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Wednesday's Top 10 with NZ Mint: 'You can quote me on this'; Junk bonds are for losers; A new reserve currency?; British Volker Rule action; down at the RBA; Dilbert

Posted in Opinion

Here's my Top 10 links from around the Internet at 10:00 am today in association with NZ Mint.

Bernard is on his summer break and will be back in late January 2013, probably from Wellington.

As always, we welcome your additions in the comments below or via email to david.chaston@interest.co.nz.

See all previous Top 10s here.

1. 'You can quote me on this' 
Investor Grant Waterhouse has had a win. He is part of an investor group that took on the promoters of the Credit Sails product.

Credit Sails was a complex derivative product put together in 2006 by French investment bank Calyon, a subsidiary of Credit Agricole, and lead managed in New Zealand by broker Forsyth Barr. See more here. Its key selling points were AA-rated capital protection and a high interest rate of 8.5%, but two years later the securities were worthless after a series of defaults decimated the structure. Estimated losses for investors were about $70m. As Tim Hunter from Stuff has reported, the investor group has gotten a settlement of $60 million from the promoters. And Tim then duly reported Waterhouse's parting shot. Good on you Tim.

Waterhouse said the firm had fed him "bullshit" about Chinese walls between the advisory and investment banking sides of the business. "You can quote me on this - the Chinese walls were about as thick as the condoms they used to shove it up the shareholders' arses."

Apologies in advance to the readers in institutions that who will block that excerpt. But these days, investor wins are rare things to report, investor 'celebrations' even rarer.

[Note: If the language in the item above had been in a reader comment, it would have been deleted. We will be strict in maintaining decorum and relevance standards in any comments readers may make on this issue. It is the publisher's preogative to include the item.]

2. It's Mario Draghi
The Financial Times interviews its choice for man of the year, ECB President Mario Draghi, and asked him if 2012 will be remembered as the year the Euro was saved.

This year will in my view be remembered as the year when the long-term vision for the euro and the euro area was relaunched.

The June summit, especially, was a key event. It’s also the year when euro area governments achieved substantial progress in adjusting their economies. And it’s the year when the ECB has stepped in to remove tail risks.

 

3. Junk bonds are for losers
Bill Gross at PIMCO looks ahread to what we expects will be their 2013 winners and losers. He is no fan of the Graeme Hart strategies, I see.

But if a 2% or lower real growth forecast holds for most of the developed world over the foreseeable future, then it is clear that there will be investment consequences. Shown below, as recently published in a TIME Magazine article by Rana Foroohar, is a PIMCO list of future Picks and Pans based upon these ongoing structural changes:

Picks

Commodities like Oil and Gold
U.S. Inflation-Protected Bonds
High-Quality Municipal Bonds
Non-Dollar Emerging-Market Stocks

Pans

Long-Dated Developed-Country Bonds in the U.S., U.K. and Germany
High-Yield Bonds
Financial Stocks of Banks and Insurance Companies

The list to a considerable extent reflects the view that emerging economy growth will continue to be higher than that of developed countries. Their debt on average will remain much lower, and their demographic age much younger.

4. Today's raw market data ...
A quick holiday update:

as at 11:10am Today
9:00 am
Yesterday Four
weeks ago
One
year ago
         
NZ$1 = US$ 0.8421 0.8447 0.8066 0.7637
NZ$1 = AU$ 0.7993 0.8000 0.7740 0.7649
TWI 75.04 75.26 72.85 68.47
         
Gold, US$/oz 1,694.00 1,695.75 1,615.00 1,598.00
Dow 13,323.66 13,235.39 12,795.96 12,103.58
Copper, US$/tonne 8005.50 8,001.10 7,496.00 7,340.00
Volatility Index 15.63 16.34 13.45 24.92

5. A new reserve currency?
China snuck a technical change out late last week that might end up being pretty significant. Its foreign exchange regulator has removed the US$1bn limit for foreign sovereign wealth funds, central banks and monetary authorities buying Chinese assets through the Qualified Institutional Investor Programme (QFII). All pretty technical, until you realise this will allow other governments to hold the Chinese currency as part of their foreign exchange reserves - that is, the yuan could become an international reserve currency.

