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90 seconds at 9 am with BNZ: US economic data mixed as confidence up but house prices and factory orders down; Markets wait ECB lolly scramble tonight

Posted in News Updated
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Here's my summary of the key news overnight in 90 seconds at 9 am in association with Bank of New Zealand, including mixed economic signs emerging from the world's biggest economy.

US consumer confidence rose in February to a one year high as hope for an employment recovery trickled through to the base of the economy. More than 60% of America's output is linked to consumer spending and their confidence will be crucial if the global economy is to start firing on all cylinders again. See more here at Bloomberg.

However, US durable goods orders fell by 4% in January, which was more than expected and the biggest fall in three years. This is a leading indicator of factory activity and may suggest America's manufacturing recovery is flagging, although economists pointed out the numbers might have been skewed by the expiry of a tax break, which boosted figures the previous month. See more here at Bloomberg.

Also, the S&P/Case-Shiller index of house prices in 20 American cities showed prices fell 4% in December from a year ago, which was slightly worse than expected. House prices are now back to their lowest levels since the housing crisis that triggered the Global Financial Crisis began in 2006.

This is a major factor to watch as the problems in the housing market filter through to US consumer spending because even if consumers have jobs, they feel poorer because of a drop in their house's equity, or even worse, an increase in the 'negative equity' between the house's value and the mortgage's value. See more here at Bloomberg.

These mixed signals meant US stocks continued to tread water overnight. The Dow Jones Index of America's 30 biggest companies struggled just below the key 13,000 mark again in late trade and the broader S&P 500 index was up just 0.2%. European stocks were up around 0.3% with many investors awaiting the results of the European Central Bank's Long Term Refinancing Operation (LTRO) due later tonight New Zealand time. The Dow eventually closed just above 13,000.

This is the ECB's second LTRO and is effectively the biggest lolly scramble on the financial planet. Any European bank can borrow as much as it wants for three year terms at 1% against often weak collateral. The ECB lent €489 billion to European banks in the first LTRO just before Christmas. This settled down Europe's bond market chaos because many of the banks turned around immediately after borrowing the money from the ECB and then bought government bonds in their respective countries, making a handy profit on the way through.

Markets are expecting the ECB to lend out another €500 billion in tonight's LTRO. See more at Reuters here.

The New Zealand dollar was in a holding pattern too. It was around 83.6 USc in morning trade, having made another abortive run towards resistance around 84.2 USc overnight. See more here in BNZ's currencies report on our site.

Meanwhile, closer to home, the CEO of QBE Insurance, Frank O'Halloran, announced yesterday he would step down after a 13 year run in the top job that saw QBE make 44 acquisitions globally. This followed a 38% fall in QBE's share price in the last year as disasters in Australia, Japan and New Zealand hammered its results. See more here at Bloomberg.

(Updates with Dow close above 13,000)

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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26 Comments

Oh isn't it so

Oh isn't it so sad...the media liars in the usa just cannot seem to churn out the same happy happy tune...surely the peasants have forgotten about the millions made homeless by now...surely they no longer remember the bailout of the criminals on Wall st....how much longer can the peasants ignore the media hype and govt BS spewing out of their goggle boxes...

The housing crisis dd not,

The housing crisis dd not, repeat not, 'cause the global financial crisis'. T'was a symptom, not a cause. Unsustainable growth is unsustainable growth, regardless of how it manifests itself.
 
The Emperor remains in raiment garbed.

Of the estimated 500 billion

Of the estimated 500 billion in newly created ECB euro dosh to be dished out to the oh so friendly parasites, what % of it will jump into the Kiwi$fx trade!

and how much will continue to

and how much will continue to be sploshed into the local housing market?

 As of Friday (edit this is

 As of Friday (edit this is from Jan 16th), the ECB announced deposits have grown to just shy of €500 billion, or a new record of €493 billion (which pays banks just 0.25%). In other words, between the LTRO effective date, and today, an additional €228 billion has been deposited, or more than the entire LTRO! And so Sarkozy's carry promoting dreams are entirely dashed, as instead banks end up paying €1.6 billion a year net just to hold the €210 billion with the ECB. In the meantime, the question becomes whether banks are already preparing for the February 29 3 year LTRO next? Check back when the deposit facility usage hits €700 billion in 2 months as banks stash aside about $1 trillion in capital shortfall cash with the central bank. And rising.

European Banks Deposit Entire LTRO, And Then Some, With ECB As Deposits Approach €500 Billion

 

"Bob Parker .....he feels

"Bob Parker .....he feels scared being in Wellington after what he's been through in Christchurch. He stressed the need to earthquake proof buildings, and warned no civil defence plan can prepare you for how you actually respond in a big shake."
http://www.newstalkzb.co.nz/auckland/news/nbnat/219760387-People-should-feel-safe-when-in-the-Capital
Wgtn will get an 8...which is a tad worse than the chch quake...at least the WCC have posted a map showing the named piles of shite 'buildings'  that will fall down on those beneath...
 
