90 seconds at 9 am with BNZ

90 seconds at 9 am with BNZ: Chinese and US factory output expands; Aussie GDP strong; Dow surges; NZ$ jumps

2nd Sep 10, 9:00am by Bernard Hickey

Bernard Hickey details the key news overnight in 90 seconds at 9 am in association with BNZ, including figures out overnight showing US factory output and Chinese factory output grew more than expected in August, bolstering hopes that a global economic recovery is back on track.

The Dow rose more than 2.5% on hopes for the recovery.

The US Institute for Supply Management (PMI) factory index rose to a three month high of 56.3 in August. Anything over 50 indicates an expansion, which was more than economists' were expecting.

Meanwhile China's Purchasing Managers Index (PMI) rose to 51.7 in August, again more than economists were forecasting and above the 50 threshold indicating expansion.

Australian GDP also grew 1.2% in the June quarter, which was more than the 0.9% economists were forecasting. Strong Chinese demand for commodities and buoyant consumer spending helped bolster activity in New Zealand's largest trading partner. China is now New Zealand's second largest trading partner. The United States is third.

However, the strong Australian growth figures also sparked speculation that the Reserve Bank of Australia may start increasing the official cash rate there again before Christmas.

Currently, New Zealand economists expect our Reserve Bank to hold our OCR at 3% until December 9, but a reassessment of global growth prospects in the next couple of months may change that.

All this positivity about the global economy increased appetites for riskier currencies such as the New Zealand dollar and boosted demand for commodities such as oil. The oil price rose more than US$2 a barrel to US$74 a barrel.

US Treasury bond prices fell and yields rose slightly on the news of a stronger global economy.

The New Zealand dollar surged to 71.2 USc overnight from 69.6 USc late yesterday.

Also bolstering the currency was news this morning from Fonterra's monthly internet auction of milk powder that prices rose 17%.

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51 Comments

by Wolly | 2nd Sep 10, 9:10am 1283375434

There is an awful lot of "more than economists were expecting" reports all popping up like fungi for me to swallow in one meal. Wanna bet they are not real!

by Christov | 2nd Sep 10, 9:15am 1283375745

No Nonny don't start the day so antagonistic..... let us celebrate the interrupted pall that surrounds us................ and good on you for pointing out the good news.

By the by you got a suitable name yet.....tic ....tic

by Kunst | 2nd Sep 10, 12:16pm 1283386563

Dow is 225 points up - great time for "Mr Stupid" with a 150'000 $ mortgage to buy a new car and a new TV set.

"Good" economic news attracts consumption, but mostly from people, who do not have savings.

Just another misinterpretation leads to believe people the global recovery is intact when the Dow is up temporarily. In the current severe crisis most of these people don’t recognise or underestimate how much the worldwide close correlation of monetary, political, social and environmental events affect us all.

Taking the entire picture into consideration, sorry but how can we master the crisis – there are in my opinion just too many obstacles occurring/ accumulating at the current time ?

Taking the entire picture into consideration, sorry but how can we master the crisis – there are in my opinion just too many obstacles occurring at the same time ?

by Gummy Bear Hero | 2nd Sep 10, 12:23pm 1283387006

........... the telly's OK ......... but a new car would be nice .

Got a copy of the " Dog & Lemon Guide " Walter ?

by Kunst | 2nd Sep 10, 1:01pm 1283389274

"I tour de France a lot"

by Christov | 2nd Sep 10, 9:12am 1283375533

Well that just about confirms it............every time the NZD goes under any sustained pressure the bloody Dairy commodities have a sudden rally.

And so two questions arise..... are we in the business of subsidising internal Petrol consumption with milk powder.

...............what the hell are we gonna do with all that milk powder.......? it's got top back up to a glut sometime.

by Kate | 2nd Sep 10, 11:42am 1283384567

Funny how both dairy and realestate seem to employ the same spin tactics.

by Gummy Bear Hero | 2nd Sep 10, 7:13pm 1283411629

............ the hot droughty Russian summer suggests that they won't export grain this year : and as many northern hemisphere dairy farms are feedlots , the higher price of wheat will feed into the inflationary cheesey spiral that will mean Fonterrible will get higher prices at their online auctions for dried milk products ..................... fecking hell , I'm all giddy just trying to nut out the ramifications of a good summer in Russia ................... bloody commies , ........ all their fault !

MacCarthy was right .

by Christov | 3rd Sep 10, 10:12am 1283465554

Da..............do not forget that burning cows may produce a similar fate for your Fonterra milky

shake boys. Your penchant for matches has been noted.

In any case GBH a reduction in your gluten intake in the coming weeks will serve you well.

