Here's my summary of the key news overnight in 90 seconds at 9 am, including news from the US Fed.
As widely expected, it reduced its bond buying programs by a further $10 billion per month - down from the original US$85 bln to now $55 bln - and it confirmed that even at 6.5% unemployment its key policy rates will remain unchanged for a long time yet, despite the improvements they see in the US economy. Their first rate hike won't be until 2015, their analysis shows.
The US dollar bounced noticeably on the announcements, with the NZ dollar losing 40 bps.
There was also an immediate impact on the gold price. It was falling ahead of the announcement and the drop has accelerated since. Gold is now down to US$1,320/oz, a fall of almost US$60/oz this week. Stories of a gold boom based on the tensions in Crimea have been way off the mark.
Following our balance of payment result yesterday, The US and Japan also reported theirs. The US current account deficit tumbled to a 14-year low in the fourth quarter as exports touched a record high. Their current account deficit is only 1.9% of GDP, well below ours that came in at 3.4%.
Japan’s trade deficit exceeded analysts’ estimates in February, although it was the smallest gap in nine months and exports surged almost 10%. But it may not be enough of a gain ahead of a sales-tax increase in April that will weigh on domestic demand. It's a testing time for Japan and the strategies of Prime Minister Abe.
All three countries (NZ, US and Japan) had export surges in Q4. Who was buying?
In Beijing overnight, John Key has set a new ambitious trade goal for New Zealand with China. The new target is $30 billion in trade between the countries by 2020. It upgrades the present target of $20 bln by 2015, but we are almost there now.
Toyota has agreed to pay a US$1.2 billion penalty to end an American criminal probe into sudden unintended acceleration that led to the recall of more than 10 million vehicles. What was unusual about this settlement is that Toyota were required to admit guilt. If only that same standard applied to the banking settlements.
US oil prices have risen overnight, Brent prices have fallen. The gap between them is narrowing fast.
Later this morning, we will get Q4 2013 GDP. It is widely expected to show annual growth in our economy of +3.1%.
The NZ Dollar started today at 86.3 USc but has fallen to 85.5 USc after the Fed announcement, the Aussie started at 94.7 AUc and the TWI started at 80.5 slipping to 80.2 post Fed. The Chinese central bank started quoting the NZ dollar today and its at 5.36 yuan.
If you want to catch up with all the changes yesterday, we have an update here.
The easiest place to stay up with today's event risk is by following our Economic Calendar here »
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3 Comments
http://in.reuters.com/article/2014/03/19/china-yuan-derivatives-idINL3N…
The slide in the yuan to near one-year lows has left it at critical levels for holders of an offshore derivatives product, exposing them to heavy losses that may fuel a further slide in the currency.
One of the off-the-wall theories that I have espoused lately is that rather than slowing because of the winter weather, the US economy is actually beginning to overheat as it enters the final stages of a free money boom that has benefitted the few at the expense of the many. Most observers with whom I’ve shared this thought, think that I’m nuts, and I agree. But I’ve been watching the Federal withholding tax collections literally going off the charts for a couple of weeks, and based on that it sure looks to me like the US economy is beginning to go into blowoff mode. Sure, only the 1%, or maybe 10%, are participating, but the people who run this show have gambled that the bottom 90% doesn’t matter and they’ve driven policy accordingly.
http://wallstreetexaminer.com/2014/03/19/us-economy-crackup-boom/
http://www.foxbusiness.com/personal-finance/2014/03/18/34-workers-have-…
http://houseofdebt.org/2014/03/13/china-and-the-dangers-of-debt.html
Interesting eh....
So maybe the reason so many Americans dont like their Govn in their face is because they see it as enabling the top 1% to pillage their wallets.
So if you are the top few %, where do you stash your cash pile? to avoid a Govn claw back? ie when the "bottom 90% doesn’t matter" want it back? presumably diversified and global....remote housing markets?
regards
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