90 seconds at 9 am: China to attack serious structural flaws; Fed to wind back stimulus; US economy sags but budget deficit falls; NZ$1 = US$0.830 TWI = 77.6

Here's my summary of the key news overnight in 90 seconds at 9 am, including news both the US and China are drawing up plans to change course.

China is at a point where the pain of inaction is sharper than the pain of action, says China watcher John Garnault. He reports that China is drawing up a blueprint for sweeping reforms aimed at averting an economic crisis. A big shake-up is coming because the structural issues are viewed as 'very serious'.

And in the US, Fed officials have mapped out a strategy for winding down their US$85 billion-a-month bond-buying program meant to spur the economy - an effort to preserve flexibility and manage highly unpredictable market expectations.

Staying in the US, retail sales probably fell in April for a second consecutive month and manufacturing stalled, indicating the world’s largest economy is cooling, some observers said before reports this week. Specifically, economists are expecting both producer prices and consumer prices to show declines for April. Deflation mat be setting in, in the world's largest economy. Something to watch.

However, the US may be about to post its first decline in Federal budget deficit sine 2007- because tax revenues are rising faster than spending. The deficit may be running under 5% of GDP, almost a third of what it was in 2009.

Over the weekend, gold fell to under US$1,420/oz although it has bounced up a bit since then. And the Dow closed on Friday at another record, and over 15,100. Almost all commodities continued their downward trend.

Australia has worked out a revised tax treaty with Switzerland that will give authorities new powers to target millionaire tax evaders, as the government scrambles to shore up its budget ahead of elections in September.

The Aussie Budget will be presented tomorrow. Our budget is released on Thursday. Little substantial news is expected from either, although they will be contrasting.

The Aussie one will say their plan to suplus has vanished; the Kiwi one will likely confirm we are on target to be back in the black.

The NZ dollar  starts the week at 83.0 USc, 82.9 AUc and under parity for the first time in almost a year, and our TWI now stands at 77.6.