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90 seconds at 9 am: European debt crisis back again on bad Spanish bond auction; US stocks up on QE III hopes after more bad economic data; NZ$ hits 80.3 USc and record high vs euro; Bundesbank to buy A$

Posted in News Updated
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Here's my summary of the key news overnight in 90 seconds at 9 am, including news a poor Spanish bond auction overnight reignited fears about the European debt crisis and weakened the euro.

Spain sold 3 billion euros in the government bond auction, but the yields blew out to unsustainable levels and the amount of bids was much lower than in previous auctions. Spain's five year yield spiked to 6.46% from 6.07% previously and its 7 year bond yield rose to 6.7% from 4.83% at the previous auction. See more here at BBC. The 10 year bond rose back over 7% again.

The euro fell and the spread between the Spanish 10 year bond yield and the German 10 year bond yield, which is a key measure of stress in the European bond markets, rose to as much as 583 basis points, near a record set in June before a European leaders summit that agreed a deal supposed to get it down. See more here at Bloomberg.

This move essentially shows the capital flight from Southern Europe into Northern Europe on fears about a euro-zone breakup is now back on in earnest.

However, the Dow rose 0.3% as, perversely, more signs of bad economic news encouraged stock investors to believe the US Federal Reserve will have enough evidence to go ahead with a third round of quantitative easing (QE III) as early as August 1.

Fresh data showed existing US existing home sales fell unexpectedly, the Philadelphia Federal Reserve survey of manufacturing activity fell for the third month running, US consumer confidence fell, jobless claims rose and a key economic indicator fell more than forecast.

All this gloom about the US economic outlook saw record demand for US TIPS (Treasury Inflation Protected Securities) at an auction overnight. The yield fell to a record low negative 0.637%. That means investors are effectively paying the US government to look after their money once inflation expectations are taken into account. See more here at Bloomberg.

The fall in yields in Northern Hemisphere markets made the higher yields in Australia and New Zealand relatively more attractive, which helped boost the New Zealand dollar to a 1 month high of over 80.3 USc. The Australian and New Zealand dollars are also being helped by a Wall St Journal report that Germany's Bundesbank is preparing to buy Australian dollars to help diversify its reserves away from the euro.

The weakness in the euro saw the New Zealand dollar rise to a fresh record high vs the euro of over 65.6 euro cents.

Meanwhile, the oil price rose sharply overnight as tensions mounted in the Middle East. Governments are now planning for the collapse of the regime in Syria and Israel blamed Iran and Hezbollah for a deadly attack in Bulgaria on Israeli tourists. See more at Bloomberg.

Also, there has been a tragic accident in Wellington. Stuff reports Infratil's Tim Brown has been seriously injured in a bus accident. He was hit by the bus while walking in Wellington and is in Intensive Care with severe head injuries and a collapsed lung. Brown was Lloyd Morrison's right hand man at Infratil and a key player in its many investments in Wellington Airport, NZ Bus and Trustpower. Our thoughts go out to his family and his colleagues at Infratil and HRL Morrison.

(Updated with details on Bundesbank buying A$ and Tim Brown accident.)

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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54 Comments

A very interesting message

A very interesting message being sent out from Jim Sinclair:
 
 

This is a call to litigation and high tech communication arms. This is a call for a communication revolution of 2012 with the same commitment that existed in 1775. This is a call for an explosion in litigation against those that destroy for profit using dastardly means.

The ends do not justify the means in the investment world even though it is the mantra of the devils that hide as financial and corporate personalities. Unless our markets are cleaned up of criminals there can be no sustained economic recovery. As long as the uptick rule is not enforced the Western world economic system is in the control of demons.

This revolution is not armed but it should be violent in its constant complaint and litigation of every organization, writer, paper, and personality that is stealing from us. Do no let up.

It is time for a Real Investors Spring.

Stop bitching and being cowards. I intend to fight via law, communication and any other legal means I can conceive of until I drive anyone who has screwed me and mine nuts.

