House rises outstrip wage increases
New Zealand Herald
Average wages in Northland have risen by $2804 in the past year but house prices soared by $25,000, according to a new survey. The gross Northland average weekly wage for May 2014 was $950.13, compared to $896.20 a year earlier, Massey ...
Tomorrow is the 100th anniversary of the start of World War I. Perhaps just as importantly, this weekend is also the 120th anniversary of the first Sino-Japanese war: a war between China's Qing dynasty and Meiji Japan. A war which China lost, and which has been a chip on China's shoulder ever since.
As Hong Kong's SCMP reports "China's loss of the first Sino-Japanese war has been attributed to a disorganised navy. Although the northern fleet equalled, some say exceeded, the Meiji navy in terms of firepower, it was annihilated because it lacked coordination among its military units."
In the context of constant recent flare ups over various contested East China Sea islands, one can see why the anniversary of the war coupled with a sudden spike in nationalistic ambitions of Japan's PM Abe, would be a sensitive issue to China. However, as we can see below, China no longer has an inferiority complex when it comes to its navy compared to that of Japan.
While Japan's navy may still have a qualitative advantage over China's, the People's Liberation Army is catching up, analysts say. In sheer manpower, China has the upper hand, with Beijing putting the PLA Navy's strength at 235,000, or more than five times the number in the Japan Maritime Self-Defence Force.
According to SCMP:
"PLA units are still exploring new ways to operate jointly, which could lead to merging their different weapon systems together," Wong said. Toshi Yoshihara, an associate professor at the US Naval War College, said that although the Japanese navy was still superior in technological sophistication and experience, China was catching up quickly.
"China is out-building Japan virtually across the board," Yoshihara said. He said the PLA Navy was deploying modern destroyers, frigates, fast-attack craft and submarines. "Japan is already having trouble keeping pace with this level of Chinese output."
Sounds kinda, sorta like the US, Russia nuclear arms race. However, unlike the use of nuclear ICBMs, launching a naval war has far less dire consequences if it goes wrong, and thus a lower hurdle to enactment. One which both China and Japan seem eager to jump over based on their behavior in recent months. The key variable remains US involvement.
As so many Chinese warships had entered production, adding mass and balance on the fleet, Japan could no longer rely on its qualitative advantage, Yoshihara said. But a deciding factor would be the support of the US Navy. "The US-Japanese alliance is essential to weighing the overall naval balance," he said.
China might even have the edge now, according to Dr Lyle Goldstein, an associate professor at the China Maritime Studies Institute under the US Naval War College.
"In my opinion, the forces are quite evenly matched now, but China may even have pulled ahead in recent years," Goldstein said. He added that this was not the official assessment of the US Navy.
Which is the worst possible situation as neither side has a massive advantage and thus serves a powerful deterrent.
So where are the two navies currently:
Japan last year formally unveiled the biggest warship in its fleet since the second world war - the Izumo-class helicopter destroyer.
The 248-metre ship, due to enter service next year, is designed to carry 14 helicopters, and complements Japan's two serving Hyuga-class helicopter destroyers, which are 197 metres long and can accommodate 11 helicopters.
Shanghai-based military expert Ni Lexiong said the helicopter destroyers could function as aircraft carriers for US planes, while China had only one aircraft carrier, the Liaoning, although observers say more are in the works.
China required nearly 10 years to convert the 67,500-ton Soviet-built Varyag into the Liaoning. It was formally delivered to the PLA in September 2012, and so far has been used for training.
"But Japan's helicopter carriers have been battle-ready for more than three decades with the help of the United States," Ni said. "Every one of its carriers is able to operate independently in combat."
Japan also enjoys an advantage in submarines, according to Wong. The PLA's existing submarines, many of which are old models, have been criticised by Western forces as "too noisy and too easily detected", while Japan has some of the most technologically advanced diesel-electric submarines in the world
And visually, just in case one of these days the infamous Gulf of Tonkin incident takes place again, only this time it happens to involve a Chinese and Japanese warship.
So what happens next? For the answer we go to SCMP again:
On Friday, the North Sea Fleet held a commemoration off Weihai in Shandong , where the Beiyang Fleet was based. The Beiyang was the pride of the Chinese navy at the time, but suffered heavy losses against Japanese forces.
When the war ended on April 17, 1895, little of the fleet remained and Taiwan was ceded to Japan.
Xinhua quoted a naval political commissar as saying the ceremony should stir soldiers' patriotism by reminding them of past humiliations. Chinese media have also pointed to remarks President Xi Jinping previously made about the anniversary. Xi said in February China should remember the painful lesson of losing Taiwan to Japan, and then in June noted the special meaning the anniversary carried in the traditional Chinese calendar.
