Here's my summary of the key news overnight in 90 seconds at 9 am, including news the ECB is getting close to launching a major QE program.
But first, the American trade deficit unexpectedly widened in February as exports hit a five-month low, suggesting first-quarter growth could be much weaker than initially anticipated. Balancing that, service industry expansion picked up a bit in March, although not quite as much as was expected. Also unexpected was the size of the jump in first time unemployment claims.
In Europe, the ECB has kept rates on hold at 0.25% but Mario Draghi said they ready to move deeper into uncharted territory in the fight against deflation, with policy makers now prepared to embrace QE and who are debating what form it might need to use.
In more central bank news, Brazil has raised interest rates for the ninth straight time overnight to 11%, extending one of the world's longest-running monetary tightening cycles after a surge in food prices stoked already high inflation.
In Australia, a bigger than expected trade surplus in February was news that sat well with the reports of new China stimulus measures we noted yesterday.
New Zealand's ranking yesterday as the world's most socially advanced nation may come as a bit of a surprise to the glass-half-empty brigade, but they can rest assured that it will be a hard spot to retain, so their day may come. In the meantime it is something to be proud of.
UST 10 year benchmark bond yields fell slightly overnight to 2.78%, gold and oil are both up marginally, and New York equities are holding at their near-record levels in mid-afternoon trade.
The NZ Dollar starts today lower at 85.4 USc, the Aussie is at 92.6 AUc, and the TWI is a tad under 80 this morning.
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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8 Comments
Speculation? Bubble? Only bubble in NZ is the Auckland and CHCH housing markets.
Xero is now the leading accounting software provider in New Zealand and the
leading online accounting software in Australia and the United Kingdom, with
annualised subscriptions of $29m, $41m and $14m respectively.
With strong growth expected to continue in these markets, Xero turns its
focus on the important US market. The US market entry phase was completed
successfully, allowing Xero to raise an additional $180m of capital in
October 2013, bolstering the Board with appointments of New York-based Chris
Liddell as Chairman and San Francisco-based Director Bill Veghte and
appointing Peter Karpas as CEO North America.
Xero has been receiving US industry recognition, including: Accounting
Today's 2013 Top New Products: Honorable Mention - Xero Touch, Mobile
category; CPA Practice Advisor's 5-Star review 2013 (for Software as a
Service); and "Top Choice" for the best online business accounting app by PC
World/ Macworld.
For a company worth 5billion what say should its annual turnover be? 10% of that?
What should the profit margin be? say 10%?
Even if you double every year from now on you are looking at 5 years to get the turnover, and the profit?
Meanwhile its raising debt to grow?
How long before it makes a return and a dividend? a decade?
That isnt to say its not a great product technically. I looked at on Sunday and it seemed a great step forward, all for about $75NZ a month. What would the subscription have to grow to to make shareholders the profit they expect for a $5billion outlay? double? treble?
and you really ask this q?
regards
Xero is good at what it does: it aims at the mom-and-pop style SME's which dominate the numbers in the Tier 3 market. Plus with Vend (online POS) etc it offers 60-70% of what these operations need.
So the strategy is good: mop up this market, lock 'em in to cloud (which means they would have to spend capex on any non SaaS alternative, which these sorts of businesses can't afford), and jack the price once the key turns behind them.
Could be a goer yet, despite the dreadfull P&L. Glass half-full.
But it cannot ever seriously challenge the heavy-weights: Microsoft, SAP, Oracle.
More likely an exit strategy for Xero is to annoy the Tier 1 playaz enough to get bought by one of 'em....many a small software firm has precisely That dream.
To make sense of the XERO story you need to separate the company from the stockmarket :
... as a company XERO has succeeded in quickly building an excellent product , marketing it , and building revenues from a zero base . They've been perspicacious in raising cash for ongoing operations by issuing new shares at a time when the shares were trading at a " nose-bleed " valuation on the NZX ...
The fact that stockmarket participants have chose to push the share price a further 150 % up from that point , into the " both nostrils bleeding " zone , is an issue for those investors , not the company itself ...
... whether the company eventually warrants the current lofty price tag is a question for investors or gamblers with bigger crystal balls than moi ...
Well with QE based fiddling, maybe XERO could help out with the biggest loser in the UK.
http://view.ed4.net/v/NA70KK/KS8T89/ATHM8J/FXSF3X/?ftcamp=crm/email/201…
They need a fiscal hand to set things cooking again.
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