Viva the Revolution.!

by ex agent | 2nd Sep 10, 9:37am 1283377072

Ridiculous I agree. I think they will fall at least 20 to 30% over the next 5 to ten years. Worse if the world economy has some more big shakes which is not impossible.

by Bernard Hickey | 2nd Sep 10, 6:21pm 1283408513

No. One swallow does not a summer make.

cheers

Bernard

by ruru | 2nd Sep 10, 9:46am 1283377562

Now this IS interesting.

www.stuff.co.nz/business/4086872/NZ-budget-almost-shock-proof-IMF

@Christov: Please explain the susidising.

by David George | 2nd Sep 10, 10:17am 1283379455

Thanks for the link Ruru but you've gotta wonder about the headline when you read down to find that government debt has more than doubled (17.4% to 36.1%) in two years. The private sector debt is still about the same so total debt to GDP is still climbing.

I don't think the IMF no what they're talking about!

by powerdownkiwi | 2nd Sep 10, 12:45pm 1283388309

Well, what do you expect - the IMF will be staffed by economists.

They in turn, are advised by folk like the IEA, who guarantee BAU.

Have you bothered, Anon@10.21, to investigate them?

No?

I suspect KiwiDave has. Take one look at their 'slide 7', boyo. The hand-pixelled one.

Would you rely on that?

Yet 22 countries do, including NZ since '77.

If that is the basis of such prognostications, you can knock em with confidence.

by Christov | 2nd Sep 10, 10:26am 1283379990

I think the report card from the IMF is more like a good boy in class award...that we can wave around after shocks and say.........................everything is alright.......nothing to see here....move along..... we got the safe scaffold certificate .............see..!

As to subsidy....while I was being tongue in cheek there still remains a remarkable correlation between sustained downward pressure on the kiwi =(higher petrol prices..etc.) and sudden surges in commodity =NZ milk powder and solid milk prod.

Coincidence ..? well it is not likely given the number of occurrences.

Case point.......... what would you do if you needed to keep petrol import prices down ( for inflationary reasons) and your dollar came under pressure...........?

Its a question ...........but a fair one I think.... see Colin Rider post.

by Kate | 2nd Sep 10, 11:47am 1283384861

What the heck did the Japanese spend all those borrowings on?

by Christov | 2nd Sep 10, 1:41pm 1283391669

Whale meat Kaye.........excursions are fraught with danger now....carrying arms costs money and so it goes.

by Christov | 2nd Sep 10, 10:43am 1283381028

ow..! ouch..! stop that nonny...........we are.......... I hope free thinking idiots...and not under

some spell cast by Bernard the Destroyer...........

p.S. can you and Nonny sort out a nom soon I don't know who I am talking to on occasion and may need to apologise for an unkind remark.

by Christov | 2nd Sep 10, 10:48am 1283381303

Damn you sound unhappy today............what's got you all wound up..? make a cuppa...have a scone

..........and contemplate just how lucky we are.

by powerdownkiwi | 2nd Sep 10, 12:49pm 1283388557

No he won't, actually. I've got a panel from 1979/80, still pumping out the 7 watts it did when new. They aren't batteries, they don't die, they just fade a bit, like an old VW.

by powerdownkiwi | 2nd Sep 10, 1:02pm 1283389350

just keep them out of the sun.......

by Wolly | 2nd Sep 10, 10:58am 1283381900

Here's something to cheer you all up...a scene through the looking glass!

http://www.marketoracle.co.uk/Article22366.html

by Wolly | 2nd Sep 10, 11:09am 1283382554

Another day in the zoo!

"Both parent's incomes could be taken into account when child care payments are set and payments could be automatically deducted from employees' income, under Govt proposals released today."herald

"Who is the daddy please..you didn't fill that space in?"

"I dunno"

"You must know..you were there!"

"I was drunk"

"Where are you working please....?"

"I get paid by WINZ"

by alex | 2nd Sep 10, 12:16pm 1283386575

Middle class gone------ Believe that we`ve been that way post late Muldoon /Douglas times.Becoming more evident now in these depressive times

by Gummy Bear Hero | 2nd Sep 10, 12:20pm 1283386840

Ga-Zounds : Knock me down with a feather Batman !!! There was good news in the financial markets over-night , and Chicken-little Hickey actually aknowledged the fact . Za-wowie !

The next round of gummy bears are on me , lads .

Bernard has finally seen the light ; his cataclysmic financial double-dip recession has been postponed .................. for now ......... !

by Gummy Bear Hero | 2nd Sep 10, 12:46pm 1283388390

Tickle me pink , Wonder-woman .............. PNA has roared up to 64 A cents ! ......... Don't let Wolly find out , team . He bailed out , weeks ago . Can we keep it as our little secret .......................... OK ?

by Vera Fayed | 2nd Sep 10, 12:55pm 1283388947

PNA @ 64! When it hits $1 Wolly will be calling it a ponzi scheme, the crazy prices of shares locking out first time buyers... will soon revert to historical average etc etc.

by Gummy Bear Hero | 2nd Sep 10, 1:01pm 1283389273

...hello Wonder ! Yassssssss , dear Wolly , I did predict PNA to bolt past $ 1 , they are undervalued . And gold is on a rip & a tear toward $US 1300/oz .