Stop bitching and get active wherever you are being screwed in your area of business. We are a legion and you all have computers. Use them.

The letters you wrote at my request are having PROFOUND impact. The perpetrators are scared because they we very sloppy in their transgressions against us. We are in a financial system in which almost everything is organized crime. All that you need to do to enforce this disease is to do nothing.

I refuse and will not yield until it is eliminated from my space and the space of my responsibility.

What are you going to do?

Drive your PM CEO nuts because they are a band of cowards as scared of their stockholders as they are of things that go boom in the night. Even more terrified of the stockholders are their directors.

Communicate directly with the board of the company whose CEO is brain dead. Even the CEOs of the biggest PMs have their worst nightmares as a stockholder legal revolution.

Our weapon is litigation. Scare the hell out of everything walking that steals from you or bullies you. Never yield! That includes agencies as well.

This is an urgent call to arms for you all.

 

Jim Sinclair or "Santa," as

Jim Sinclair or "Santa," as he is affectionately known, is my guru when it comes to precious metals investing.

I wouldn't know so much about

I wouldn't know so much about that, but the frustration contained within that message was what go my attention.

Steep curves A.J. come with

Steep curves A.J. come with the warning....pack your skis...!

And where was the RBA? - ohh

And where was the RBA? - ohh sorry, debt is not considered and important economic assumption variable in anglo-saxon central bank modelling.
 
Just a means of oiling the wheels of otherwise unobtainable lifestyles for the not so rich and famous who demand a living from those no longer able to produce it., hence the credit growth. 
 
Any lame attempts by the RBA to reel in this devastating legacy are immediately jumped upon by the idiot bankers wishing utopia to hang on for another round of bonus payments.
 
To hell with the young - we can pay to blame it on the elderly.
 

The USA has a bit of a

The USA has a bit of a problem at the top of the curve
http://forums.wallstreetexaminer.com/index.php?app=core&module=attach&se...

No doubt...A.J...but as the

No doubt...A.J...but as the psychiatrist said ,at least their talking about it now.......with a sense of Jubilation I might add.

The Dow rises cause things

The Dow rises cause things are bad and not getting better, perverse.
What I see is a great tussle between the forces of deflation and inflation. Sort of evenly balanced at present - just as well. The thing that probably worries the Bernank & co more than anything else is if the battle gets un-even. At the moment there's some in the inflation camp and some in the deflation camp - the ships on an even keel. What happens if they all start heading to one side? Could easily happen. The most dangerous would be a surge in the inflation bets and I don't think there's a damn thing they could do to stop it once it gained traction. I think the CBs are near the end of what they can safely do with QE for that reason.
Those calling for a strong burst of inflation had better watch what they wish for. Massive wealth destruction, contracts becoming meaningless and the potential for complete loss of faith in a faith based money system. Mild, managed deflation or inflation is the intention but who really thinks they've got the thing under full control?
The final outcome? I'm fully prepared to put my hand up and say, unequivocally, .........I don't know.

Kd - it's interesting to

Kd - it's interesting to listen to the radio, day after day, calling the Dow as if it's a barometer of the daily weather - some real-time indicator.
 
At the moment, it's just an indicator of a lot of terrified lemmings, rushing hither and thither assuming that someone else knows more.
 
The only thing I'm sure of, is that the longer the whole thing isn't re-booted, the worse it will be when it implodes. Every day, folk are charging 'profit', every day banks are charging 'interest'. Every day, we chew into the underwriting planet, every day we use 85 million never-to-be-had-again barrels of oil, heading down the cherry-picking list through deep-water, fracking and shale, towards lignite......
 
Every day worserer, not betterer. Has to end badlier.

PDK - So what would you do if

PDK - So what would you do if you were 25? With a solid job and money in the bank.

