Bernard Hickey details the key news overnight in 90 seconds at 9 am in association with BNZ, including figures out overnight showing US factory output and Chinese factory output grew more than expected in August, bolstering hopes that a global economic recovery is back on track.
The Dow rose more than 2.5% on hopes for the recovery.
The US Institute for Supply Management (PMI) factory index rose to a three month high of 56.3 in August. Anything over 50 indicates an expansion, which was more than economists' were expecting.
Meanwhile China's Purchasing Managers Index (PMI) rose to 51.7 in August, again more than economists were forecasting and above the 50 threshold indicating expansion.
Australian GDP also grew 1.2% in the June quarter, which was more than the 0.9% economists were forecasting. Strong Chinese demand for commodities and buoyant consumer spending helped bolster activity in New Zealand's largest trading partner. China is now New Zealand's second largest trading partner. The United States is third.
However, the strong Australian growth figures also sparked speculation that the Reserve Bank of Australia may start increasing the official cash rate there again before Christmas.
Currently, New Zealand economists expect our Reserve Bank to hold our OCR at 3% until December 9, but a reassessment of global growth prospects in the next couple of months may change that.
All this positivity about the global economy increased appetites for riskier currencies such as the New Zealand dollar and boosted demand for commodities such as oil. The oil price rose more than US$2 a barrel to US$74 a barrel.
US Treasury bond prices fell and yields rose slightly on the news of a stronger global economy.
The New Zealand dollar surged to 71.2 USc overnight from 69.6 USc late yesterday.
Also bolstering the currency was news this morning from Fonterra's monthly internet auction of milk powder that prices rose 17%.
No chart with that title exists.
51 Comments
Dow is 225 points up - great time for "Mr Stupid" with a 150'000 $ mortgage to buy a new car and a new TV set.
"Good" economic news attracts consumption, but mostly from people, who do not have savings.
Just another misinterpretation leads to believe people the global recovery is intact when the Dow is up temporarily. In the current severe crisis most of these people don’t recognise or underestimate how much the worldwide close correlation of monetary, political, social and environmental events affect us all.
Taking the entire picture into consideration, sorry but how can we master the crisis – there are in my opinion just too many obstacles occurring/ accumulating at the current time ?
Taking the entire picture into consideration, sorry but how can we master the crisis – there are in my opinion just too many obstacles occurring at the same time ?
Well that just about confirms it............every time the NZD goes under any sustained pressure the bloody Dairy commodities have a sudden rally.
And so two questions arise..... are we in the business of subsidising internal Petrol consumption with milk powder.
...............what the hell are we gonna do with all that milk powder.......? it's got top back up to a glut sometime.
............ the hot droughty Russian summer suggests that they won't export grain this year : and as many northern hemisphere dairy farms are feedlots , the higher price of wheat will feed into the inflationary cheesey spiral that will mean Fonterrible will get higher prices at their online auctions for dried milk products ..................... fecking hell , I'm all giddy just trying to nut out the ramifications of a good summer in Russia ................... bloody commies , ........ all their fault !
MacCarthy was right .
Da..............do not forget that burning cows may produce a similar fate for your Fonterra milky
shake boys. Your penchant for matches has been noted.
In any case GBH a reduction in your gluten intake in the coming weeks will serve you well.
Viva the Revolution.!
Now this IS interesting.
www.stuff.co.nz/business/4086872/NZ-budget-almost-shock-proof-IMF
@Christov: Please explain the susidising.
Thanks for the link Ruru but you've gotta wonder about the headline when you read down to find that government debt has more than doubled (17.4% to 36.1%) in two years. The private sector debt is still about the same so total debt to GDP is still climbing.
I don't think the IMF no what they're talking about!
Well, what do you expect - the IMF will be staffed by economists.
They in turn, are advised by folk like the IEA, who guarantee BAU.
Have you bothered, Anon@10.21, to investigate them?
No?
I suspect KiwiDave has. Take one look at their 'slide 7', boyo. The hand-pixelled one.
Would you rely on that?
Yet 22 countries do, including NZ since '77.
If that is the basis of such prognostications, you can knock em with confidence.
I think the report card from the IMF is more like a good boy in class award...that we can wave around after shocks and say.........................everything is alright.......nothing to see here....move along..... we got the safe scaffold certificate .............see..!
As to subsidy....while I was being tongue in cheek there still remains a remarkable correlation between sustained downward pressure on the kiwi =(higher petrol prices..etc.) and sudden surges in commodity =NZ milk powder and solid milk prod.
Coincidence ..? well it is not likely given the number of occurrences.
Case point.......... what would you do if you needed to keep petrol import prices down ( for inflationary reasons) and your dollar came under pressure...........?
Its a question ...........but a fair one I think.... see Colin Rider post.
ow..! ouch..! stop that nonny...........we are.......... I hope free thinking idiots...and not under
some spell cast by Bernard the Destroyer...........
p.S. can you and Nonny sort out a nom soon I don't know who I am talking to on occasion and may need to apologise for an unkind remark.
Here's something to cheer you all up...a scene through the looking glass!
Another day in the zoo!
"Both parent's incomes could be taken into account when child care payments are set and payments could be automatically deducted from employees' income, under Govt proposals released today."herald
"Who is the daddy please..you didn't fill that space in?"
"I dunno"
"You must know..you were there!"
"I was drunk"
"Where are you working please....?"
"I get paid by WINZ"
Ga-Zounds : Knock me down with a feather Batman !!! There was good news in the financial markets over-night , and Chicken-little Hickey actually aknowledged the fact . Za-wowie !
The next round of gummy bears are on me , lads .
Bernard has finally seen the light ; his cataclysmic financial double-dip recession has been postponed .................. for now ......... !
...hello Wonder ! Yassssssss , dear Wolly , I did predict PNA to bolt past $ 1 , they are undervalued . And gold is on a rip & a tear toward $US 1300/oz .
........... Don't tell Wolly , OK . He'll be beside himself with remorse ........... and we wouldn't want that , would we ( hee hee heeeeeeeeeee )
This should deal with welfare, super, and possibly educational underachievement all in one: might cause an initial spike in the helalth budget before the peasants succumb though
http://www.telegraph.co.uk/foodanddrink/foodanddrinknews/7973944/Deep-fried-beer-invented-in-Texas.html
Too late anononono...you should have done what Wolly said to do way back when it was 40 cents...I'm a happy chappy having bought at 15 and sold at 60...and good luck to those who still have any. The only risk is the macro bomb going off and the copper demand heading south.
I wonder how many Gummy Bear bought!
Bernard..........I must say I've noticed lately by your post snapshots that you may have developed a taste for a little something extra in the morning coffee.
For the benefit of you high standing and credibility it may be advisable to refrain from this practice until after............your photo obligations have been completed......
yours faithfully
Disturbed Viewer.
Hey ...............wow I made 69 again....that's like some sort of record....if you could see my profile shot you'd know just how bizarre that is.
God it's a slow day...........and I've made zero dollars.....guuuhh...I'm bored...I'm going to get a hammer and nail something. (tweet/style)
happy day all.
Looking for an explanation on the 2.5% DOW increase ...
http://www.newyorkfed.org/markets/pomo/display/index.cfm?showmore=1&ope…
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