Here's our summary of key events overnight that affect New Zealand, with news the world's factory engines are all purring along in good shape.
But firstly in the US, consumer prices increased in January, with their PCE gauge of underlying inflation posting its largest gain in 12 months. This is a measure the Fed takes seriously.
Also indicating higher future prices are the latest PMI surveys. The ISM one noted factory prices are increasing at a faster rate, adding to a 24 month trend. The overall PMI result indicated a faster expansion in this sector.
The global series of Markit PMIs showed the US factory sector expansion down a tad but still in a strong expansionary mode. The flow of new orders however was quite strong. Price pressures are up. But before we get too carried away by these results we should note that their level of optimism in this data was below the long-run series average.
Other countries had stronger results. The EU PMIs are more than +3 points higher, and the Japanese ones are still rising. The global consolidated review of 42 of the largest countries shows a healthy solid expansion underway across in every one of them, except Malaysia. The immediate future of global trade seems assured from an activity point-of-view.
However, the US President verbally indicated that new tariffs on steel (25%) and aluminium (10%) will be formally announced soon. These are lower than originally indicated, and the process for imposing them may be slow.
China is growing its commercial business numbers fast. It is adding 55,000 per day, up from 36,000 just five years ago. Sometime in the next new months, they will be reporting there are more than 100 million businesses operating in the country.
Brazil’s economy returned to growth in 2017 after two years of contraction, as investment spending, agriculture and industrial production helped pull the country out of its worst recession on record.
In Australia, the head of banking regulator APRA told lawmakers in Canberra that its 10% 'speed limit' cap on lending to property investors is "probably reaching the end of its useful life". It has now been three years since it was introduced and he suggested it has become "redundant" as bank lending standards had improved, while credit growth had dropped sharply.
And staying in Australia, the head of KPMG has said it is 'not practical' to ban sex between partners and staff - even as they claim they have 'zero tolerance' for inappropriate workplace conduct'.
In New York, the UST 10 yr yield is down -5 bps to 2.84% today, with the rate of drop rising in the last hour. Update: It has dropped sharply further and is now 2.80%.
The gold price is down a significant -US$12 to US$1,306/oz today.
Oil prices are also sharply lower today with the US benchmark now just under US$61/bbl and the Brent benchmark over US$63.50/bbl.
The Kiwi dollar will start today a little higher from yesterday at 72.5 USc. On the cross rates we are at 93.5 AUc and at 59.5 euro cents. That puts the TWI-5 marginally up at 73.9.
Bitcoin is now at US$10,877, up +3.6% from this time yesterday.
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35 Comments
Not sure that will be the case. Tiwai Point product is very high quality aluminium that goes to many markets but principally Japan for industrial products. The initial signals on the US tariff is that it will apply to aluminium foil products only.
Also, primary aluminium product prices are currently relatively high. So I doubt there is any special pressure on the Bluff smelter. In 2015, yes, there may have been market pressure, but 2018 is seeing prices +50% higher.
In order to avoid a day of doom around the collapse of Invercargill property prices I will contribute that Tiwai makes high purity aluminium suitable for aircraft.
The Chinese pour out low purity aluminium for consumer products, foil, drink cans...
Draw your own conclusions.
You missed Russia admitting it has hyper sonic missile capability.
https://www.zerohedge.com/news/2018-03-01/putin-russias-new-hypersonic-…
His Speech
https://thesaker.is/the-president-of-russia-delivered-the-address-to-th…
Putin is great at scaremongering. Russia has never been under threat as a nation by the US. It's autocratic dictatorship method of Government has, as has it's expansionist aspirations. No one gains from Putin's attitude of militaristic spending. The US military expenditure is almost as bad, but at least the technology from American military spending usually finds it's way into the civil market. Some US presidents are as dangerous as Putin. 'W' was, and the mess was so great from his efforts, it was too much for Obama to make any significant headway in cleaning up. If Trumps gets loose, god help us all!
Neither Russia nor North Korea will ever make a first move against the United States. They both know that, if provoked, the United States will send them to oblivion. I'm not supporter, but that's just how things are. The media like to portray it as otherwise, but that's the reality.
I didn't say anything about their defence spending. And yes I know the US's very high. It'd be interesting to see relative ratios based on GDP. Trump is pushing their debt to huge new levels and a significant cause of it is defence spending, but that is just obfuscation. What matters is the type of weapons.
The comments above about the US providing missile systems to NATO countries and a few others, True but they are Patriot systems - a wholly defensive system that can only protect against a missile attack. To argue that it is aggression is like saying some shouldn't be able to buy a bullet proof vest when everyone around them has rifles.
Equally the US has not got hypersonic missiles that can threaten a nations sovereignty. They are developing some smaller one for aircraft use against other aircraft.
As to Trump V Putin. Putin appears to be trying to be a modern day Stalin. Trump would probably think that is a good thing to do if he could get away with it himself. Not exactly peas from a pod but each as bad as the other. Putin is driving the world back to the cold war days of MAD (Mutually Assured Destruction) and an ever escalating arms race.
The US Military Industrial complex naturally loves this, because they just become stronger (remember Eisenhower warned against them). they will be exercising their political muscle big time to push people like Putin, which will naturally elicit a reaction from the WH. Lovely - the rich getting much richer!