Immediate, a) have no

Immediate,
a) have no debt.
b) Ask for professional advice on protecting the money from bank default. 
c) Look for education to broaden your skills...things liek gardening, DIY....alternatives etc.
Short term,
a) define "solid" job....with a (greater) depression, how solid is that?
medium term
a) fossil fuel allows much job specialisation...have more than one string to your bow.....
regards
 

Thank you for your

Thank you for your response.
I am now debt-free and I am aiming to have 100k in the bank by this time next year. My current protection is to have the money spread across 3 banks. 
I'm currently learning how to rebuild a two-strike engine to try and learn some mechanical skills, as well as growing hydroponic veges indoors.
Solid job for now, who knows going forward. I'm currently in the IT business as a junior sysadmin, learning more every day.
I appreciate the advice.

Money in the bank is not

Money in the bank is not protection ! .... the best protection in an uncertain world , is the stockmarket ...... always has been so , and always willl be ...
 
....and  if those screwball central bankers ever stop manipulating the system , the recovery in the world's economies will commence . And at the forefront of that will be the entrepreneurs and the innovators ..... finance , tech , medicine , energy .... industries ripe for progress and profit
 
In the IT industry , you're at that forefront . Leverage your inside knowledge to invest in firms that are replacing the old behemoths ( Megaupload.com was one such firm  ..... look at the shit they got into for smashing up the profits and the methodology of the entertainment industrie's incumbent firms ! )

Way to go there Stevo....!

Way to go there Stevo....! now don't spoil it and mention (you know what) to him or the wheels could just come right of his momentum.

LOL.... regards

LOL....
regards

Great question.   I'd

Great question.
 
I'd semi-ignore those of my echelon who didn't wan't to know. (Only those old like me can afford the time to teach/cajole/educate).
 
I'd get a group of like-minded folk together, and buy some land. Not prime, not flat, low hills with running water maybe.  Do a formal document, so everyone knows how they stand. Alow for buy-in/out, but with majority approval (keeps the ethos/style intact). What you're aiming for ss a 'development' or a 'retirement village' but without someone else soaking away the profit....
 
There will be a need to go for a Consent, if you're being legit. You should be unique enough to not be setting a precedent! A lawyer in the group might be an advantage...  If you're prepared to wing it, be prepared for the wrath of the anally-attentive to come down on you like a ton of bricks via an Authority. T'was ever thus, small minds being what they are.
 
Set up a resilient power-supply, would be my pick, but you could be separate. Solar panel housing, one design (cost savings in permits and in materials). $50,000 should see a shoestring house for 2+2. At 100,thou, you've a mansion. I'd build in panel, but I'm biased.
 
Communal and/or private gardens, glasshouses is you're southern, and an ongoing discussion /watching-brief on what's happening. (Assume less controls for two reasons: the Hughey types pushing for 'open slather', and the inability/unwillingness of ratepayers to fund officials). Expect slow social disintegration, starting with angst. It'll manifest in places like Spain first, watch and learn.
 
Those with good income streams keep doing it while they can, turning it into resilience back on the land. Those with land skills, better on-site.
 
Does it fix the worlds woes? Nope, but that's too big. Maybe something too big (war?) may wipe you out too. You can't do anything about what you can't do anything about. Does the aboveput you in a better position? You bet.  Great lifestyle, too.

Wow. Thank you for your

Wow. Thank you for your detailed response. That's certainly a lot to think about.
 

yes.......Christov says I/we

yes.......Christov says I/we frighten ppl....but there is the crisis that looks right now and then stuff years away...
PDK is right I/we hope Re: spain and NZ.....we should have time to see and get over the Hugey's and their opposites who are obsolete but in the way...at least I hope so....Things like this are the future, http://earthship.com/
I came from marine engineering to IT so Ive a broad range of suitable skills for the future. Of course Im getting past it a bit but hopefully my children will want to / be able to learn off me, and take that forward as part of their skill set at least I hope so....
regards

I don't think this is a

I don't think this is a balancing act, with a happy equilibrium. The stock market rises only because of the promise of more QE (and other assorted bailouts around the world) and it is only sustained by previous QE. Company earnings are increasing as companies lay off hiring. That is, the only way for wealth to turn a profit is to suck more money for speculation out of the government and the workforce.
 
