Bernard Hickey details the key news over the weekend in 90 seconds at 9 am in association with BNZ, including news the Serious Fraud Office (SFO) has decided there is enough evidence to extend its investigation into Allan Hubbard's financial affairs by interviewing investors in his various funds.
Meanwhile, there was news late on Friday that US GDP was a weaker than expected 2.4% in the June quarter, suggesting a double dip recession is possible in the world's largest economy.
This followed a warning from the International Monetary Fund (IMF) that America needed to take decisive action to control its ballooning budget deficits and debt.
It has warned higher taxes and spending cuts are needed to control a public debt that is racing out of control.
Yet, the two year Treasury bond yield hit a record low of 0.54% late on Friday after the very weak US GDP figures. The Dow fell slightly.
The New Zealand dollar was unchanged at 72.5 USc in early trade.
Meanwhile, Chinese manufacturing output growth fell to a 17 month low in July as the government there moved to slow economic growth.
All of these factors suggest a slowing global economy and a weaker outlook for growth.
The Reserve Bank warned last week of a softer growth outlook in New Zealand and overseas, meaning the Official Cash Rate did not need to rise as fast or as high as previously forecast.
But we have yet to see what the US and European central banks would do to restart growth if it does completely stall.
They could engage in fresh money printing, which some fear would eventually spark global inflation and therefore push up interest rates.
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1 Comments
Chris,
Alan Greenspan, who most would not say is a trained monkey, seems to think a double dip recession is a possibility...
Former Federal Reserve Chairman Alan Greenspan said the slowing economic recovery in the U.S. feels like a “quasi-recession” and the economy might contract again if home prices decline.
“We’re in a pause in a recovery, a modest recovery, but a pause in the modest recovery feels like a quasi-recession,” Greenspan said in an interview on NBC’s “Meet the Press.”
Asked if another economic contraction, a so-called “double dip,” was possible, Greenspan said, “It is possible if home prices go down. Home prices, as best we can judge, have really flattened out in the last year.”
http://noir.bloomberg.com/apps/news?pid=20601087&sid=aUb4ukA88agU&pos=4
cheers
Bernard
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