Here's our summary of key events overnight that affect New Zealand, with news economic growth is healthy worldwide.
But first up today, the latest dairy auction has brought a good gain of +2.7% overall in USD although the strengthened Kiwi dollar has limited the upside in local currency to +1.5%. WMP prices also only gained less than +1% and that also restrained the overall outcome. But there was a good bounce back for cheese which rose +4.6% and also SMP which rose +3.6%. In fact, butter prices, which rose just a bit less than +3% are now at a six month high. And despite the minor gain for WMP, the new price level is an eleven month high. Volumes sold were a modest 19,262 tonnes, but that is the highest in four auction events. It is unlikely any payout forecasts will be changed by today's auction, but they aren't under threat from it either.
In the US, new housing starts in March have come in much stronger than expected and are up +10.9% above the same month a year ago. Building permits issued were up +7.5% on the same basis. The real strength is in multi-unit developments; single family home starts were up only +1.7%.
And in American factories, industrial production was up +4.3% in March from a year ago although the growth rate slowed to less than half that from February. Capacity utilisation however did pick up.
China announced its economic growth rate was +6.8% pa in the quarter ending in March, exactly on market expectations and exactly the same as Q4-17. They also said their retail sales grew +10.1% and that follows a rare two months that were sub +10%.
Around the world, economic growth is rising. The IMF reports the global economic upswing that began around mid-2016 has become broader and stronger. They say advanced economies as a group will continue to expand above their potential growth rates this year and next before decelerating, while growth in emerging market and developing economies will also rise before leveling off. 2018 growth will be a seven year high, they say. Of course, they also give their obligatory warning about "troubles ahead in the future".
Led by tech stocks, Wall Street is strongly higher today with all major indexes up by much more than +1%.
China announced a new 'reform' allowing foreign carmakers to set up in the country without a local shareholding. It also removed foreign ownership limits for ship and aircraft manufacturing. But China's Commerce Ministry ordered importers of American sorghum to post bonds to pay possible anti-dumping duties which could be as high at 180%.
But China is not moving away from holding its foreign reserves in US Treasuries. They increased their holdings in February by +$8.5 bln, its biggest purchase in six months, taking them to US$1.18% tln or 18.7% of all foreign holdings and about 6% of all US Federal debt.
In Germany, the influential business confidence survey by ZEW is reporting a sharp fall in confidence, triggered by the inhibiting of German trade with Russia after the West's reaction to the Syria chemical warfare attack.
In Australia, revelations at their Royal Commission into Financial Services is exposing some very dodgy behaviour in the current investigation of AMP. There are likely to be some long-term consequences for the whole industry, and much tougher penalties as a result.
The UST 10yr yield is slipping today and now at 2.81% (-2 bps). The US 2-10 rate curve is moving lower again. The Chinese 10yr is at 3.68% (-4 bps) while the New Zealand equivalent is at 2.85% (unchanged).
Gold is at US$1,347/oz in New York, and unchanged.
Oil prices are slightly firmer today and now just over US$66.50/bbl and the Brent benchmark just over US$71.50/bbl.
The Kiwi dollar is still unchanged this morning at 73.4 USc. On the cross rates we are at 94.4 AUc and 59.4 euro cents. That puts the TWI-5 at 74.4, still anchored near the top of its 2018 range.
Bitcoin is now at US$7,870 which is a -1.8% slip from this time yesterday.
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56 Comments
Sounds like you missed the memo on sharemarkets. It's already happened. S&P 500 + 19.42% in 2017, +1.23% so far for 2018. Many balanced portfolios are modestly negative overall for the year so far.
If corporate profitability tracks the current strong upswing in growth, PE ratios should improve and turn out to be not so 'bloated' (based on current valuations).
@glc
Clearly worldwide debt is too extreme and with deleveraging well under way and world interest rates on the rise, the bloated asset & share markets are surely to quieten down at the very least
I read in another topic that because of the same reason of 'extreme debt', the interest rate can NOT increase .
A small question: what is deleveraging mean? Is it just no more quantitative easing ? or selling of the coroporate bonds by Fed ? what is it ? please enlighten . Thanks
I wonder when Trump will get his Nobel peace prize? Or maybe Obama could give him his given expectation never matched reality there.
“Ahead of a summit next week between North Korean premier Kim Jong Un and South Korean President Moon Jae-In, lawmakers from the neighboring states were thought to be negotiating the details of a joint statement that could outline an end to the military conflict between the two countries.”