The usual analogy is that of a parasite overcoming the host, with us being the host in this case.
 
The usual end of a negative feedback loop is zero.

yes......."The stock market

yes......."The stock market rises" which is so funny when you consider the retoric of keep Govn out of business/markets.  If Govn did they and us would be so screwed.
regards
 

Bundesbank switching out of

Bundesbank switching out of the Euro into AUD and NZD. Mirror, mirror, who is the biggest of them all. Bundesbank?, RBA?, RBNZ? Who controls the AU and NZ currencies? Tough on AU/NZ exporters.

Whatever, it's definitely a

Whatever, it's definitely a race to the bottom and the Germans obviously want to enhance their chances. Not much chance of RBNZ beating them - it will have to be an initiative under taken by the Finance Minister -does he have the courage to jeopardise our banks' chances of issuing covered bonds in Europe?

The Germans ...Stephen H ,

The Germans ...Stephen H , would be signaling a cut n run....no small bananna even on a Euro political level......a no confidence show would start an immediate implosion.
As to Billy Bob....he don't do courage...he does smug sneer and one on one's with Bolly. 

Maybe the IMF has already

Maybe the IMF has already done it for them (Bundesbank).

Maybe..Stephen....but let's

Maybe..Stephen....but let's remember who's steering that ship and in the  probable interests of whom.
As far as I'm concerned the IMF is the Fed's pitbull (with a controlled disposition.)

I would say the Bundesbank is

I would say the Bundesbank is of that same disposition - until stopped - .they do not want hyper-inflation and perceive the ECB rushing headlong down that route. Out of Europe would suit the restoration of the internal M3 monitoring and control policy. Not to say it's right - but it cannot be denied. A strong political will is needed to overcome this ideological predisposition towards debt growth management.  It did them no harm and they can only see it as the appropriate medicine now - the country has had that type of blinkered perception before and endured heavy hardships as a consequence - It will be interesting to watch matters unfold. 

Your reference to German

Your reference to German pragmatism is spot on Stephen....there is however of conflict of interest in signaling self preservation at this level...
I agree to watch it unfold is all we can do, but there is going to be an ....awful....amount of money follow this move....that hypothesis needs to be explored as well, and that is thr reason for my cautionary tone on it.
Lets hear from the RBA on it....rack it and stack it anyway you want, it's not good for the AUD.....unless their all going on holiday to parts yonder together and suddenly.

Bundesbank...declined to

Bundesbank...declined to comment..?
Unamed sources in Australian banking informed Glynn....while he telegraphs from an FX desk......?    ...( a walk right in , or boiler room scenario) 
The RBA is not asked to comment at all....?
 The RBA are going to sit on their hands and allow the currency to strenghten further despite sharp falls in commodity demand....? ( it's not the bloody RBNZ you know)
There have been for the last two or so years anyway large volumes of sloshy cash captured to remain in limbo by just such scenarios as the above.......I'm quietly confident this will capture a truckload of the deserving FX dealers long puts .......
The RBA has no reason to be silent on a matter that concerns the welfare of the Australian economy....unless it is a party to a greater central bank capture. 
Follow this one..?....not me ...not yet.
 

I'll bet a penny iconoclast

I'll bet a penny iconoclast is off researching this right now....go you good thing.

No, as a matter of fact, I

No, as a matter of fact, I was doing two other things, at the same time .. multi-tasking if you like ...
 