........... Don't tell Wolly , OK . He'll be beside himself with remorse ........... and we wouldn't want that , would we ( hee hee heeeeeeeeeee )

by Kunst | 2nd Sep 10, 12:21pm 1283386907

Under communism there is no middleclass.

by Gummy Bear Hero | 2nd Sep 10, 12:25pm 1283387108

Only a proletariat , with the leaders' boots on their throats !

by Kunst | 2nd Sep 10, 12:37pm 1283387866

…similar - middleclass taxpayers bailing out Hubbard’s and “Comrade Greed”..

by Christov | 2nd Sep 10, 12:38pm 1283387880

But I'd wear a soft leather.............maybe a moccasin.....yes that's it ...I shall rule in UGboots...somehow befitting my geography.

by Gummy Bear Hero | 2nd Sep 10, 12:41pm 1283388071

UGG boots Big Uggy Bernard : Any chance of letting them in again ? Softer on the workers' heads when the dictator class give instructions , comrade .

by Christov | 2nd Sep 10, 1:12pm 1283389964

Yes thank you GBH......G ...I appear to have misplaced a G from my UGG...thankfully I have you as Press Secretary in the Junta.

Yes I shall rule in UGG boots.......etc etc.

by powerdownkiwi | 2nd Sep 10, 12:53pm 1283388834

Isn't that totalitarianism?

by Kunst | 2nd Sep 10, 12:57pm 1283389047

No, no I think at least JK left the country this morning - otherwise huuuuuuu!

by Christov | 2nd Sep 10, 1:15pm 1283390132

I'm confused .............you'll have to ask Walter........ I thought we were Spanish revolutionaries......

in any case Powderperson my soon to be title ....all goes well Nov 26th is...............

El Presidente'...........

by ruru | 2nd Sep 10, 12:59pm 1283389176

This should deal with welfare, super, and possibly educational underachievement all in one: might cause an initial spike in the helalth budget before the peasants succumb though

http://www.telegraph.co.uk/foodanddrink/foodanddrinknews/7973944/Deep-fried-beer-invented-in-Texas.html

by Christov | 2nd Sep 10, 1:20pm 1283390416

Bush is a Texan........... Ruru ......if you get my drift.....it'll probably catch on here though.

by ruru | 2nd Sep 10, 1:25pm 1283390749

Ah, the great neocon gameplan: lure them to the trough, where they shall sup greedily. Sort of like Marie Antoinette and 'let them eat cake". Or Bob Parker's "you too can have cheap tickets to the garden show".

by Vera Fayed | 2nd Sep 10, 1:53pm 1283392428

PNA - http://www.google.com/finance?q=ASX:PNA

by Wolly | 2nd Sep 10, 1:54pm 1283392482

Too late anononono...you should have done what Wolly said to do way back when it was 40 cents...I'm a happy chappy having bought at 15 and sold at 60...and good luck to those who still have any. The only risk is the macro bomb going off and the copper demand heading south.

I wonder how many Gummy Bear bought!

by Gummy Bear Hero | 2nd Sep 10, 2:11pm 1283393466

Nun ! Hanging onto me Canadian copper . And if we can bribe off the environmentalists , we can drain the lake , and get at the 7 m. oz of gold , too .

by Wolly | 2nd Sep 10, 2:51pm 1283395901

Oh yeah...I forgot you had a toe in Canada...mind you don't get frost bite come the northern winter Gummy Bear. You keep one eye on that Mongolian monsta mine you hear!

by Gummy Bear Hero | 2nd Sep 10, 3:02pm 1283396545

They get frosts in Canada ? ............. The accountant from Timaru never mentioned that in the IPO prospectus ............. go figure ...........

by Christov | 2nd Sep 10, 1:35pm 1283391337

Bernard..........I must say I've noticed lately by your post snapshots that you may have developed a taste for a little something extra in the morning coffee.

For the benefit of you high standing and credibility it may be advisable to refrain from this practice until after............your photo obligations have been completed......

yours faithfully

Disturbed Viewer.

by Christov | 2nd Sep 10, 2:04pm 1283393044

Hey ...............wow I made 69 again....that's like some sort of record....if you could see my profile shot you'd know just how bizarre that is.

God it's a slow day...........and I've made zero dollars.....guuuhh...I'm bored...I'm going to get a hammer and nail something. (tweet/style)

happy day all.

by Kunst | 2nd Sep 10, 2:56pm 1283396213

God it's a slow day...........and I've made zero dollars - no walking or driving tourists - no noise of construction work or trucks - it seems even lawn- movers are in recession - just the wonderful roaring sea.

Great - after all a good day !

by Christov | 2nd Sep 10, 3:07pm 1283396836

The Sea The Sea............God how I love the Sea........ the perfect example of patience.

by Kunst | 2nd Sep 10, 3:09pm 1283396949

I have now more time, then ever in the last 35 years - together - okay almost !

by jfal013 | 2nd Sep 10, 11:29pm 1283426985

Looking for an explanation on the 2.5% DOW increase ...

http://www.newyorkfed.org/markets/pomo/display/index.cfm?showmore=1&ope…