Here's my summary of the key events overnight that affect New Zealand, with news China is moving quickly now that the US has withdrawn from the Trans Pacific Partnership.
But first, in the US, Trump advisers are considering appointing JPMorgan chief executive Jamie Dimon as Treasury Secretary. Wall Street's influence on US fiscal policy seems set to be enhanced. The official response to the GFC excesses are to be 'dismantled' with a repeal of the Dodd-Frank laws. And Russia has admitted to was in contact with the Trump election team during the campaign.
The number of Americans filing for jobless benefits fell more than expected last week, underscoring the strength of their labour markets.
China is moving quickly to fill the void left by a likely Trump refusal to ratify the TPP. The void has offered Beijing an opportunity to argue for faster adoption of a broader Free Trade Area of the Asia-Pacific. Given New Zealand has ratified the TPP, we will be in a prime position to take advantage of this revised opportunity. The only likely changes will be the weakening of the investment and labour protections built into the US-based Agreement. You can see the detail of the already negotiated TPP in our 21-part analysis series here. It is not hard to see how it could transition to a China-led one. In fact, China wanted to join the TPP but were rebuffed around the labour and investment protection issues.
China reported that lending by banks rose +15.7% in the year to September, reaching US$32.8 tln. For an economy that is supposed to be growing at even the official +6.7% annual rate, clearly this pace can't continue. Perhaps a sign of stress is that this same data release shows profit growth at just +2.8%. Leverage is getting extreme.
Wall Street equity indexes are pushing higher, as markets get to understand the likely large level of debt spending and fiscal stimulus to come from the new Administration. It will be fun to watch the explanatory gymnastics from the Republican Congress as the US Federal deficit swells and borrowing levels require new debt ceiling authorisations.
And the price of money is now rising quickly as investors want to be compensated for the new risks.
In New York, the UST 10yr yield will start today much higher again, now at 2.10%, and nearing a new one year high. Our wholesale rates rose sharply yesterday as well, but will get pushed higher again today with this latest US benchmark spurt.
The US benchmark oil price is lower, and is now just under US$45 a barrel, while the Brent benchmark is under US$46 a barrel.
The gold price is lower too, now under US$1,265/oz. All the run-up in the past 2 weeks has now been lost.
The New Zealand dollar will start today lower than this time yesterday, at 72.1 US¢. On the cross rates it is now at 94.8 AU¢, and against the euro at 66.3 euro cents. The NZ TWI-5 index is at 76.5.
If you want to catch up with all the local changes yesterday, we have an update here.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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25 Comments
and trump already has new friends
http://edition.cnn.com/2016/11/10/asia/duterte-trump-military-exercises/
https://www.rt.com/news/365966-putin-trump-congratulates-victory/
In New York, the UST 10yr yield will start today much higher again, now at 2.10%, and nearing a new one year high.
Or do markets truly believe Trump will ignite a growth cycle?
A yield curve is supposed to be upward sloping given the core time value of money and investing. That arises from opportunity cost, meaning the more plentiful the opportunities the greater the time value and the steeper the curve (the income effect). Read more
ah er, "how fickle politicians are" perhaps should be "how blind some voters can be".
"The news media" ran stories that this sort of stuff would happen - it was blatantly obvious - but the wilfully blind ignored it. They can hardly now blame-shift to someone else. The 47.5% who voted for Trump were told. Actually more people (47.7%) voted against his cynical dog-whistle sloganeering.
However, if you don't use critical thinking in the first place, you can hardly try and label others with hypocracy.
Bit too much grapefruit juice this morning David! At such early days any conclusions are naive at best. Love him or hate him, Trump deserves an opportunity to put up or shut up. He has a mandate. The popular vote was not the objective and if the outcomes had been reversed....
Voters are not so much blind as blinded
A Stunning Failure of the Media and the Polls
http://www.nytimes.com/2016/11/10/opinion/a-stunning-failure-of-the-med…
.... most journalists were blind to their own “bigotry against conservative religion, bigotry against rural folks, and bigotry against working class and poor white people
and
.... you’re going to hear a lot from news executives about how they need to send their reporters out into the heart of the country, to better understand its citizenry
http://www.nytimes.com/2016/11/09/business/media/media-trump-clinton.ht…
There is a smug style in American liberalism. It has been growing these past decades. It is a way of conducting politics, predicated on the belief that American life is not divided by moral difference or policy divergence — not really — but by the failure of half the country to know what's good for them. Read more
No David it would be deaf ,not blind as all they..... heard.... was a better America for Americans and decision making that would be biased to" American" interests and to hell with Foreign détente policy that has displaced so much of middle America from the work force. They also heard that in "making America great again" they may resign as sheriff of the globe or invite those who benefit from such protection to contribute to same.
The Funny thing is I think it was a Democrat who said "hearts and minds" is what it takes to win....well well eh?
111th Congress was Dem super majority - 2009
https://en.wikipedia.org/wiki/111th_United_States_Congress
Jaime Dimon would seem an odd choice.He financially supported the Democrat Party (barely..his words) and at
one stage was being being considered for the position of Sec of Treasury before Tim Geithner got the job.
He was also accused of misleading investors and regulators when J P Morgan was investigated for a massive 6.2 billion dollars loss by Hugo Iskil.
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