(a) re-writing (challenging) Bernards headline about NY rising on expectations of QEIII
(b) searching back through the archives for a post where I commented about the $50 billion of hot-money that passes through NZ every day and asking bernard to ask the resident fx guru dan bell where is it going .. because now it's only gonna get worse .. being an expert in the field he would have a fair idea .. a bit like your guy who knows where the new outside money is coming from and going to

Don't think Dan can help you

Don't think Dan can help you there iconoclast...he watches worms n blips,n I've always found his comment retrospective in an (I could have told you that way).....A senior Merchant Banker with Deutche Bank would have a far better idea, but he's not even going to let you read his used newspaper......there just like that , the whole lot of em, real cloak n dagger stuff. icky people.
I think the U.S. markets " are "sweating on QE3....but sweat on, sweat away, it would serve only to capture more money into the abyss........I'm thinking this is a no go for Ben pre election....I'm thinking there are two camps at the Fed......haircut now and pray for the Jubilee....haircut down the road in a forlorne hope things might pick up, strategic military events may change the playing field.....and the Euro stops dragging this out.

If I was the chief dealer at

If I was the chief dealer at an FX operation .. watching the screens and watching the clients I can assure you I'd know if it was touching the sides and would have a very good idea its destination and how long its hangin around for .... 

PUT that in your diary .. Dan

PUT that in your diary .. Dan Bell is the eye in the sky .. he's only a phone call away .. he KNOWS

Great ...! so what did he

Great ...! so what did he tell you...?

deleted

deleted

He never did..!...? go on was

He never did..!...? go on was it an expletive...I been out n about......did he say the f word to you..?

No, had seconds thoughts.

No, had seconds thoughts. Self deletion.

I got a great joke about GBH

I got a great joke about GBH and BH and the EFF word. Just waiting for GBH to get back

..... mighten't be a bad idea

..... mighten't be a bad idea for me  to go back into hibernation ........
 
Ciao !

Ciao..!! buckaroo.

Ciao..!! buckaroo.

Doom.....we're

Doom.....we're doooomed...well those owning piigs debt are, that's for sure!
"Stock markets climbed and solvency fears eased after the summit, which many saw as provided a lengthy breathing space for politicians to work out a broader rescue package. But the shortcomings of the agreement have once again undermined renewed confidence in the eurozone and sent the bond yields of several countries higher, including Spain and Italy."
http://www.guardian.co.uk/business/2012/jul/20/spain-crisis-eurozone-valencia?newsfeed=true

"Peter Doyle said in a letter

"Peter Doyle said in a letter to the IMF executive board that he wanted to explain his resignation after 20 years.
He writes of "incompetence", "failings" and "disastrous" appointments for the IMF's managing director, stretching back 10 years.
No one from the Washington-based IMF was immediately available for comment."
http://www.bbc.co.uk/news/business-18921670
Round about now every weapon in the IMF will be tuned in to destroy Doyle....expect an IMF report on why Doyle should have been fired 20 years ago...that he suffers from deloosions...that he is Irish....that he owns a puppy....

"why are U.S. politicians not

"why are U.S. politicians not holding their own thieving criminal banks to account "
http://www.marketoracle.co.uk/Article35687.html

" Why is water wet ?? "

" Why is water wet ?? " .....
 
...  did it get left out in the rain , overnight ? ...... people are ever so forgetful these days...

It's wet for the same reason

It's wet for the same reason a northerly is the only wind to blow at the south pole!

...... in the Antarctic you

...... in the Antarctic you can't get a cold southerly blowing up your ice hole ?

Oh but you can Gummy....long

Oh but you can Gummy....long as you is not sitting on the pole!

"Problem families 'have too

"Problem families 'have too many children’"
http://www.telegraph.co.uk/news/politics/9416535/Problem-families-have-too-many-children.html
Give them free grog....laced with you know what!
 

Don't blame the Mum's and the

Don't blame the Mum's and the families , if they're merely following the line of least effort , which is to indulge themselves off the taxpayers' hard work ..... sucking in all the freebies and benefits  that successive governments ladle out to them , to bribe their votes at election time ...
 
..... WFF anyone ? ....... wanna loan , interest free ? ...... a rental supplement ? ......

Lace the plonk and grog

Lace the plonk and grog Gummy...deliver it to their door....gotta be the answer.