That might take pressure off the AUD and others who are being used to diversify away from the USD and euro. And, if global central banks decided to allocate just 1% of their reserves to Chinese assets, there could in theory be a wall of US$75 bln of new investment in China.

6. Down, down, down 
ANZ is now saying that the RBA will embark on a big rate cut journey in 2013, down to record low levels for Australia.

ANZ's economists are predicting the cash rate will be cut to 2 per cent by the end of 2013 and suggest it may be a good idea for the government to step back from its budget surplus plans. In a monthly report ... they made the interest rate prediction based on weakness in the Australian economic and only a modest pickup in production in the rest of the world.

“Due to the further sharp weakening in mining business conditions in recent months, the tepid improvement in the non-mining sector, the deterioration in job advertising trends and the strong Australian dollar, we now expect a further one percentage point cut in the cash rate over the course of 2013,'' they said in the report.

Following a cut from 3.25 per cent earlier this month, the cash rate is now at three per cent, as low as it has been on a sustained basis since early 1960. A move to 2 per cent would put it below a level seen in any available records.

7. UK Conservatives challenge big banks
Watch out for a UK report from their Parliamentary Banking Commission, which is expected out just before Christmas. The chairman of this Commission is reportedly a fan of Paul Volker and 'separation'.

Parliamentary Banking Commission to call for banks to be broken up, rather than just ring-fenced. The Coalition’s financial reforms could be seriously challenged this week by demands from the banking commission for a far more radical overhaul of British lenders. However business leaders have urged the Government not to put economic recovery above their reforms. Archie Norman, chairman of ITV, warned of “political indulgence” in pushing regulatory reforms. He told The Sunday Telegraph that “regulation and reserve capital does not come for free. It comes with a cost and the price of the attack on banks will be lower growth.”

8. The fast pace of change
As usual, Dilbert nails it.

9. Ready to jump?
The fiscal cliff is mana from heaven for cartoonists

10. Today's quote
Money isn't everything but it sure keeps you in touch with your children. J. Paul Getty

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?

We welcome your comments below. If you are not already registered, please register to comment in the box on the right or click on the "'Register" link at the bottom of the comments.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current Comment policy is here.

50 Comments

# 11 The art of

# 11
The art of deception
How do you interpret that chart of "real estate for rent"
Presumbly it is the combined "vacancy rate" of
(a) residential property, and
(b) commercial property
Or, is it an index of the going rate for rents?
Residential?, Commercial?, both?
Can you explain it please?

It is only 'residential'. It

It is only 'residential'. It is an index of the "For Rent" listings on both Trade Me, and realestate.co.nz. We record this data on Monday mornings, about 9am.

can I suggest you adopt the

can I suggest you adopt the industry standard and change the heading to "residential rental vacancies index"

done

done

Interesting chart, what do

Interesting chart, what do you make of that Iconoclast? Simple an increase in the market share by Trademe?

In order to draw any

In order to draw any meaningful conclusions we would need a regional breakdown.

Surely though overall though

Surely though overall though ppl leaving one region should = those moving to another region? so Ntaionally why? ppl exiting NZ? or singles moving back to their parents? or what?
I suspect that we'd even want a closer look than regional, ie are the rates climbing in the appreciating areas? but dropping in the cheaper? that would suggest renter stress and even Landlord stress.
Im interested in what ppl think is going on, I cant determine much as there could be so many variables not known, so it almost seems to be a useless chart.
regards
 
 

Agree. A lot of variables.

Agree. A lot of variables. Still, I think it has value. If you are a landlord, try and arrange your lease so it doesn't expire just before December. It could possibly represent increased pressure on landlords to manage and do their own advertising via trade-me.

Forsyth Barr.  How long are

Forsyth Barr.  How long are going to accept these 'no admission of guilt' type settlements.   But we know they are guilty as sin.   Not anything I can do about it, except not give them any of my  business.  Miniscule response --  but at least it is something. 