Under its 60-year cycle, 1894 was a jiawu (wood horse) year, as is 2014. The occurrence has led some hawks to argue that the humiliation of a weak China then should be avenged by a strong China now.
Beijing has increasingly been referring to a string of historical events to highlight old grievances. The central government held an unusually high-profile commemoration on July 7 marking the 77th anniversary of the start of China's second war with Japan.
Giving prominence to such anniversaries is part of a broader domestic agenda, analysts say.
"An important aspect and end goal of achieving the Chinese dream is to rid China of past humiliations inflicted by foreign powers, and Japan perhaps did more than its share," said Yuan Jingdong, a professor at the University of Sydney Centre for International Security Studies.
That sounds like warmongering, and incidentally, a war may just be the thing Princeton's Keynesianomics (not to be confused with Clownianomics) department ordered to send the Nikkei225 to fresh cycle highs now that it appears to have stalled and is still down YTD. Because how else will the wealth effect trickle down to the 0.01%, which is really all the New Normal has been about.
The 'worst time to buy a home for three years': High prices and interest rate fears ... - Daily Mail
The 'worst time to buy a home for three years': High prices and interest rate fears ...
However it appears that we've reached a tipping point, with the equilibrium between buyers and sellers much more out of sync.' Howard Archer, of research group IHS Global Insight, said: 'While house prices look likely to keep rising over the coming months, ...
and more »
Real estate agents will no longer need to advertise in their local paper when applying for a licence
In a sign of the times, prospective real estate agents will no longer have to advertise their intention to apply for a real estate licence in the public notices section of their local newspaper.
At the moment, anyone applying for a real estate licence must publish their details in two advertisements in approved regional newspapers, but from next month the notice will go online and be posted on the Real Estate Agents Authority's website (www.reaa.govt.nz).
The REAA is the industry's regulatory body that issues real estate licences and investigates complaints about agents.
"This new online resource will provide a transparent and reliable source of information for people wanting to know who in their area is applying to become a real estate agent," REAA chief executive Kevin Lampen-Smith said.
The website also lets people know what to do if they believe the applicant is not a suitable person to hold a real estate licence and they want to object to the licence being granted, he said.
8:20p ET Sunday, July 27, 2014
Dear Friend of GATA and Gold:
Some really big money has just taken a huge long position in silver, the Got Gold Report's Gene Arensberg writes tonight as he analyzes futures market trader positioning data. Arensberg says the positioning looks like what happened when gold blasted off at the end of 2010. His commentary is headlined "Comex Swap Dealers Hedging a Massive Long Play on Silver?" and it's posted at the Got Gold Report here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
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The Co-operative Bank has launched its mobile banking application, as the bank begins rolling out what CEO Bruce McLachlan has pledged will be "one of New Zealand's best online and mobile banking experiences."
The bank says the app is available for both iPhones and Android smartphones.
Using the app, Co-operative Bank says customers can check account balances, view transactions, transfer money between their Co-operative Bank accounts, and make up to $5,000 worth of payments per day. Payments can be scheduled up to 60 days in advance.
"With just one touch, you'll be able to view all your account balances, transactions over the next seven days, and the previous seven days of your activity across all your accounts – no more hunting across your accounts to find a transaction," the Co-operative Bank says.
"You'll be able to do most things you can do on internet banking, including making payments, managing your payees and transferring between your accounts. You'll be able to customise the app with your own images and photos. The app is super simple to use, you just swipe to switch between your accounts or view your transactions. The app has a unique easy process to transfer money between your accounts. You'll be able to use images to help you easily select between accounts or payees."
The app also features a payment failed alert enabling users to rectify failed payments on the same day they occur.
McLachlan last month told interest.co.nz the Co-operative Bank was spending about $2 million, working with Wellington firm Alphero, as it strives to develop "one of New Zealand's best online and mobile banking experiences" over this year and next. Formerly PSIS, the Co-operative Bank secured banking registration from the Reserve Bank in 2011 and changed its name.
Given the Co-operative Bank has "minimal legacy issues," McLachlan said it has been able to design an app that uses the latest technology and innovations in user design.
"We believe our application will rival those of any of the major, foreign-owned banks operating in New Zealand. It shows that we understand where the future of banking is headed, and that we’re agile enough to respond," said McLachlan.
Adam Weaver examines the Chinese outbound travel market for New Zealand and finds big opportunities, along with challenges and choices
By Adam Weaver*
We may now be reaching the point where it is more apt to say that this market has already emerged.
