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Bernard Hickey details the key news over the weekend in 90 seconds at 9am, including news Reserve Bank Governor Alan Bollard has told TVNZ it’s unrealistic for New Zealand to think it can match Australia’s incomes and we should be content with the crumbs that fall off Australia’s table. Australia’s mineral wealth gives it some natural advantages we can’t match, Bollard said.

He also said the New Zealand economy remained fragile and the housing market was spongy, meaning rates would stay on hold until the middle of the year, in line with previous statements.

Meanwhile, the Australian Government announced it would remove its wholesale deposit guarantee for banks from end of March, the Sydney Morning Herald reported. Bill English told NZPA that New Zealand was also considering lifting the wholesale guarantee.

The Dow wobbled late on Friday after weak US jobs figures.

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Bernard Hickey highlights the key news overnight in 90 seconds at 9am in association with BNZ, including news the Tax Working Group will release its report recommending tax changes later today at 1pm.

It is expected to suggest a range of taxes to broaden the tax net to include property investors. See my preview here. These could include the removal of depreciation as a taxable expense on buildings, a ‘RFRM’ tax on equity and a land tax. This would help pay for a cut in the top income tax rate to match the family trust rate at 33%.

Meanwhile, Japan Airlines has been declared bankrupt overnight. It will cut 15,000 jobs and 34 routes, including potentially routes from Japan to Auckland and Christchurch.

Also, Citigroup released results showing a big fourth quarter loss and an overall loss for the year. But it still managed to pay its bankers US$25 billion in pay and bonuses. Bonuses are up again across the banking sector in the US.

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Bernard Hickey details the key news over the weekend in 90 seconds at 9am in association with BNZ, including news Strategic Finance announced a big loss and defaulted on its first payment under its moratorium plan. It may now be put into receivership by its Trustee.

Meanwhile, US retail sales for December fell 0.3%, which was much worse than expectations for a 0.5% rise. That drove the stock market and market interest rates lower as investors fear a double dip recession and deflation.

In New Zealand, we are expecting suggestions for tax reform from the Tax Working Group. Also we will see inflation figures on Wednesday.

Next Thursday (January 28) the Reserve Bank will make its first monetary policy decision for the year and is expected to leave rates on hold, but the market is picking a March rise. The RBNZ may change its own outlook for ‘no hike until mid 2010.’

Alex Tarrant presents 90 seconds at 9 am in association with BNZ.

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Barack Obama has said he wants to ‘recover every single dime’ from the Wall Street bailout in a bank fee plan that may last over 10 years, the New York Times reports. US administration officials said overnight that the fee will be placed on the nation’s 50 largest banks and financial institutions with assets over US$50 billion. The plan would look to claw back US$90 billion in lost bailout funds, although US Treasury estimates show the amount of lost funds could be up to US$117 billion.

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Alex Tarrant presents 90 seconds at 9 o’clock in association with BNZ.

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The bank fee being looked at by the Obama administration could be placed on over 20 of the country’s largest banks and financial institutions to claw back up to US$120 billion in lost TARP funds over 10 years, Bloomberg reports.

Meanwhile, California is after for US$6.9 billion in Federal funds to help the state (and the world’s eighth largest economy) with its widening deficit. Many are expecting Governor Arnold Schwarzenegger will have to revert to last year’s IOU system to pay its bills, Bloomberg reports. Schwarzenegger has been supportive of Barack Obama since the President was elected and voted for the US$787 billion stimulus package. However, Obama senior advisor David Axelrod said: “We recognize they have enormous problems…But we can’t solve all of those problems from Washington.”

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Alex Tarrant presents 90 seconds at 9 o’clock in association with BNZ.

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The Washington Post is reporting the US Federal Reserve is set to announce a record profit in 2009, passing around US$45 billion over to the US Treasury. The windfall comes after the Fed went on a buying spree of US government bonds to stimulate the economy, which it earned interest on. On the other side of the coin, the Fed only has to pay banks 0.25% for deposits held at the central bank. However, the Fed may make losses when it starts to sell the US bonds as it drains these stimulus funds from the economy.

Stocks fell in the US in early trade after an announcement on an announcement from China on bank reserve ratios (more below) and lower than expected earnings from aluminium giant Alcoa, Bloomberg reports.

Chile will become the 31st member of the OECD, it was announced overnight. Chile will be the first South American country in the group.

An announcement from China sent commodity currencies lower overnight. The Chinese central bank said it will increase the bank reserve ratio requirement by 0.5%, meaning Chinese banks will have to hold more deposits in reserve instead of lending them out. Markets are picking China to lead global growth in 2010 and this caused a bit of a stir.

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