Agreed regards

Agreed
regards

On #1, it is more than just

On #1, it is more than just offensive language you editors censor. I have been censored on a few occasions, and I am never vulgar or unwittingly disrespectful. Maybe you editors can provide a basis for exclusion of comments, such that readers are aware of when their comments will be deleted.
Thank you!
HGW

On the bottom of every

On the bottom of every story/article posted on this site Hevi you'll find the following:
We welcome your comments below. If you are not already registered, please register to comment in the box on the right or click on the "'Register" link at the bottom of the comments. Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making these comments.

Thank you Garret. I had

Thank you Garret. I had noticed it, but I read it again, just in case I missed something.
So were my comments abusive or defamatory the times I have been censored? They were neither, I believe.
I would have suspected such vulgar remark that promted the note would have been defamatory. But I suspose not that it wasn't, but that it was allowed on an ad-hoc basis.
I wonder if the victims alluded to have been metaphorically sodomized by this author feel abused by this publication. What do you think? Will I be sensored... Hevi sensoring!
HGW

Gareth ! ... a garret is an

Gareth ! ... a garret is an attic , or a top room .... you know , somewhere you go to quietly cry in your soup because the editor has been censoring your blogs .......
 
As they say : " Everyone's censure is first moulded in his own nature . " ... .. heavy shit , Hevi !
 
:-)

Wow... Take easy Gummy. You

Wow... Take easy Gummy. You might get a hernia, or even bust a gut, with all that pressure building up. 
Did you know that a bear with no teeth is called a Gummy Bear... Strewth!
Relax GBH... Breath deeply... Huummmm!
HGW

Buster Gutt ? ..... that guy

Buster Gutt ? ..... that guy .... you know him ? ...... Dang , small world ..... heavy , Hevi ...
 
..... if memory serves , one of us drowned whilst swimming at Ashley Gorge  ..... must look it up , can't remember if it was him or me ....
 
Poor old Garrotte , go easy on him , we were at unFairfax together .... except , seperately ...

Better get her some nice

Better get her some nice noise canceling ear muffs for xmas, as I cant see next year being anything but worse....
regards
 

Did you know that in a survey

Did you know that in a survey of children in England , 40 % believed that Santa Claus was present at the manger when the baby Jesus was born .......
 
..... as long as they keep coming up with survey results like this , life is on the right track ...
 
Rock & Roll on 2013 !!!! ........ boooooo------yahhhhhhh !

#6 I took a bet by fixing my

#6 I took a bet by fixing my NZ mortgage for 1 year last June that by June 2013 I'll get a lower rate than 4.99%. So far, so good..

Good realist article by AEP

Good realist article by AEP over at the Torygraph.  Synopsis fer all you lazy readers:  go talk to China and India if'n yer wanta Do Sumpin' aboot climate.
 
Implied postscript:  Best of Luck, and don't ferget ter Take a Lunch.

This is why the NZ Gov't

This is why the NZ Gov't emissions tax is bo**ocks.  China and India are burning coal at prodigious rates that make our emissions infinitesimal.  

Emissions trading is rubbish.

Emissions trading is rubbish. If pollution is detrimental to the environment and human health, tax it to encourage a switch to more sustainable practice.
 
No, little NZ can't do much about India or China, but that doesn't mean we should do nothing ourselves. The "we're not going to bother because they aren't" mindset legitimises any number of sins. Maybe we shouldn't bother about civil/individual rights abuses or corruption because they're rampant in India and China. Last time I looked we were a sovereign nation quite capable of making our own decisions based on what was right and just, not just rolling over when a bigger nation doesn't agree.