 

I have been thinking about

I have been thinking about Prof. Steve Keen;s idea of somehow getting q.e money away from the banks and out to the masses.
  What would develop if the American government were to pay the cash difference (the loss) of mortgagees who owe more on their loans than the value of thier home?  What would be the possible unintended consequences?
 

Jeremy Grantham's (GMO)

Jeremy Grantham's (GMO) latest newsletter is well worth a read: http://www.gmo.com/websitecontent/JGLetter_LongestLetterEver_4Q11.pdf

Grantham nails it. Send a

Grantham nails it. Send a copy to the Beehive though I'm sure they'd ignore it - doesn't fit the brain dead script they're following

Yep that is a fantastic

Yep that is a fantastic read.  Your grandchildren have no value.

good aticle in the herald

good aticle in the herald today by Brian Gould, with Bernard name checked!:
 
 

Dow Ends Above 13,000 for

Dow Ends Above 13,000 for First Time Since 2008
best level in almost four years - party on people!

Silver was the massive

Silver was the massive winner, now up an impressive 4.3% since Friday and 30% YTD
Silver Explodes As DJIA Closes Above 13,000
 
Aside from the market acting shcizo, with everything rising.  Bonds up (reflecting deflationary expectations) and stocks up, and unsurprisingly silver pwning everything.

"Party on"  

"Party on"   harrrrhaaahaaaaa
"Ireland has shocked Europe with plans for a referendum on the EU's fiscal treaty, a move that risks an unprecedented fragmentation of the eurozone and a major clash with Germany."
http://www.telegraph.co.uk/finance/financialcrisis/9112155/Irish-EU-treaty-vote-threatens-chaos.html

"While Ireland's vibrant

"While Ireland's vibrant exports have helped pull the economy out of a death spiral, austerity is still biting deeper. Dublin house prices fell another 4pc in January from a month earlier and are down 57pc from the peak."
 
Ouch, guess Ireland wasn't different and property prices weren't rational. If a lot of their exports go to the EU they're stuck aren't they. Can't afford price of staying, can't afford to leave. Lucky New Zealand is different :)

Just in case there was an

Just in case there was an assumption that rising house prices in NZ are counter to global trends.  European house prices are back on the "up and up".
Guest Post: The Post-2009 Northern & Western European Housing Bubble
 
People are looking to take risk off, and stocks and bonds seem risky to many people at the moment, so cash flows out of those assets, and into safety.  The difference between perception and reality seems to be irrelevant (for now).

First they force now

First they force now officially defaulted Greece to bailout European banks courtesy of a Greek funded Escrow package, then they make Greek pays for the privilege of having a job, then they send in German tax collectors, and finally they prepare to pilfer the gold. And simply because nobody is home, the colonization continues, with the formal take over of the country by a "Kommisar"

  • JUNCKER CALLS FOR RECONSTRUCTION COMMISSIONER FOR ATHENS: WELT
  • JUNCKER COMMENTS IN INTERVIEW WITH GERMANY'S DIE WELT

And since not even this colonial escalation will do much if anything to stir the locals, we can't even imagine what the next annexation steps will be.

"There will be no glory in

"There will be no glory in your sacrifice. I will erase even the memory of free Greece from the histories."---Xerxes

The pain in Spain as they

The pain in Spain as they follow the Greeks into the hole.....
"Conditions in Spain have deteriorated at a rapid pace. As little as a few months ago the Spanish economy was foolishly projected to grow at .7%. Now it expected to contract 1%.
 
Likewise, Spain's budget deficit was supposed to shrink to 6% in 2011 and 4.4% in 2012. Instead it rose to 8.51 percent in 2011, up from a revised estimate of 8.2% which was up from a revised estimate of 6.5%."
 
http://globaleconomicanalysis.blogspot.co.nz/

Spain and Greece venture down

Spain and Greece venture down the hole, but could they pull out a rabbit?
http://coldfusion3.com/blog/live-tests-of-greek-lenr-devices-could-be-broadcast-online
Word is they might actually have something, just having trouble making it consistent. Better start buying nickel.

No Rabbit...just a Black

No Rabbit...just a Black Mamba in a bad mood.

LOL...yes... regards

LOL...yes...
regards

"Orji could face deportation

"Orji could face deportation when he is released from prison, Mr Stuart said."
On the other hand he might still be inside when Shearer and mob jump into the trough...that would mean Orji can expect to be invited to stay...!
 
http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10788850

Wolly – hot NW day in

Wolly – hot NW day in Blenheim I guess.
I’m not sure if Shearer would allow that, but rather some wineries looking for cheap labour in Blenheim.

They are always looking for

They are always looking for cheap labour........
regards