A random thought/comment? I can't see any reference to that in the above news. However on that line of thought, is Taxinda as naive as she sounds? Good grief re the Syrian situation shes saying Russia has questions to answer and leave it to the UN to do that, at the same time acknowledging that Russia has veto power. The comrade is strong in this one.
There is some talk of the Commonwealth expanding and inviting the US to join. Whilst the UN is mainly nasty dictatorship "Republics" (eg The Democratic Republic of the Congo - a slaughterhouse), the Commonwealth only allows democracies (they suspended Fiji's membership during the coup, I believe). Sounds far-fetched, well apparently not:
https://www.forbes.com/sites/simonconstable/2017/01/26/how-the-commonwe…
What making the Pres pay allegiance to the Queen - Or (considering Trump) would we have two Queens? One real one, and one poncy, posturing egotistical one? Don't forget the Yanks went to war for their independence. this is really ironic!
On the other side of the coin, no veto playing their part in a democratic process. Yeah right!
Even if Russia did not exercise its veto, the Islamic and developing nation bloc would stymie proposed military action against Syria.
Anyway - govt MP and history expert Golriz Ghahraman informs us that bombing for peace has never worked; apparently Hiroshima and Nagasaki didn't force the Japanese to sue for peace, American bombing didn't bring the North Vietnamese to peace negotiations in Paris and the UN bombing in the Balkans played no part in bringing an end to that conflict.
Robert Fisk Reaches Syrian 'Chemical Attack' Site, Concludes "They Were Not Gassed"
https://www.zerohedge.com/news/2018-04-17/famed-war-reporter-robert-fis…
Robert Fisk suggests wind and dust cause hypoxia(as opposed to chlorine gas poisoning): they don't.
But intensive shelling or gas or dust could be pretty irritating.
Truth will probably never come out.
PS Fisk is an incredibly courageous and determined on the spot reporter.
So Fisk talks to one Syrian doctor who theorises oxygen starvation is the explanation and on that basis the 'actual truth' is established. I think we'd need a bit more than the assertion of this Beirut based Islamist sympathising journalist.
While I doubt gas was used on this occasion, given how little sense it makes that the grotesque Assad would take such a risk given he was so close to 'victory' and that the children hosing down TV scenes looked contrived, that this vile regime makes and uses gas against its people is a certified fact.
Your cynicism is noted - but on a serious note a big part of the problem is that when military action is deemed necessary we tend to target the troops not the leadership who are directing the mayhem. With modern weapons precision targeting of the leadership might make them feel a little more directly accountable for the consequences of their decisions, and actually save a lot of lives in the process.
There is a strong argument to be made that the Japanese surrendered due to the Soviet Union entering the war and invading Japanese territory - the prospect of Russian's invading the mainland in a matter of days would have focused minds.
https://en.wikipedia.org/wiki/Debate_over_the_atomic_bombings_of_Hirosh…
The Japanese war cabinet was divided on whether to end it, Hirohito made the call. Yes, the emperors speech cited the bomb as the key determining reason:
'the enemy has begun to employ a new and most cruel bomb, the power of which to do damage is, indeed, incalculable, taking the toll of many innocent lives. Should we continue to fight, it would not only result in an ultimate collapse and obliteration of the Japanese nation, but also it would lead to the total extinction of human civilization'
mfd. If a more emphatic example is required of why Ghahraman's grasp of history is shaky (her CV embellishment also demonstrating a selective approach to the past), the American operation linebacker bombing of North Vietnam is a classic one. The bombing ceased when the NV came to the negotiating table and recommenced when they withdrew, upon which they promptly returned and did a deal. Peace would not have occurred without the bombing.
This is an observation of simple cause and effect (which was Ghrahman's flawed assertion), not a commentary of the morality of bombing.
The US militarily lost no campaigns in Vietnam, including the massive NVA Tet offensive. Body count and domestic politics forced them out, not NVA military action. The Paris accord was a negotiated peace settlement.
ExExpat.....you do realise that Douma is where the Jaish al-Islam, western approved and Saudi backed 'moderate rebels' were based and held the local population hostage? Jaish al-Islam have previously admitted using chemical weapons on a Kurdish part of Allepo, Northern Syria in April 2016. This group is the source of the video at the clinc...which shows no evidence of chemical exposure symptoms or any effective treatment for chemical exposure. They're using water and asthma inhalers! I've added a link below as this will likely challenge your ideological fervor/two minutes of hate.
https://www.express.co.uk/news/world/944900/Syria-Assad-chemical-attack…
As stp noted above, the journalist Robert Fisk recently visited the site of the alleged chemical attack in Douma and interviewed the doctor at the clinic where the video was taken as well as residents who reported no chemical attack. Dr. Assim Rahaibani stated that were overcome not by gas but by oxygen starvation from being trapped in either a basement or tunnels under city. The original article is in the Independent.