Cripes! it's all go round

Cripes! it's all go round here today........
 Well nearly time for reflection on just what  a suggish , largely mundane year it has been.
Greece are still in the E.U.
Spain is living in bailout mode.
Italy showed they understood corruption a lot better when it was  out in the open and may even give the old Porn star another trot.
 The ECB are still promising "whatever it takes" despite needing to fight tooth n nail over every proposal.
Germany did not revolt on Merkel.
Obama returned to reinstall print n poke Bernanke. 
Gold did not make $5000.00 an oz by Christmas, hell didn't even crack two.
 China continued to finance it's export payload to countries desperate for junk in their garages
John Boy n Billy Bob didn't make good on reducing the deficit any, the fat man got fatter n slower,Groser just got grosser, Bennet got the benifit of the doubt.
Judith Collins illustrated the utter contempt one must have for the people in general ,the arrogance,the sanctimonious self interest that epitomises the attitude of those who percieve themselves ruling class.....what a prize twat..!
 I like not this news ..! bring me some other news.
 Still , only two sleeps to oblivion, i'm going to watch "what about Bob" or Bad Santa again. 
 

If the world ends by

If the world ends by exploding from the core , from the inside out , does this mean that cave dwellers ( our good friends steven & PDK ) get to die before us surface citizens , the sun people ?
 
...... it's a great shame to end the world now , particularly as we finally have an excellent PM , a guy who has a solid grasp upon running NZ Inc. correctly ...... it's the key thing that counts , Count ....... yes ?

He's got a solid grasp on

He's got a solid grasp on something GBH....but , still it pays to be ready when your having a fantasy such as balancing the ledger...eh compadre..?
As to the end of days, I'm not gonna dwell on it, eat my crisps and act all surprised if it sneaks up on me.
 i'll catch up with you before xmas provided you stick around....cheers matey..!

.... our Jewelia is having

.... our Jewelia is having the same fantasy , Count .... dreaming of a Xmas whiter than her pallid skin .....
 
Publicly engaging in an onastist wank about balancing the budget .......
 
... but the die-hards , the unions and the lifetime party supporters believe her all the way ...
 
Over the fiscal cliff ........ SUCKERS !!!!!!

It's the Donkey things that

It's the Donkey things that count... Gummy!
Great PM...? Only if you are a surface dweller...
HGW

The maternatives grate

The maternatives grate heavily with me , Hevi dude ....... rustle Abnorman , DVD sheer-rear .........
 
.......... nup ! ...... Jolly Kid and Wild Bill look the best of a fairly ugly bunch .... for now !!!
 
Where's that excitement machine , the Mantovani of NZ politics , ... Colin & the Conservatives , got to ?

Breathe Gummy, breathe...

Breathe Gummy, breathe... Breathe and hummmm!
It'll help you oxiginate your garret, and regain ... well somethink!
Be positive, life is good and good times are here!
HGW

No need for hevi breathing ,

No need for hevi breathing , friend , life indeed ... is good , very good ......
 
..... if we survive the holocaust tomorrow .... some say it is Mayan , but I reckon it's Bernard's .... we will be fine ....
 
And if we don't survive the end of times , and the earth actually  is rent asunder , I shall be mightily pissed that I didin't scarfie my hidden trove of Gummibars !

Christov, Give me your reg no

Christov,
Give me your reg no and I'll send Crusher around to give it a blast of dragon's breath.
It's a race to the bottom as I see it between her, The Zip-it queen and What the Hekia.
So much for females among the Nats. Seems they have bigger appendages than their male colleagues and are prepared to use them.

Times have changed so little

Times have changed so little , 'cos it's just like the days of Mistress HELEN and the sisterhood .... and the massive weaponry , that great rod of discipline & obedience which they waved above our heads ......
 
...... exhorting the populence to meek submission , acquiescence to those who know best ...
 
As any good Catholic priest admits , it is indeed , a race to the bottom ..

Go on my Son.

Go on my Son.

Interesting chart on our

Interesting chart on our non-recovery,
http://notthetreasuryview.blogspot.co.nz/2012/04/recessions-and-recoveri...
 
regards

RB 20% wrong...Inflation

RB 20% wrong...Inflation seems to be declining still, 0.8% and not the 1% the RB predicted.
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=1084...
So from this historic point, can we start charting just how wrong the RB gets to be?
regards
 

Nice fin-de-siècle article

Nice fin-de-siècle article over at ZH, and (ears on, PDK?) EROEI gets a mention!
 
