Here's our summary of key events overnight that affect New Zealand, with news of a huge trade surplus in China.
China’s exports hit a three-year high in February, far higher market expectations, while its year-to-date surplus against the United States soared +35%, adding fuel concerns over a trade war. Exports surged +45% from a year ago to NZ$242 bln in February alone, while imports in the month were only NZ$193 bln and far lower than the bump higher we saw in January.
As this data was released, the US Administration signaled it will water down its hard-line steel and aluminium tariff stance.
The Bank of Japan is meeting today and they must also be near issuing turning-point signals on their extensive QE program.
And staying in Japan, they posted their largest January current account surplus since 2011. That extends their very strong 2017 result. And their GDP growth in the December quarter was revised up to +1.6% and far better than analysts had expected (just +0.9%).
American household debt grew in the final quarter of 2017 at the fastest rate in ten years, just before the GFC, on the back of car sales (although some of that may have been replenishment after hurricanes). Overall household debt rose +5.2% while consumer debt jumped +7.8% and mortgage debt grew +3%. In the same release, the Fed also reported that household net worth rose by +2.1% to US$98.75 tln, as the value of sharemarket holdings rose by +US$1.3 tn and the value of their housing rose by about +$0.5 tln.
The ECB met overnight and said two interesting things. Firstly, they criticised the US on its trade stances, and more importantly they dropped the promise to expand their bond buying if the EU economy turns negative. But otherwise, they changed no other settings.
International air travel grew +4.4% in January. its slowest rate of growth in almost four years.
In Australia, their competition commission said it will be releasing its report on how banks price mortgages sometime next week, and it will be a "very interesting" read.
In New York, the UST 10 yr yield is down to 2.86% after getting as high as 2.89% overnight..
The gold price has slipped again today, down -US$4 and now at US$1,321/oz.
Oil prices are lower again today with the US benchmark down to just under US$60.50/bbl and the Brent benchmark now just over US$63.50/bbl. Swelling American inventories are behind the new push lower.
The Kiwi dollar will start today unchanged at 72.6 USc. On the cross rates we are at 93.2 AUc and 59 euro cents. That leaves the TWI-5 at 73.7.
Bitcoin is now at US$9,250, down another -2.7% from this time on yesterday. This time the drop has been triggered by lawsuits against platform investor Coinbase. Japan has also suspended trading on two of its platforms.
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20 Comments
more people waiting for the dreaded ten year shock
J.P. Morgan Chase Co-president Daniel Pinto believes equity markets could see as much as a 40 percent correction within the next few years.
"The equity market has some way to go for the next year to two," Pinto said in an interview with Bloomberg TV. "But then, if there is a correction, it could be a deep correction. It could be between 20 and 40 percent depending on the valuations at the time. The most important thing for someone like us is just to be prepared."
Interviewer gives Mr Pinto some Whittaker's:
"So what that means is that over the next couple of years, maybe less, we will be engaged in what we call "distribution". Which is our code word for getting rid of overpriced rubbish.
We usually do this by not selling when prices plunge so it looks like there is fundamental value underpinning stock prices. Then, we do what we can to help prices rebound upward and let the salesmen in the industry talk up the stock market. These are very, very good salesmen, we are able to afford the very best, you realise. We then start steadily selling the stocks we own. Occasionally stocks will plunge for a few days, but we try to prevent this until we have sold all our stocks and built up a nice big short position, well, a massive short position really. Then we let the bastard fall hard."
China is an excellent example of how to do things , but it would never work in the West .
Hard work , a merchantalist trade policy , no minimum wages , no trade unions, a fixed exchange rate , exchange controls on ordinary citizens , and taking advantage of the weaknesses of Western liberal systems of free currencies , open markets , low trade barriers .
They well and truly have got the world trade system in checkmate , hence their massive trade surplusses
Question 1 - answer YES.
Statement 2 - housing prices have always depended on location, location, locatio. Chinese housing looks like a bubble but maybe the trajectory of Chinese growth continues and China really does succeed and passes Taiwan, Japan, Korea, USA, etc. Meanwhile NZ lack of growth continues. Then maybe we will have the bubble and the pop and China will just have expensive housing.
Roger, why does a trade surplus = a capital outflow..??
China holding $3 trillion in foreign reserves shows this is not so... ie.. They have Capital flight controls and a controlled currency. ( Mercantilist is a word that comes to mind.. )
https://en.wikipedia.org/wiki/Mercantilism
Wiki partly defines it as accumulating gold and silver. I suppose China accumulating $US is the modern day equivalent.
It is a double entry identity, not a cause and effect thing in the usual way. For a country to run a surplus on current account it must run an equal deficit on capital account.
All financial transactions have two sides. You borrow money, you now have cash plus an equal and opposite debt.
Double entry bookkeeping is possibly one of the greatest inventions of all time.
China has managed to run both a current account surplus and a capital acct surplus..most of the time
http://www.livemint.com/Politics/d98AiV3oBu6xWAFpRYKpuK/The-flight-of-c…
https://www.simontaylorsblog.com/2012/09/18/chinas-balance-of-payments-…
Could Jenee do a follow an investigative report up on the new owners of the Augustine Lau property on Albany Highway .
The Ennironment Court were explicit in what had to be done to restore the environmental damage from the bulldozing of protected trees over many acres .
Nothing has been done .................. are the new owners off the hook ?
What is Council doing to ensure its restored .
"Imagine if overall unemployment in the country was more than three times its current rate. Imagine if youth unemployment in the U.S. was at 35 percent. And imagine if hundreds and hundreds of thousands of people from sub-Saharan Africa were constantly landing on the shores and coming into the country. A U.S. election in such circumstances might have a certain piquancy. "
https://www.nationalreview.com/blog/corner/the-italian-publics-concerns…
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