Here's my summary of the key news overnight in 90 seconds at 9 am, including news European credit markets surged higher for the second consecutive day amid optimism that the eurozone debt crisis is entering a less dangerous phase. Moody’s decision not to downgrade Spain provided a boost to a market already in a rallying mood.
Reports yesterday that Spain is ready to request assistance from the ESM laid the groundwork for the rally and Finland’s Prime Minister helped with comments that Spain won’t need a full bailout but rather a "precautionary program".
In France, it looks like their government is about to bail out Peugeot Citroen by funding its struggling finance unit. That car company has seen is sales plunge recently.
In the US, housing starts surged 15% in September to their highest level in four years, a revival of an industry that was at the heart of the financial crisis.
In China, Premier Wen Jiabao said the country’s economic situation last quarter was "relatively good," a signal the report later today on Chinese GDP may show the country’s slowdown ebbing.
And in Australia, it looks like the Labor government there may be considering a state asset selloff. The AFR is reporting a key adviser recommending that more than A$200 billion of “lazy” assets owned by the federal and state governments should be sold to plug the nation’s infrastructure gap, reduce debt and lift productivity.
In late trade, US stocks are level-pegging, gold is holding after a fall, and the NZ dollar is up to 82.1 USc and 72.9 on the TWI.
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23 Comments
Yes , some good news stories before the long weekend . Its okay , it will all pan out as its meant to and she'll be right .
I see even the Aussies are to sell some SOE's , so we are not out of step with the world , we are actually leading innovators in this idea, of increasing productivity , and realising the underlying value of these assets
Reminds me of a earthquake assessment report a structural/earthquake engineeering company I know did for Wellington. I think they had 4 or 6 zones varying from totally and utterly screwed, ie its not the earthquake itself, its the slide into the valley, or the liquidification, or the tsunamii....ie 4 or 5 ways to die down to just the earthquake itself damage/risk of death. The real estate agents were grossly un-happy as it affected the house prices so wanted it destroyed....punters of course wanted to see it. Reality as the lead engineer said its splitting hairs....99.999% v 99.99 or 99.5% the difference is so small it doesnt matter but the non-engineers cant understand that...
I think this is in the financial markets also....though throw in greed and fear of not making a killing...any excuse to justify playing in TAB no matter how weak.
regards
So David the Fed lives to print another day....? Pesky FBI had been watching my man on the ground...I told him to leave the bloody camel at home, but no, he said last time he did that ,she got the hump.
Good bombers are getting hard to find , and I'm running out of underpants.....ah well, maybe some cliff diving inside the behive, if Cliff's still up for it that is.
Yay some good news ! Maybe this is because the EU is going to do something innovative like Print more money. The EU summit may also come up with this plan. Its nice to have good news while it lasts. The economy in the USA is a crawl speed with tax hike looming in the near year that will drag on economic growth. The Chinese are lying about there economy, the last quarter for them was relatively rubbish and they have big domestic problems.
The following Reserve Bank link explains a lot.
http://media.nzherald.co.nz/webcontent/document/pdf/201242/RBNZ.pdf
The link was published in the Herald this morning. Like many economics papers, it can be a hard read; but following is a quick summary:
The Reserve Bank has a concept of a Desired Current Account, which they define as that deficit that can just probably be financed over time. That is like running your house with a mortgage that you keep at a maximum, and if your income should go up a little bit, you make sure you borrow and blow even more to keep the mortgage at the maximum. The current maximum is 83% apparently, and that is more or less where they would like to keep it. No thought at all of paying any of it off. In fact doing so would be a bad thing indeed.
They don't really know what sustainable is, so they guess that our current debt level is sustainable and use that as a base. Simplistically they then compute that a current account deficit of 3.8% a year is "Desired". Even at this level they believe the exchange rate is currently overvalued- so we are currently Greece like in having a current account that we have no chance of ever paying back, if it were to persist for any time at all.
2008, our best recent year by far in current account terms at only -2% ; was considered a very bad result. We are aiming at -3.8% remember.
They guess at elasticities that would fix the problem; back to their -3.8%.
No wonder Bollard's regime was useless. Who authorised us to run our national accounts this way? Was there ever a vote? Did a political party ever say "We want to have the biggest national mortgage possible, even though doing so means we will kneecap our productive industries, and own very little, but enjoy the good life in the short term?
It's successfully got my heart rate up in some anger. Better lay off the caffeine for an hour or two.
The gentleperson's club of choice is not doing fantastically well at the moment - God knows what you get up to?
Greece will exit the Euro within 9 months as they have gone from recesssion into depression and the people of Greece have had enough. They cannot even medically treat people and doctors are in crisis. Spain is in big trouble and the situation is getting worse and the banks are going to take a bigger hit than expected. Large US banks are going to need to be broken up as they have got to complex and particular ones that have got too large as they are no longer in control. The real issue with China and a hard landing will happen in the back end of 2013 and going into 2014 (remember 4 is unlucky in Chinese). No country in history has ever had a boom without a bust. At the moment things are pretty amazing and a good rally now enables bank bonuses to be paid out prior to Christmas, as the results look like they have done well.
Interesting on the timing....I find it hard to see 9months, more like 9 weeks but then I thought that 30months ago.
doh.
If I was planning exit Greece (I bet they are), I'd let the US elections pass (so Obama gets re-elected). Then over the xmas hols, while much is shut down for 2 weeks anyway, do it.
Braking up the [US] banks, frankly I cant see there is the political will power to do it. Not even the will power not to intervene to stop it happening "naturally". The US wont "nationalise" the banks, its not in their DNA, its simply impossible for them to contemplate it IMHO. Then again this is getting extreme so who knows.
regards
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