Gold is up +US$2 at US$1,281/oz.
US oil prices are little-changed today but with a firmer tone, now just over US$62/bbl while the Brent benchmark is just over US$71/bbl.
The Kiwi dollar will start today a little softer at 66.1 USc, under the expected pressure from the wobbly US:China trade situation. On the cross rates we lower at 94.4 AUc. Against the euro we are at 59 euro cents. That puts the TWI-5 down at 70.9.
Bitcoin is little-changed from this time yesterday at US$5,712. This rate is charted in the exchange rate set below.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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9 Comments
"First of all: stop advocating renewables, start advocating the use of less energy. I’m not saying it will be much use, I have this deep-seated fear that we, as a species, won’t be able to stop until nature itself stops us. What you don’t use, someone else can and will. But renewables are now dead."
The transition to renewables was doomed because modern industrial people, no matter how Romantic they are, do not want to return to pre-modern life. The reason renewables can’t power modern civilization is because they were never meant to.
Its a nice summary
There is no need for fear of the outcome, it is a wasted sentiment. Take a look at the actions of people, which is what has lead to the status quo, and to me it is obvious it there will not suddenly be enlightenment and change. I mean look at this site as a great example, a collection of above average minds that still can't reach anything close to consensus of the outcomes facing us, or develop any will do do anything about it. The point of enlightenment is when it is so obvious as to be too late to do anything about it.
When I started looking at these matters ten years ago the "use less energy" solution was obvious and came quickly without a lot of investigation. If I could come to that conclusion so quickly then some questions are left hanging about those that can't come to it. A couple of contributing factors from my observation is that not all intelligent people are technical, and that not all technical people are intelligent. You are left with a small pool of people that have insufficient gravity to alter the inertia. Inertia also being a term in physicals, an energy state if you like.
Interesting comment Scarfie, particularly the "questions are left hanging about those that can't come to it." bit. I'm a quality specialist who focus's on people and my experience is that there are a lot who blithely blunder through life thinking a) that bad shit just doesn't happen to them. It only ever happens to others. and b) the rules are for others to obey and/or are for them to apply to others. So it is not that they cannot come to the logical conclusion, but feel that they are somehow above them and the laws of the universe just won't apply to them. These two can explain why seemingly smart people can make remarkably stupid and/or selfish choices, and why much of the business world refuses to change they way they do business.
Growing up I can remember many conspiracy type stories that talked about people who seemed to be succeeding in developing alternate energy technology (fuel or power) suddenly vanishing, or just stopping with no credible reason. Personally I never knew the truth or otherwise in any of these, but today, having seen some of the all too common evidence of large corporates protecting their interests at the cost of society I do wonder if there is at least a grain of truth in some of these.
When the numbers aren't showing what you want, just make them up!
https://www.thedailybeast.com/japan-has-a-new-emperor-naruhito-and-a-ne…
this is a pretty good summary of our predicament for those with the time.
https://www.youtube.com/watch?v=5WPB2u8EzL8&feature=youtu.be
Outlines energy & dissipative structures, EROI for different civilizations, our energy cliff, end of financialisation, debt limits, ecosystem collapse...
The cornucopians are somewhat absent this morning.
Shorting their positions, maybe?
this cartoon sums it up
https://steveaustinlex.wordpress.com/2011/05/16/steady-as-she-goes/
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