Weekend Reads

For the profit and pleasure of subscribers, here's a few longer reads on political, economic and social issues for the weekend.

It's always worth watching what's happening in Australia's property markets, and the nervousness around a slow-down in Chinese capital inflows and apartment gluts in Melbourne and Brisbane is worrying/exciting a few people over there. This Bloomberg piece on why Cate Blanchett's Sydney home hasn't sold is useful.

"People are finding it’s very hard to get a mortgage here and then find they can’t get their money out of China, and they’re stuck,” said Lulu Pallier of Sotheby’s International in Sydney, who handles high-end sales to Chinese buyers.

Bloomberg writes Chinese authorities worry that outflows of capital, exacerbated by the declining yuan, could be a continued driver of devaluation. Estimated outflows in October reached $73 billion, picking up again after having slowed mid-year, according Capital Economics Ltd. Estimates from Bloomberg Intelligence show about $620 billion flowed out in the nine months through September.

The recent weakening of the yuan is making a few people nervous in China, where a new clampdown on capital flows out of China is underway. The FT reported this morning that China has curbed gold imports to slow down the capital flows out of China. The South China Morning Post also reported this morning that China had imposed new caps on companies and people sending renminbi overseas.

"China’s central bank will limit the amount of renminbi that Chinese companies and individuals can remit outside the country, imposing a cap for the first time in more than two decades to stem the yuan’s outflow as the currency plumbs daily lows. Companies domiciled in China will be limited to net currency outflows equivalent to 30 per cent of the owners’ equity, according to Order No. 306 issued Monday by the People’s Bank of China, a copy of which was obtained by the South China Morning Post," it reported.

This Bloomberg piece on Melbourne apartment prices falling in November at their fastest rate in more than two years is also therefore noteworthy.

ANZ Group's (Kiwi) CEO Shayne Elliott gets a mention with a warning that ANZ was becoming increasingly cautious about parts of the market and pockets of over-building in apartments. “There are emerging signs of stress” in the economy, the head of Australia’s third-biggest bank told a Reuters event in Sydney.

Also on the financial danger signs flashing front, the global bond market has now lost US$2.8 trillion over the last two months as long term interest rates have jumped. The US 10 year yield almost reached 2.5% overnight.

Speaking of the man who has already contributed to rising long-term mortgage rates in New Zealand, Trump selected former Goldman Sachs banker Steven Mnuchin (eds yes it's the correct spelling) to be his Treasury Secretary this week. Elizabeth Warren's reaction hits the mark here (via CNN):

"Steven Mnuchin is the Forrest Gump of the financial crisis -- he managed to participate in all the worst practices on Wall Street," Warren said, a reference to the Tom Hanks title character from the 1994 Academy Award-winning film. "His selection as Treasury Secretary should send shivers down the spine of every American who got hit hard by the financial crisis, and is the latest sign that Donald Trump has no intention of draining the swamp and every intention of running Washington to benefit himself and his rich buddies."

Remember the movie Network? “I’m mad as hell, and I’m not going to take this anymore!" has to be one one of the great movie lines. Released 40 years ago, it seemed an outrageous satire on the appeal of a ranting tele-populist at the time. Nicholas Barber looks at the prescience of the movie in this BBC website piece that weaves in the rise of Jerry Springer, Howard Stern and reality television, but somehow misses Trump.

Further to the Trump transition, this Washington Post piece that lists his 282 campaign promises is a sobering and important read.

That's enough sobering up for one weekend.

cheers

Bernard