Please also explain why the airstrikes were made on a day before the OPCW was due to inspect the alledged site of the chemical attack? -An inspection invited by Russia. Also why would you bomb a chemical weapons facility knowing that dangerous chemicals could be dispersed into the enviroment and atmosphere?
Jacinda is right in being measured and cautious in her response.
Who knows what is true and what isn't in the fog of war? The version I watched on the news suggested that there was an attack. Neither of us were there and I certainly don't have the inside info.
Are we likely being manipulated? Absolutely on a daily basis, even in domestic politics where the spin merchants are likely making $$$, witness the attempts to make it look like the Nation was behind Taxinda re the offshore permits.
At times like this I revert to the bigger picture. I put more store in the response from the UK, US and France than I do in ours. To me it just highlights how lacking the PM is in leadership. Fence sit for too long and you get a sore butt.
Offshore permits. Storm in a teacup. Have a read...
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=120…
Sorry, I can't bring myself to read anything that commentator writes. It's the same reaction every time I get caught out seeing Taxinda on TV.
If it's a storm in a teacup then why not take the time to consult with industry? To use the phrase of the moment it's virtue signalling. The mitigant is that a future National Government (and there will be one) will reverse this. What goes around comes around.
Ex Expat. Non consultation with the industry is the key concern. It is arrogant and unsettling for potential investors.
Who knows which industry is next to be obliterated by a Green party that has the support of only 5% of the electorate yet is clearly in control of decisions on any business using natural resources. It is a dangerous time to have your livelihood at the whim of these extremists.
Big end of town investors will have noted the non consultative, dictatorial approach on exploration and will be wondering which industry will be next in the sights of the minority greens coalition faction which is calling the shots on natural resource based industries.
Clark got badly offside with industry, this lot seem to be striving to outdo her by in addition to business, rapidly alienating regional NZ.
Dont be so closed minded...you just might see the light.
2/3 of known oil reserves canaot be used without breaching the carbon tipping point, the oil industry are under pressure to re-evaluate reserves due to the fact they will not be allowed to use them. There is no point in exploring for more oil when we caanot use what we already know about. And on it goes.......wake up time my friend, the world is changing and you need to grow up about it.
If that's true, why bother legislating? The cost of reserves unable to be used would be a private cost.
In the interim, if you truly want to reduce our carbon footprint be bold: lobby to have SOE coal mining stopped forthwith; lift the price of fuel to its environmental cost; reduce the number of lanes on roads until the traffic uses more environmentally friendly methods; tax cars with less than say 3 occupants; limit the open road speed limit to 70km/hr. Of course I'd like to see that because it would have National in government in a flash. By not consulting, the COL have shot themselves in the foot. It would have meant nothing in the timeframe espoused to do that, so what were they scared about? You've lost the Public on day 1, not the hard core supporters but the swing voters. I'm pretty happy about that.
If 2/3rds of known oil reserves can't be used then we are already stuffed since BP says that proven reserves were good for 50 years of 2016 level consumption.. take 2/3rds of that away and we have 15 years of usable oil left at 2016 useage levels. Simply no way we can stay inside that envelope with current population levels and growth expectations, and the couple billion people in Asia and Africa all wanting to move up to a western lifestyle.
Other answers will have to be found until we get population growth under control.
"proven" is a bit of a joke, and BP is simply wrong.
Otherwise spot on, the problem is there appear to be no short term answers except conserve, meanwhile we continue to breed like rabbits and no one will have a bar of population reduction and especially not the Greens.
I trust BP to know more about oil reserves than an IT guy going by the name "thing", and the whole peak oil scare industry thats been wrong since the mid 70s. They simply fail to account for how inventive we can get at finding new/better ways to extract what we want/need.
Eventually the oil will run out if we don't move away from it. But when that is is open to debate, and I don't think peak oil will occur because we can't extract enough, but simply because we have moved to better technologies and we no longer need to extract the oil in increasing quantities.
You, ah, might have missed this. It is not perfect, but at least it begins to address the issue, name me another party that even goes this close.
https://www.greens.org.nz/sites/default/files/population_20140811_0.pdf
It doesn't address anything, it just says hand wavy words and no clear action plan. And there other policies directly contradict that one. The number of handouts they wanted to give new mothers etc would produce the exact opposite effect of slowing down the birth rate.
fuel prices could rapidly decline as the world moves to electric vehicles, anything to keep the old cars on the road for one more year.
