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Here's our summary of key events overnight that affect New Zealand, with news the largest are slowing the fastest.
The OECD says economic expansions are slowing quickly now in most countries with the fastest slowdowns occurring in the largest economies, especially the US and China. Only Canada and Japan are expected to see rising growth and they are both off low levels anyway. They see New Zealand with a +2.5% growth rate and well above most G20 countries, but probably didn't adjust that after yesterday's weak Q2 result that came in at +2.1%. The OECD report says that world growth has now slowed to its lowest level since the GFC.
In the US, the latest regional Fed survey in the Pennsylvania area, shows a slowing of activity although not be as much markets were expecting.
And the slowing growth in August home sales in the US also came in less-worse than observers were expecting.
Electric small truck startup Rivian Automotive got a big boost yesterday when Amazon announced it was ordering 100,000 electric delivery vans.
On Wall Street, the financial stresses are continuing with the New York Fed having to inject another US$75 bln overnight through the repo system that keeps bank capital stable. That followed a dose of the same size on Wednesday and US$53.2 bln the day before. The lubrication is mounting up, now exceeding US$200 bln.
In Canada, the unofficial survey of jobs growth came in better in August that July, both showing strong gains.
In Japan, as expected, their latest official interest rate review kept rates and policy unchanged, but they did signal that more easing measures may be coming in October.
Domestic unrest and the US-China trade war seems likely to push Hong Kong into recession, according to local government officials. The Hong Kong Monetary Authority has cut its benchmark interest rate by -25 bps to 2.25%.
Forest burning in Indonesia for palm oil plantations has reached extreme levels, blanketing many neighbouring countries in thick smog. Because of the economic power of companies like Wilmar, there seems to be little political will to address the issue.
In Australia, they reported poor jobs data yesterday, with all the growth in part-time positions. Analysts think this will be a trigger for another RBA rate cut.
The UST 10yr yield is unchanged today at 1.78%. Their 2-10 curve is still at +3 bps. Their negative 1-5 curve is now at -22 bps. And their 3m-10yr curve is holding at -18 bps. The Aussie Govt 10yr is down -8 bps at 1.06%. The China Govt 10yr is unchanged at 3.14%. The NZ Govt 10 yr is now at 1.21%, a another fall of -6 bps from yesterday.
Gold is in a holding pattern, up +US$2 to US$1,499/oz.
US oil prices are unchanged today at just on US$58/bbl. But the Brent benchmark is up +US$1 to just under US$64.50.
The Kiwi dollar is softer at 63.1 USc. On the cross rates we have firmed a bit to 92.7 AUc. Against the euro we are down to 57.1 euro cents. That leaves the TWI-5 at the same low level it was at this time yesterday, 68.4.
Bitcoin is now at US$10,044 and a small net slide since than this time yesterday. Overnight it did dip well under US$10,000 for some time. The bitcoin 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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91 Comments
Wee, another reshuffle of people to a new agency, complete with new letterhead, stationery, email addresses and no doubt some team building exercises and a leadership retreat.
Another entry to be added to https://www.hnzc.co.nz/about-us/state-housing-agencies/ soon.
But have they actually gained any competence, or is it just a hip/PC new culturally enlightened name for the same bunch of paperpushers doing the same thing?
The Homes and Communities bill suggests the new agency has consolidated some of the executive powers required to address social housing issues.
The current state is a mess with the community housing portfolio sitting across many different departments and agencies; each having some level of authority and veto over the decision making process.
Hah, just being realistic about the non-performance of this govt on Housing, ( and Immigration and Transport..)
btw, checked with the HLC people about market homes in the Mt Roskill development, nothing in the pipeline anytime soon, might be some "off the plan" sales before Christmas, so maybe some actual foundations going down sometime next year. So everything you saw at Mt roskill south was state housing.
yup, agree.. I didn't say the KB ones are happening in the next month or two..
the ground work happening on many sites I was told are KB, so the actual foundations and structures, could be early next year..
the houses currently being erected are state houses.. and as I said, they are all the ones with the HNZ banners..
based on my sources, most of the KB houses will be prefabricated...
I believe state houses have a specific building specification, so prefabs are out of scope... would any one know why...
How many times has the Australian flag been hoisted at an event instead of ours? In fact, how many time has the opposite happened!
"Australia confuses their own flag for New Zealand's"
https://www.morefm.co.nz/home/trending/2018/01/australia-confuses-their…
Plenty of people voted for Labour and the coalition last election based on their promises of change, myself included. I will not be voting for them at the next election, and I will be voting, and I won't be the only one. Your claim that this isn't making any difference is quite wrong, I am sure.
If the Nats did things like cut income taxes might you vote for them Pragmatist?
I'm still basically centre-left (but have voted for Nats once or twice), but Labour are a mess, and for me it now comes down to self interest.
And Labour are doing very little that benefits me, and doing very little that benefits society....
Its a hard call. I'd like to see things improve for all NZers, and Nationals not exactly known for that , but yeah, at some point I have to eventually say fuggit, gotta put myself and family first..
