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90 seconds at 9 am: Dow down 250 pts on global slump in factory output and disappointment over Fed's decision not to print money; NZ$ down to 78.5 USc; Oil under US$80/bbl

Posted in News
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Here's my summary of the key news in 90 seconds at 9 am, including news US stocks fell 2.2% overnight after fresh data showed a concerted slump in factory output growth across America's east coast, Europe and China.

Investors were also disappointed over the US Federal Reserve's decision on Thursday our time to extend its 'Operation Twist' programme rather than start a third round of money printing known as Quantitative Easing III or QE III.

The Dow Jones Industrial Average fell 250 points or 2%, while the S&P 500, a broader measure of US stocks, fell 2.2%.  See more here at Bloomberg.

US factory orders in the Mid-Atlantic region, as measured by the Philadelphia Federal Reserve Survey, grew at their slowest rate in 11 months and jobless claims last week were worse than economists had forecast. See more here at Reuters.

Euro-area manufacturing shrank at its fastest pace in three years in June, while the HSBC Markit guage of factory activity in China fell for the 8th consecutive month. See more here at Bloomberg.

Concerns about global growth saw commodity prices slump overnight to their lowest levels since November 2010. Commodity prices have now fallen 21% from their highs in February. Oil prices fell around 3% with the NYMEX crude price falling under US$80/bbl for the first time in 8 months. Gold fell almost US$50/oz to US$1,566/oz. See more here at Bloomberg.

The New Zealand dollar fell to 78.5 USc overnight, in line with a drop in appetites for risk. It had been over 80 USc for much of yesterday after stronger than expected GDP growth figures for the first quarter saw investors reduce their bets on a cut in the Official Cash Rate later this year. See more here in Alex Tarrant's article.

However, the New Zealand dollar hasn't fallen nearly as much as commodity prices since February. It is down just 6% from its February levels while the prices of New Zealand's export commodities are down 17%.

Meanwhile, there was some good news overnight in the Spanish bond markets for a change. The Spanish 10 year bond yield fell to 6.61% after auctions of 2,3 and 5 year Spanish government bonds were well bid and after fresh speculation that Europe's Financial Stability Fund (EFSF) will buy Italian and Spanish bonds directly. See more here at Bloomberg.

However, German Chancellor Angela Merkel again rejected talk of using European rescue to buy Southern European bonds directly. See more here at Bloomberg.

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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18 Comments

red ink

1,608 weapons to criminals,

1,608 weapons to criminals, at a total value of over $1 million. Aside from putting American citizens in danger, the AFT also supplied what now amounts to a civil war within Mexico
Hardly a civil war stash there A.J......looks more like the CIA have yet sucked another Administration into financing their own little private agendas...
Nicaragua back in the day was boom time for the CIA....maybe looking for a little action n it got away on them...come to think of it...that happened back in the day too didn't it....?
Still it's  not a good look is it....and I mean Romney's desperate for that hispanic vote, so   the story will no doubt have a bit of manure piled on it for growths sake , and no doubt financed by those gun loving republicans.......

Goldman got short KIWI ? GE

Goldman got short KIWI ?
GE Capital got everybody.

Ta Stephen H.. short

Ta Stephen H.. short kiwi.....a pants down scenario......do this.....um ,no wait you shouldn't have done that.....get out take the hit..!......and they pay me to do this to you...?   cool.
GE Capital....disgusting, sickening,filthy pigs wallowing around the polished Wall St. floors that by any other name appears more and more to be Pen for Swine.
It's a pity the Jury will probably have little understanding of the rammifications of the accused's activies let alone the seriousness of entrenched criminal behaviour of those who percieve themselves above the law.
How does that song go....?
If I had a hammer.......I'd make the rest of them watch.

How would you like to be one

How would you like to be one of the BNZ's new rural clients
http://www.stuff.co.nz/business/farming/7149726/Big-increase-in-BNZs-agr...

Andrewj - bank depositors are

Andrewj - bank depositors are half way there  - they will stand firm with OBR and take the hit along with shareholders and bondholders. Meanwhile executives will have made off like bandits.

Bank downgrades currently

Bank downgrades currently taking place

This is

This is funny...
http://www.bloomberg.com/news/2012-06-21/vanishing-households-undercut-c...
The 2011 census has counted 7.8 million households in Australia, compared to previous estimates of 8.7 million. Vanishing of 900,000 households many impact on forecast housing shortages. The population also grew in 2006-2011 by 300,000 less than predicted.
Meanwhile the Australian house price index
http://www.bloomberg.com/quote/AUEHPI:IND/chart
has fallen 6.3% from its peak 2 years ago in mid-2010.
 

The statistics departments on

The statistics departments on both sides of the Tasman are in need of a shakeup. Did all the bright sparks move to Singapore and Hongkong? Or was it a matter of being asked to move  on by a retained, top heavy, overpaid, ineffectual management.
 
Lets hope the RBNZ's apparent dissatisfaction with Stats NZ initiates a reorganisation.  

RBNZ's dissatisfaction with

RBNZ's dissatisfaction with Stats NZ
 
Can you elaborate on that?

Don't know about RBNZ but

Don't know about RBNZ but this from Treasury back in May is a good insight;
 
http://www.treasury.govt.nz/economy/mei/may12/03.htm
 
 
 
 

Yes, in response, to a

Yes, in response, to a comment made by ostrich, in respect of the recent GDP adjustments I asked an RBNZ officer about it and received a similar response to that outlined by Treasury.

Do you have any idea how

Do you have any idea how Stats NZ gather their data, where they get it from?
 
That Treasury document leaves a feeling of discomfort. It seems capable of being interpreted that the methodology has changed sufficient that it could account for yesterdays big surprise.

Do you have any idea how

Do you have any idea how Stats NZ gather their data, where they get it from?
 
I think that is a question best directed to Stats NZ.
 
But I do feel it was unfortunate that the not so well informed rushed the foreign exchange and government stock market with disastrous consequences on the back of an ill-handled and little publicised Stats NZ methodology change. Real growth is still falling at best.

An unusual statistical

An unusual statistical decision by the national Greek stats agency.
 
Athens Bar Association (DSA) has just released a memorandum declaring the recent Greek general election void because of an out-of-date census having been used

Bernard, touching on the

Bernard, touching on the subject you raised of bright young scientific minds ending up on Wall Street.
 
http://sandiegofreepress.org/2012/06/young-wall-street-traitor-joins-occ...
 

  Here We Go: Moody's

 

Here We Go: Moody's Downgrade Is Out - Morgan Stanley Cut Only 2 Notches, To Face $6.8 Billion In Collateral Calls
 
http://www.zerohedge.com/news/here-we-go-moodys-comes-out-morgan-stanley...

Love the comments on that

Love the comments on that article.