OPEC risks falling apart as the less wealthy countries try and maximise the return on their valued natural resource before it becomes obsolete by increasng production and flooding the supply.
fuel prices wont decline rapidly, because the move to electric vehicles and the materials extraction and infrastructure building to support them requires large amounts of oil to consumed in the process. And material constraints will mean the move to a fully (90%+) electric light vehicle fleet takes minimum 3 decades, maybe 5.
I am glad you see the timescale, few do.
Otherwise this is actually rather dynamic in nature and probably all but impossible to predict short term at least eg in July2008 oil hit $148US a barrel and the world's economy went into severe recession and oil demand collapsed so much the oil price went down to $35US a barrel and has since recovered to $50~60US. New fields are going to cost $80+ so whos developing them when oil is $60? few.
So the Q is as we are at peak oil and oil output will decline will demand decline at all? slower? faster? will the price go up? its still a cheap and amazing feedstock into our industrial economy after all that deamnd wont go away and there is a lot of energy in making and plastic in an EV.
Material constraints is also highly dynamic in nature. 2 to 5 years ago Lithium batteries were it and the problems of getting enough lithium loomed as a big issue. Today however there are now new batteries coming out of research using common and cheap materials so this could also change hugely. Then there is UBER and driverless cars on the horizon also. This means that yes you are right it could easily take 20 years to get to 90%+ of the current numbers of ICE, but what if in 10 years ownership of any car is now not common as everyone "UBERs" as its so cheap? so actual cars on the road drop 75%?
Side effects, lets say that happens, why do we need new and bigger roads if the car numbers are hugely less?
I find it mind blowing and also hopeful....
peak oil. lol.
Car numbers hugely less because of uber/autnomous cars.. Hmm, absolute numbers of cars might decrease, considering 90% of current cars spend 20+hrs a day parked, but peak hour cars could increase, since now Mum can go to work, dad can go to work and little 12yo Johhny can order his ride to school on his phone instead of relying on mum or dad or (shock horror) sharing a bus with the riff-raff.
We could car-pool a lot more than we do now even without autonomous cars.. but we don't because we don't want to. I don't see autonomous cars changing that, and while city dwellers without car-parks might revel in on-demand cars that they don't have to worry about providing parking for, you are fighting to get the rest of the car owners away from instant availabilty, being able to keep their gym bag or whatever in the boot, their music on the stereo and not having to worry about the previous user soiling the car or leaving it smelling of hot food etc.
There are some interesting reports out there on how the industry will be transformed, and my friends in the industry say there's a massive amount coming through from the head offices on what their expectations are. They are already considering the need for new business models, of course.
This is one interesting report, though I don't think it's the one I had read earlier. Overall, a lot of analyses suggest reduced congestion, fewer deaths by accident (of course), but also significantly less pollution from automobiles - and a much smaller fleet.
Once upon a time I always thought people would want to own their own physical music media. I was very wrong about that, and it seems ludicrous that I would have thought that. I do think young people will value car ownership much, much less and many will opt out. Why have that depreciating asset that is most people's second biggest purchase?
(The one thing I cannot recall is what the commentary was on overall passenger miles - up, down, or broadly similar. )
Its interesting, and impossible to predict how the social animal will react to technological change. Price will be a major factor, if autonomous uber-like services are cheap, then I can see total vehicle miles going up, if they are expensive, then it'll take longer for people to relinquish the gas burner cars. We will still have issue with peak hour traffic so long as we keep trying to move 60% of to population from home to work at ~8am and then back teh other way at ~5pm. Autonomous food delivery fleets and the like could turn the average NZer into something that wont fit in a standard car sized seat.
Interesting times ahead!
We are all being manipulated. I find it amazing just how different medias present completely different accounts of the same thing. But it's good to step out of the western media to see that entirely different view.
Follow these for a while.
www.southfront.org. Difficult to be sure, but when the chips are down, always on the side of the Russians. So probably Government funded. But no more one sided that any US media.
www.almasdarnews.com Lebanese based, but always in favour of the Syrian Government.
"Live map Syria" (best to put those words into a search engine). Seems independent because it collects all sorts of sources, tweets and photos from journalists, soldiers alike. So opposing info pops up all the time. Then puts it onto a map. Following that map over a few months tells a reliable story, whatever side you are on.
You don't have to agree with anything you see, but the difference in the basic info presented is startling.
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