I really dunno, I will vote, but It may just end up being a protest vote for a minor party in the hope that enough of us do it to get some new blood/thinking into parliament and force the two major parties into actually getting their crap together.
"Voting for more of the same failed policies is mind blowing."
Yeah, but that encompasses both National and Labour.. So leaves me with the minor parties. I'll never vote ACT again, I'd support some/most of the greens environmentla policies, but a lot of the social justice bs can piss right off. So who?
Not at all. National do not look like leaders as well. Putting your head in the sand and not calling the screw ups isn't helping at all.
Notice that on Stuff news that any artical on Jacinda has the comments disabled.... That speaks volumes on how her bubble has burst!
On the Fed injecting cash into the banking system, the article claims this has now exceeded $200bn. This isn't really true, they have offered up to $75bn in overnight lending facilities - i.e., $75bn which is then repaid the next day. It isn't cumulative, they effectively have a rolling facility of $75bn.
Forest burning in Indonesia for palm oil plantations has reached extreme levels, blanketing many neighbouring countries in thick smog. Because of the economic power of companies like Wilmar, there seems to be little political will to address the issue.
Indonesia's attempts to eradicate the Orangutan, driving it into extinction. Must be some quality people at the top of companies like Wilmar. Kuok Khoon Hong and Martua Sitorus, for two.
We do our fair share to help.
Save a Kiwi - Kill an Orangutan.
- Turn off the Gas and buy more Indonesian coal
- Stop fertilising/irrigating the dairy land and buy more PKE.
The Watermelon's green skin has been just about peeled off. They really are just Labour extremists.
Re the repo drama (why is something so simple, so hard to grasp), Martin Armstrong explains that negative yielding bonds are the present day equivalent of mortgage backed securities:
What has transpired is the buyers of these negative bonds have been simply traders. They have not bought this stuff to actually hold to maturity. They have been happy to trade them assuming rates would continue lower so it would be a bond rally. We are looking at SERIOUS credit risk once again but instead of the time bombs being mortgage-backed securities, this time it will be negative-yielding bonds issued by governments. The bond markets have been converted into a child’s game of musical chairs. When the music stops, someone will be left holding negative-yielding bonds that will only be salable at even deeper discounts of perhaps as great as 50% in a few years.
About 30% of the bonds issued by governments and companies worldwide are trading at negative yields which is now about $17tn of outstanding debt. This unprecedented reversal of normal practice has raised profound questions about the outlook for bonds. This is seriously impacting core holding for institutional investors.
https://www.armstrongeconomics.com/markets-by-sector/interest-rates/the…
Bank traders buy sovereign bonds with negative yields which lock in a loss at redemption because they are the most money like collateral that can substitute for the cash shortage now evident in the US. Furthermore, they can serve as a rehypothecation tool to bolster suspect collateral employed for non-pristine bank repo financing activity. The redemption loss is considered a necessary balance sheet hedging cost. The acute eurodollar credit shortage requires drastic measures since central bankers are not a liquidity backstop mechanism for the actual global reserve currency. Global bank credit creation aided by various and some nefarious derivative instruments is indispensible and relies on sovereign bond collateral repurchase agreements as a liquidity backstop.
Some back ground commentary helps to reinforce reality:
Unanswered Risks That Could Affect the Global Economy For a Long Time
I am often reminded of what one long ago New York Times article had noticed about the monetary system back when Britain’s pound was in crisis. At around the same time Japan’s JGB curve was last emerging from inversion, in 1992, a (very) few people had recognized just how the world had changed and in which direction the balance of power had (permanently) shifted.
“The world’s currency markets, it seems, are no longer governed by central bankers in Washington and Bonn, but by traders and investors in Tokyo, London and New York, as the chaos in the currency markets this past week has shown.”
What are the implications of such a statement? Central bankers and even the mighty IMF would effectively become powerless once the market – meaning dollar - gets moving. While very few understood the notion in 1992, it only gained a little more awareness in 2008 at its fullest display. The idea that central banks and official institutions are at the center of the global system remains despite all the evidence otherwise, evidence that continues to pile up in the present day.
Foreign Exchange Trading Soars to $6.6 Trillion a Day, US Dollar is Total King
t happens every three years: The Bank for International Settlements released its Triennial Central Bank Survey about the global foreign exchange (FX) and over-the-counter (OTC) derivatives markets, as it occurred in April. The numbers are ginormous, and get more ginormous with every survey, with trading volume measured in trillions of dollars per day. This is a huge data trove, and I will focus here on global FX trading.
Fed Funds Is Loudly Declaring the Fed's Total Cluelessness
You want to speculate on junk corporates issued by some company in Brazil? You can’t go to the repo market to fund that position because the repo market won’t take it. But you might be able to go to one of these more optimistic dealer banks and “borrow” some Treasuries putting up your junk as collateral for the transformation. The more willing the dealers, the more this goes on (and the cheaper it gets).
