Here's our summary of the key events from overnight that affect New Zealand.
Oil is once again in the news with reports speculators are buying options contracts that will only pay out if the crude price falls as low as US$15 a barrel in 2016. These bearish bets come with the Organisation of Petroleum Exporting Countries (OPEC) effectively scrapping output limits, Iran’s expected return to the market, and the resilience of production from the likes of Russia raising the prospects of a prolonged oil glut.
Investors are buying put options, giving them the right to sell at a predetermined price and time, at strike prices as low as US$15 a barrel, according to the New York Mercantile Exchange and the US Depository Trust & Clearing Corp. West Texas Intermediate, the US benchmark, is currently trading around US$36 a barrel near 11-year lows, with Brent crude at similar levels.
Meanwhile in the UK record high December temperatures have left the country with its highest stocks of oil for five years with Europe bound fuel tankers forced into mid-Atlantic u-turns. The head of commodities research at Goldman Sachs says oil prices could fall to US$20 a barrel to force production shutdowns if mild weather continues to dampen demand.
In the US home resales recorded their biggest fall in five years in November, down 10.5% to 4.76 million units, versus economists’ expectations for 5.35 million sales. The National Association of Realtors is blaming new regulations aimed at simplifying paperwork for home purchasing. The median price rose 6.3% to US$220,300.
Staying in the US, third quarter GDP rose at a revised 2% annualised rate against the median forecast of 1.9%.
In China authorities have asked banks to test longer trading hours for the yuan in a move to support China’s push to increase global yuan usage after the International Monetary Fund admitted the currency into its reserve basket. This comes after Chinese leaders yesterday hinted at more stimulus for their slowing economy as they target 6.5% growth in 2016.
In a direct impact from the slowing Chinese economy, Australia's Department of Industry & Science says iron ore prices will average $41.30 a metric tonne next year, down almost $10 from its September forecast. The department cut its average price for 2015 by 4.7% to $50.40 a tonne. The iron ore price is down 43% this year.
The Kiwi dollar is at US68.09 cents this morning, AU94.17c, and the Trade Weighted Index (TWI-5) is at 73.32. If you want to catch up with all the local changes from yesterday, we have an update here.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
This is our last 90 at 9 for 2015. David Chaston will provide regular holiday briefing reports over the festive season. Merry Christmas and Happy New Year to all our readers and viewers!
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24 Comments
Ho ho - didn't think this story had any legs left in it:
Stuff reports that a last-ditch class action is being launched against James Hardie Industries over leaky homes.
The story so far:
- In 1991 parliament unanimously passed the Building Act and stripped councils of the right to set building standards. They passed this responsibility to the brand new Building Industry Authority (now the Department of Building and Housing, a division of MBIE);
- James Hardie managed to convince the BIA to approve both its cladding products and the system for installing them. These are later implicated in many (most?) leaky home cases;
- When the leaky homes fiasco blew up, the government, far from admitting their “bad”, distanced itself, shut down the BIA and left councils to cop the flak;
- Which was unfair because councils had no choice in most cases but to allow the use of the suspect products and methods because they were on the “approved” list
- Grudgingly the government later agreed to fund 25% of repairs if the claimants could survive a tortuous process that made dealing with insurance companies in Christchurch seem like a picnic. They made it seem like a generous act but, from memory, they have actually shelled out virtually nothing
So having done absolutely nothing to right the wrong their own department was deeply involved in inflicting on ordinary people, the government bided their time then sued James Hardie to recover the costs of remediating leaky school buildings. The claim was settled out of court so we will never know what went on.
The government ended up sitting pretty; they looked after themselves and largely ignored the homeowners who had bought and built leaky homes in good faith. So, in sheer desperation, a handful of claimants are setting out to do what the government could and should have done for them in the first place.
James Hardie Industries have the simplest defence imaginable: the government approved their products and systems. I look forward to seeing how this plays out just in case there was something dodgy about the approval (very entertaining account by Peter Cresswell here)
As much as it grieves me I got caught up in that saga very early in the piece
In 1989 I had a townhouse built with roof parapets and fascias using the "Hardie" materials and construction system. Within 1 year it failed, the joints leaked and the frames began decaying. Began to investigate. Contacted Hardies. I obtained full product specifications and system construction and jointing instructions. Turned out the builders had not followed the instructions. They had used standard 3mm grey fibre-cement board instead of water-proof blue-board, didn't use the recommended weather-tight aluminium and rubberised jointing materials and fibreglass tape overlay. The interior gib-stopper had simply taped over the exterior joints with elasticised interior gib-stopping tape and the renderers then rendered over the top of it. Couple of hot days and some strong winds and all the joints opened up as the roof flexed.
After 5 years of fighting the builder, finally employed the services of the Law Society's recommended building expert-arbitrator who had a reputation being a bigger dog than than the builders dog. The builder capitulated immediately and undertook complete remediation of the fascias (plus many other defects)
The remediation was performed in 1995. Since then product has performed perfectly well to this day.
The point of this - the system does work. Hardies simply cowed to the government's bigger dog
Because we have a history of building the cheapest infrastructures at the time that are only 20 year proof.
take our motorways by the time planning is done and it is built it is already 1/2 through its life.
i.e transmission gully how long has that taken to get approved and its only going to be two lanes.
this has been our mindset for years and it costs us more in the long run, I could list project after project where we had taken the cheap option only to come back 20 years later to enhance it at a much greater expense.
Are these low commodity prices fully reflected in what customers pay. In the case of NZ a big fat no. The cartels and middle men must pocketing a fortune, so until we address this I would not be lining their pockets any further.
Besides which if we had a far more sensible level of immigration we would not need to waste precious overseas funds building housing and infrastructure for people who add little if any thing meaningful to our economy other than fuelling an unsustainable ponzie scheme.
I have had to price up numerous products lately (building products, household furnishings, kitchen items, camping and other leisure gear to name a few) and NZ'ers are getting seriously ripped off !!!!
Vehicles are another item we are paying far too much for when comparing pricing in other countries!!
Agree about vehicles and in fact every other item you mentioned.
Irecently tried to sell a 3 year old car,only done 6k,on behalf of an estate.The salesman stressed that it was a second hand car and the mileage didn't really matter because it was still second hand.I turned their paltry offer down but returned a couple of months later to use the same vehicle as a trade in.The salesman stressed that the vehicle i wanted was only 1 owner and had done a low mileage so the asking price was justified.The offer for my vehicle was only just above the previous paltry offer.It makes me wonder how much profit these dealers can make off 1 vehicle through out it's life time.
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