US third quarter GDP revised lower but still tops 3%, JPMorgan in the gun over Malaysia's 1MDB, Chinese property tax based on appraisal value, Carney on bitcoin, NZ$ at US70.14c

Here’s our summary of key events from overnight that affect New Zealand, with news that unlike New Zealand yesterday where Gross Domestic Product figures were revised up, in the United States GDP has been revised down overnight.

Albeit this was only for the third quarter, and only a minor revision down – to 3.2% from 3.3%. It’s still the fastest growth since the first quarter of 2015, and is the first time since 2014 that the US economy delivered growth of 3% or more for two consecutive quarters.

The main Wall Street stock indexes were higher with investors expecting lower corporate tax rates to encourage companies to spend more on dividends, new projects and wage hikes. The US Congress approved a US$1.5 trillion tax cut bill this week, which includes a corporate tax cut to 21% from 35%.

Swiss financial markets supervisory authority FINMA says the Swiss subsidiary of US bank JPMorgan committed serious anti-money laundering breaches in relation to Malaysian sovereign wealth fund 1MDB. 1Malaysia Development Berhad (1MDB) is the focus of money-laundering investigations in at least six countries including Singapore, Switzerland and the United States, according to Reuters. There’s also an IMDB connection to NZ trusts. Malaysian Prime Minister Najib Razak, who chaired 1MDB’s advisory board, has denied any wrongdoing. 

“The bank [JPMorgan] failed in particular to identify the money laundering risks relating to cash flows between business accounts and personal accounts. In one case, it credited hundreds of millions of US dollars from the 1MDB sovereign wealth fund, allegedly earmarked for the purchase of a company, to the personal account of an individual with close ties to a 1MDB business partner,” FINMA says.

In China President Xi Jinping is said to taking a longer-term approach to China’s problems, with more tolerance for short-term economic growth fluctuations, having cemented his power at the Communist Party congress in October, where he was lifted to the same status as previous leaders Mao Zedong and Deng Xiaoping. China’s leaders usually focus on the next year at their annual economic policymaking meeting, which was held this week. This year the timeframe for controlling financial risk, reducing poverty and curbing pollution was set at three years.

Meanwhile based on a People’s Daily article quoting Finance Minister Xiao Jie, it appears a new residential properties tax in China will be based on appraisal value.

Yet another regulator has waded into the debate about bitcoin. Bank of England Governor Mark Carney says big moves in the value of bitcoin don’t present a threat to global financial stability. Separately Carney sees “fundamental problems” with the idea of a digital currency issued by a central bank being used by the general public. More on that here.

Having pushed towards US$20,000 earlier in the week, the bitcoin price was recently at US$15,354.81.

With US crude inventories at their lowest level since October 2015, oil prices rose with WTI (Nymex) at US$58.25 a barrel, and Brent crude at US$64.63. Gold was also higher, at US$1266.08oz. The yield on 10-year treasury bonds fell 1.5 basis points to 2.48%.

This morning the Kiwi dollar is just over US70 cents at US70.14c, it’s at AU91.08c, and against the euro it’s at 59.11 euro cents.  

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