It’s the same sort of thing AIG did in the precrisis era which eventually led to its bailout (it wasn’t credit default swaps which nearly brought the company down, it was securities lending of just this type). In other words, banks engaging in these transactions know what the true downside looks like. They must not have believed there was much downside given, again, “globally synchronized growth.”
But what if that proved to be nothing more than a bumper sticker slogan? Now you begin to see the early months of 2018 very differently. If you are a dealer bank who had been involved in especially Eurobond tranformations throughout 2017 as a bypass of the Treasury shortage, then you scale back if not stop the transformations and bring the system back to…the Treasury shortage.
Not only that, if you are a dealer who was engaged in this kind of risky (really, stupid) behavior throughout 2017, binging on transformation of Argentine, Brazilian, Chinese junk, you are going to set about cleaning up your act in early 2018 as it looks like things are starting to go the wrong way. The further 2018 went on, the more wrong, the cleaner your act.
Nobody wants to be the next AIG. Cleaning up your act means taking on less risk, doing less monetary things.
The rising dollar beginning in April 2018 was the global marketplace signaling this was going on. Therefore, May 29 followed in close succession (a collateral event). Eurodollar futures a few weeks after that (pricing for the consequences). Then full-blown yield curve implosion another five months further down the road (widespread acceptance of this as the new base case), all while Powell was still hiking rates and congratulating himself on the unflinchingly strong economy.
On Wall Street, the financial stresses are continuing with the New York Fed having to inject another US$75 bln overnight through the repo system that keeps bank capital stable
In accordance with the FOMC Directive issued September 18, 2019, the Open Market Trading Desk (the Desk) at the Federal Reserve Bank of New York will conduct an overnight repurchase agreement (repo) operation from 8:15 AM ET to 8:30 AM ET tomorrow, Friday, September 20, 2019, in order to help maintain the federal funds rate within the target range of 1-3/4 to 2 percent.
This repo operation will be conducted with Primary Dealers for up to an aggregate amount of $75 billion. Link
Electric motors don't really need servicing. Tesla states that it doesn't void your warranty if you never have the car serviced. When you go for a service, generally they replace the oils and other fluids, check the spark plugs, grease bits that need greasing etc, none of which is required for an electric motor. Things like CV boots, strut mounts, tyres are all rubber and will perish regardless of your motor, so these will periodically need replacing.
On the approx life question, I don't know. It would be good to know, as I suspect currently electric cars are being depreciated based on the expected lifespan of a combustion engine because that is what everyone is familiar with. If electric motors have significantly longer lifespans, a secondhand Tesla could be underpriced right now.
Why do you lie?
They are recyclable -> https://www.fortum.com/products-and-services/recycling-waste/recycling-…
Really, from that sites page "Most of today’s recycling solutions for EV batteries are not able to recover valuable minerals. Crisolteq has a hydrometallurgical recycling facility in Harjavalta, Finland, where the ‘black mass’ can be treated on an industrial scale."
So my statement is not a lie, its not available.
One site in Finland does not service the world, nor does it prove there solution works either.
It certainly does prove they are recyclable:
"We are able to recycle over 80% of lithium-ion battery materials. Our industrial-scale, low-CO2 process allows us to recover the cobalt, manganese and nickel from the battery for reuse in producing new batteries."
and that one site probably can service the world, given the very small number of EV batts currently being pulled out of dead EVs.. there just aren't enough yet to justify hundreds of recycling plants for EV batteries. By the time we have an actual need for recycling lots of dead EV batteries the technology will have improved and there will be plenty of incentive to build more plants.
Sorry, your BS talking point has no merit.
There is no excise tax on diesel.. thats why it has RUCs.
So are you suggesting the petrol powered car drivers are currently subsidising diesel car drivers (we certainly are subsidising diesel heavy vehicles who pay far less in RUCs than they should based on damage to the roads)
No not saying that. The damage caused by trucks is a necessary evil to transport everything, including petrol. Point i was trying to make it that if we do achieve a significant uptake in EVs, then the lost excise tax from drop in fuel consumption will have to be taken from somewhere else i.e. RUCs
You think the various motoring organisations, the Greens and Ev owning public won't put pressure on them to keep them down? Much greater chance they keep kicking the EV RUC exemption expiry down the road for another decade than start trying to screw diesel and EV owners.
I dare say I have this awful suspicion that the entire coalition is way out of its depth , Jacinda does not even know where she is.
A former housing minister who does not know how big the number 100,000 is
A minister for trees , who has even less idea how much a billion is
A minister of Finance constantly looking in his rear view mirror, trying to see the 'past nine years " and he is going to crash if he does not look in front of himself
The Green academics who have never had to turn a Dollar in their lives want to slap a tax on farmers utility vehicles , the also slapped a ban on oil and gas exploration ........... without even a word of warning to the investors who have risks Billions here .
Winston just smiles like a Cheshire cat , is full of snide remarks and is frankly clueless .
Its like something from a really bad Monty Python skit ..........
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