As a result, it presents certain opportunities and challenges - and there is scope for choices to be made.
According to the United Nations World Tourism Organization, Chinese travellers have spent more abroad than travellers from any other country - nearly $130 billion in 2013.
By early 2015, Chinese travellers could be taking more than 100 million overseas trips. This figure could double within five or six years.
China is currently the second largest source of international visitors to New Zealand behind Australia. In 2013, approximately 230,000 Chinese tourists visited this country. By 2018/2019, this number could reach a staggering 400,000.
A challenge that comes with the increasing number of Chinese visitors is the crucial matters of value and yield.
Travellers who are willing to spend a decent sum of money during the course of their visit and wish to have experiences that match those offered by New Zealand’s tourism industry - and then share glowing accounts of these experiences via social media - definitely have appeal.
China is certainly not the only overseas market that deserves our attention. However, as part of a portfolio of different national markets, devoting resources to the Chinese market makes sense.
The opportunities presented by China’s growing middle classes and by a growing segment of ultra-affluent consumers are significant.
Independent travel is becoming more common and is in many ways preferable to budget-oriented, shopping-focused package tours.
One challenge is identifying a market niche or a series of niches worthy of being targeted. In this aspect, Auckland provides an instructive example. In 2014, Auckland Tourism, Events and Economic Development unveiled its golfing, equine, and marine strategy. There is clearly a fit here between the niches targeted - Chinese who are enthusiastic about golf, horse racing, and sailing - and the types of experiences the Auckland region can provide.
In addition to marketing-related matters, product development deserves attention.
There is already evidence that industry participants, namely hoteliers, are taking steps to adapt the services they provide to the Chinese market. Breakfast buffets feature a wider array of options, for example the inclusion of congee. Green tea, symbolic of healthy drink, is also readily available in many hotel rooms.
Should more be done in the accommodation sector? There are other choices to contemplate.
“Chinese hotels”, hotels specifically created for the Chinese market have been proposed and was endorsed by the Prime Minister in early 2013. For some, such hotels would suit the tastes of Chinese travellers seeking familiar comforts in their home country. Others suggest that hotels of this type may not actually be that popular, are inconsistent with efforts to showcase New Zealand hospitality, and insulate Chinese travellers from serendipitous and authentic encounters with New Zealanders. Building “Chinese hotels” could polarize public opinion, a challenge that deserves some consideration.
There is also scope to help Chinese travellers become more accustomed to existing tourism products in New Zealand.
Campervan travel might appeal to independent Chinese travellers. However, aspects of this mode of travel might seem slightly daunting. Holiday Parks Association New Zealand created a series of videos that were designed to familiarize independent Chinese travellers with certain details regarding campervan use - for example, sourcing fresh water and emptying the waste collection system. These videos have been posted on YouKu, the Chinese equivalent of YouTube.
Of course, encouraging more campervan travel by Chinese travellers and other overseas markets creates challenges: a number of serious road accidents have been reported in the press and there are legitimate concerns that overseas travellers, tired after their long-haul flight and perhaps unfamiliar with New Zealand’s rules of the road, pose a hazard to themselves and others. Some choices need to be made, then, with respect to the way in which we manage (potentially) rising numbers of campervan users. Should a standardised safety briefing be developed? Is a short road test necessary?
Some of the opportunities presented by the Chinese market involve making the most of situations close to home.
International students from China who are studying in New Zealand may, over the course of their stay, take a holiday. These potential tourists are, in essence, already here. They travel during their study breaks between and within semesters. As well, they invite friends and relatives to visit. Travel by students during their various breaks might also help to address issues related to seasonality in the tourism industry.
The Chinese market presents clear opportunities. Challenges, however, accompany some of these opportunities.
Arguably one of the most important challenges has yet to come to the limelight: the English language is a significant barrier for many Chinese travellers. There are opportunities to improve in this area and provide Chinese travellers with exceptional experiences with the aid of expert interpretation.
Taking advantage of the opportunities and confronting the challenges means making (sometimes difficult) choices that require the balance of risks and rewards.
Dr. Adam Weaver is a Senior Lecturer in Tourism Management at Victoria University of Wellington
New Zealand: “Auckland house prices have risen to a frightening level”
Eamonn Sheridan worked with Bankers Trust Australia for 13 years as a Spot foreign exchange dealer, trading across all major currencies and all time zones. He rose to a Vice President position, running spot operations during the busy European time, ...