I understand that your guess lets you make these comments but not all world share your opinions:
https://www.unz.com/mwhitney/putin-the-man-who-stopped-washingtons-regi…
Well, if Putin was in charge of the US, they would be very lucky people indeed. He's more socialist than the average snowflake. Quote from the above link:
“Another priority is global healthcare…. All people in the world, not only the elite, should have the right to healthy, long and full lives. This is a noble goal. In short, we should build the foundation for the future world today by investing in all priority areas of human development.” (Vladimir Putin, President Russian Federation, Meeting of the Valdai International Discussion Club)
In the realistic news department, NZ ranked 55th as an attractive mining jurisdiction by The Fraser institute, somewhere in the nether regions after Democratic Republic of the Congo but better than Zimbabwe. That is an astonishingly appalling result. No wonder we need to sell the country to the Chinese so we can continue pretending all is well.
Figure 3, page 9:
https://www.fraserinstitute.org/sites/default/files/survey-of-mining-co…
So why is Finland, a Scandinavian country, number one? We have been led to believe that our future lies in low tech areas like Tourism, Grape growing, Milk powder and so on. The reality is these provide very low paying entry level jobs. Mining is very high tech these days, Rio Tinto in Aussie are now using fully automated driverless 650 tonne haul trucks.
New Zealand spends more than it earns and so must sell assets to make the books balance. Is this because our politicians and bureaucrats live in la la land? They seem to believe in many impossible things, like New Zealand can continue to be a first world country by selling assets to foreigners for ever.
My point is, the number one country in that survey is highly environmentally conscious, and we are behind one of the most lawless countries in the world. Why is this not front page shock horror news?
I am not sure it matters how friendly we are. I don't believe we have any decent reserves of anything underground, except a bit of coal here and there which is going out of fashion very quickly for obvious reasons. Also coal mining is fairly low value and high environmental impact.
If it was found we were the next Saudi Arabia or Norway and had real value underground that would not have a high environmental damage footprint, I am sure the friendliness of our Government would change on a dime, no matter who was in charge.
Murray, you need to read a broader selection of news mate....those defensive missile systems parked up in Romania and elsewhere along russias borders can be converted to offensive in a matter of hours and why would they want to expand territory....they have more than enough.....imho Putin and Lavrov are the only statesmen in the world worth listening to these days....they have handled the syria / middle east situation with intelligence and restraint....
How can patriot be converted to offensive, although i suppose their radars can look across borders? With in the NATO Countries and the Baltic states it is Russia who is pushing the boundaries, not NATO or the US. The Baltic Air Policing missions undertaken by all NATO nations routine intercepts a variety of Russian military aircraft crossing international borders without clearance.
So the Kurdish fighters taking on Daesh are worthy of being treated as terrorists in Syria, and bombing civilian enclaves killing women and children with chemical weapons is restraint? Perhaps you should try opening your eyes, and ears. Don't forget how the war started - Abbas turning his army loose on a peasful protest by his own citizens. Restraint - yeah right!
Putin’s stunning revelations about new Russian weapons systems
https://thesaker.is/putins-stunning-revelations-about-new-russian-weapo…
I have met a couple of Brazilians recently and learned a few things about South America. Many young people there yearn to emigrate to the US, Canada, Australia or New Zealand. A brand new Toyota Corolla costs about five years average net salary while here it is about ten months. They dont seem to want to emigrate to anywhere within South America.
Last night I spoke with a young man I was working with who spent months practicing to apply online for a work visa here. The window of opportunity lasts six minutes a year. His hard work and careful planning paid off and he got it. After that he spent months visiting the NZ embassy and reading newspapers concentrating on absorbing everything about NZ culture. When he got here he achieved a lifetime dream of owning his own MX5. Now he is working 60+ hour weeks in IT and loving every minute of it, probably earning four times as much as back in Brazil. Very inspiring story I thought.
On September 28, 2015 Putin finally threw down the gauntlet in a speech he delivered at the 70th session of the UN General Assembly in New York. After reiterating his commitment to international law, the UN, and state sovereignty, he provided a brief but disturbing account of recent events in the Middle East, all of which have gotten significantly worse due to Washington’s use of force. Here’s Putin:
“Just look at the situation in the Middle East and Northern Africa… Instead of bringing about reforms, aggressive intervention destroyed government institutions and the local way of life. Instead of democracy and progress, there is now violence, poverty, social disasters and total disregard for human rights, including even the right to life…
The power vacuum in some countries in the Middle East and Northern Africa obviously resulted in the emergence of areas of anarchy, which were quickly filled with extremists and terrorists. The so-called Islamic State has tens of thousands of militants fighting for it, including former Iraqi soldiers who were left on the street after the 2003 invasion. Many recruits come from Libya whose statehood was destroyed as a result of a gross violation of UN Security Council Resolution 1973….”
US interventions have decimated Iraq, Libya, Syria and beyond. Over a million people have been killed while tens of millions have been forced to flee their homes and their countries. The refugee spillover has added to social tensions across the EU where anti-immigrant sentiment has precipitated the explosive growth in right wing groups and political organizations. From Northern Africa, across the Middle East, and into Central Asia, global security has steadily deteriorated under Washington’s ruthless stewardship. Here’s more from Putin:
“The Islamic State itself did not come out of nowhere. It was initially developed as a weapon against undesirable secular regimes. Having established control over parts of Syria and Iraq, Islamic State now aggressively expands into other regions….It is irresponsible to manipulate extremist groups and use them to achieve your political goals, hoping that later you’ll find a way to get rid of them or somehow eliminate them….”
In Switzerland, Australia, New Zealand and Canada, the household debt-to-GDP ratio has risen between five and 10 percentage points over the past three years, paces comparable to the U.S. in the run-up to the housing bubble. In Norway and South Korea they’re rising even faster.
https://www.zerohedge.com/news/2018-02-28/consumers-surprising-places-a…
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