To wit:

  • Demographics—our aging populace and the impossible entitlements promises made
  • Decline of Paid Work—automation and the Web are destroying more jobs than they create
  • Diminishing Returns of Centralization—the more power the State grabs, the more broken the system becomes
  • EROEI (energy returned on energy invested): energy may be abundant but expensive
  • Healthcare in Crisis—our health declines as we spend 2X more per capita than our competitors
  • The End of Consumerist Growth—if debt and income aren’t growing, neither can consumption
  • Globalization—the genii cannot be put back in the bottle

But only coupla sleeps and then - nepenthe....

EROEI, energy abundant but

EROEI, energy abundant but expensive, no, kind of strange thing to say.  He doesnt understand, Energy Return On Energy invested, no money is involved.  If you bring in money its a method to transfer the true energy costs from one sector / user somewhere else. 
Expensive energy our world economy cant function with.
Globalisation is where using cheap energy we tranport raw materials to points of cheap labour and then transport the finished goods using cheap energy to where they are consumed.
When energy isnt cheap globalisation doesnt work.
regards
 
 

Quibble time, DC.   It's

Quibble time, DC.
 
It's Manna from heaven.  Heavenly bread, given to the Israelites on their Long March outta Egypt.
 
Mana is what yez need to get Into heaven - that or a signed pass from the Big Chief ('Er Indoors, as Saint Peter always says).
 
Ena

But is he manna nuff to fess

But is he manna nuff to fess up?
 
Good ZH piece, but the way. Goes with this:
http://oilprice.com/Energy/Crude-Oil/IMF-Do-we-Have-a-Peak-Oil-Problem.html
and this:
http://www.businessinsider.com/oil-peak-opec-world-bank-2011-11
 
Methinks the IMF and the World Bank read the comments of Steven, PDK, Scarfie et al, and thought: egads, perhaps they have something there. Maybe money doesn't drive energy - maybe it's the other way round?
 
I look forward (note the acceptance-speak already) to being nominated for a Noble Piece prize. Houston might be a suitable venue - they tell me it's cheap.....
 
Actually, the piece doesn't quite get there, but it's not a bad stab.

I'd want to receive it via a

I'd want to receive it via a video conference call though not into flying, ever again. Yes Houston would be a great spot.....very fitting, invite Hugh P and Phil B.
Give them front seats and a bucket each.
World bank is right that ASPO etc expects a spike and then a collapse, rinse and repeat...the only unknown is just when....
NB $147USD is today corrected to about $160US (after inflation adjust), or more importanly $147USD is about 6% of GDP.  Trouble is the real GDP is less these days and the economy far weaker so $120USD might be the trigger point.....or at $111 we might be watching it already.
regards

That is a good link for the

That is a good link for the facebook page thanks PDK :-)

Tough day...just blew $4 to

Tough day...just blew $4 to make $400 plus...now what can you buy for $2 that's already worth
 over $200 on the open market?

illegal paua..? a ten acre

illegal paua..? a ten acre block in Kaitaia..? a copper tank pinched from an unsuspecting widow.......
 now come on Wooly it's Christmas....give her , her share back.

Donate all the profits to a

Donate all the profits to a political party and enter into a PPP........ with the promise of a larger donation at the end......seems to be working for a selected few.

.. list your private hobby of

.. list your private hobby of scrounging up road-kill ( hedgehogs , rabbits , cats , dogs ) onto the NZX as a franchise of butchers-shops , offering cheap low grade meat or meat-like substitutes to Kiwis , an unsuspecting and supremely gullible  public with no sense of smell nor taste  ......
 
Oh bugger , pickle me kidneys , Veritas have beaten you to the punch there , and are set to list  " The Mad Butcher " on the NZX ...
 
Sorry , " Mad Wolly's " ....