In case someone needs a beyond idiotic op-ed on the state of the market, we urge them to read the following stunner from USA Today (which is simply a syndicated piece from the Motley Fool, complete with Batman style graphics). Beyond idiotic because in addition to quoting the perpetually amusing Stony Brook assistant professor, Noah Smith, who has never held a job outside of academia and is thus a credible source on all things markety (to wit: "The value of a financial asset is the discounted present value of its future payoffs, and when the discount rate -- of which the Fed interest rate is a component -- goes down, the true fundamental value of risky assets goes up mechanically and automatically. That's rational price appreciation, not a bubble." And by that logic under NIRP the value of an asset is... what? +??) it says this: "Stock prices correct all the time. But what's important to remember is that a correction isn't a bubble." Yes, a correction is not a bubble: it is the result of one, and usually transforms into something far worse once the bubble pops.
Entertaining propaganda aside, for some actually astute observations on the state of the market bubble we go to John Hussman, someone whose opinion on such issues does matter.
Selected excerpts from: Yes, This Is An Equity Bubble
Make no mistake – this is an equity bubble, and a highly advanced one. On the most historically reliable measures, it is easily beyond 1972 and 1987, beyond 1929 and 2007, and is now within about 15% of the 2000 extreme. The main difference between the current episode and that of 2000 is that the 2000 bubble was strikingly obvious in technology, whereas the present one is diffused across all sectors in a way that makes valuations for most stocks actually worse than in 2000. The median price/revenue ratio of S&P 500 components is already far above the 2000 level, and the average across S&P 500 components is nearly the same as in 2000. The extent of this bubble is also partially obscured by record high profit margins that make P/E ratios on single-year measures seem less extreme (though the forward operating P/E of the S&P 500 is already beyond its 2007 peak even without accounting for margins).
Recall also that the ratio of nonfinancial market capitalization to GDP is presently about 1.35, versus a pre-bubble historical norm of about 0.55 and an extreme at the 2000 peak of 1.54. This measure is better correlated with actual subsequent market returns than nearly any alternative, as Warren Buffett also observed in a 2001 Fortune interview. So if one wishes to use the 2000 bubble peak as an objective, we suggest that it would take another 15% market advance to match that highest valuation extreme in history – a point that was predictably followed by a decade of negative returns for the S&P 500, averaging a nominal total return, including dividends, of just 3.7% annually in the more than 14 years since that peak, and even then only because valuations have again approached those previous bubble extremes. The blue line on the chart below shows market cap / GDP on an inverted left (log) scale, the red line shows the actual subsequent 10-year annual nominal total return of the S&P 500.
All of that said, the simple fact is that the
primary driver of the market here is not valuation, or even
fundamentals, but perception. The perception is that somehow the
Federal Reserve has the power to keep the stock market in suspended and
even diagonally advancing animation, and that zero interest rates
offer “no choice” but to hold equities. Be careful here. What’s
actually true is that the Fed has now created $4 trillion of idle
currency and bank reserves that must be held by someone, and because
investors perceive risky assets as having no risk, they have
been willing to hold them in search of any near-term return greater
than zero. What is actually true is that even an additional year
of zero interest rates beyond present expectations would only be worth
a roughly 4% bump to market valuations. Given the current perceptions
of investors, the Federal Reserve can certainly postpone the collapse
of this bubble, but only by making the eventual outcome that much worse.
Remember how these things unwound after 1929 (even
before the add-on policy mistakes that created the Depression), 1972,
1987, 2000 and 2007 – all market peaks that uniquely shared the same
extreme overvalued, overbought, overbullish syndromes that have been
sustained even longer in the present half-cycle. These speculative
episodes don’t unwind slowly once risk perceptions change. The shift in
risk perceptions is often accompanied by deteriorating market
internals and widening credit spreads slightly before the major indices
are in full retreat, but not always. Sometimes the shift comes in
response to an unexpected shock, and other times for no apparent reason
at all. Ultimately though, investors treat risky assets as risky
assets. At that point, investors become increasingly eager to hold
truly risk-free securities regardless of their yield. That’s when the
music stops. At that point, there is suddenly no bidder left for risky
and overvalued securities anywhere near prevailing levels.
History suggests that when that moment comes, the
first losses come quickly. Many trend-followers who promised themselves
to sell on the “break” suddenly can’t imagine selling the market
10-20% below its high, especially after a long bull market where every
dip was a buying opportunity. This is why many investors who think they
can get out actually don’t get out. Still, some do sell, and when
those trend-following sell signals occur at widely-followed threshholds
(as they did in 1987), the follow-through can be swift.