Bernard Hickey details the key news overnight in 90 seconds at 9 am in association with Bank of New Zealand, including news the US Federal Reserve has announced it is ready to provide more stimulus to support a lagging US economy, but it stopped short of announcing action to ease further.
Markets have been speculating the US Federal Reserve will print up to 2 trillion US dollars to buy US Treasury bonds in an attempt to further reduce already low long term interest rates to boost economic growth. But the Fed held back from announcing the details.
Some were hoping for a second round of quantitative easing known as QE II. But although the Fed is building up steam, it has not released the mooring ropes and the ship remains stuck at the dock.
The Dow initially rose on the suggestion of more money printing to come, but sagged on the realisation that the Fed was all talk and no action. It closed almost flat.
However, the New Zealand dollar rose around half a US cent to 73.4 USc as international investors digested the prospect of a devalued US currency. The US dollar fell to a six week low vs the euro.
Gold hit a fresh record high of US$1,290 overnight as some investors avoided fiat currencies in favour of something harder they believe is inflation proof.
Meanwhile, in another sign of political turmoil inside Barack Obama's administration, National Economic Adviser Larry Summers is expected to resign after congressional elections in November, Bloomberg reported.
No chart with that title exists.
71 Comments
Cafe Hayek makes the interesting point that though Obama has claimed his initial $800 billion stimulunacy prevented the recession becoming the Great Depression, if yesterday's report is correct that the US recession ended over June 2009, then that was before that stimulunacy had been spent.
http://cafehayek.com/2010/09/11035.html
So how does he justify yet further stimulunacy?
(Answer: Western Statists under the thrall - the wise would say death grip - of yet another defunct economist, namely Mr Keynes, are to all extents and purposes insane. It appears too late to end this madness by removing the State from the economy.)
"...debt holders have to be prepared to enter an age of 'financial oppression'."
http://www.marketoracle.co.uk/Article22863.html
Get well away from debt...and be careful to whom you lend your capital...especially your own govt!
Yep,well while greenbacks may have sold off last night, there is a limit to how worthless USD can become as the world’s reserve currency. What they’re trying to do, is get bond yields down so they don’t have to pay people who lend them money. Mercantilism never died. Fair to say it’s working so far and bonds loved it, rallying hard. The treasury curve bull flattened as the 10 yr yield fell 10bp after the Fed’s statement to 2.58 per cent. The five-year yield was not to far behind falling to 2.58 per cent while the 2yr yield fell about 4bp to 0.42 per cent. Amidst all that confusion Australian futures ended up unchanged – 3s at 95.07 and 10s at 94.84 although it was whippy (both contract trading on a 9 tick range).
Wally and the goldbugs out there will be (incl me) pleased 'cos gold was also a big winner last night which makes sense. If the Fed are stupid enough to defile their currency it really does pay to own something of value. Truly, the sooner we can get rid of the USD as the world’s reserve currency the better we shall all be I reckon. Maybe that’s something else for the “Rally to Restore Sanity” to consider. The US has huge problems. Huge, huge problems. Anyway gold shot up to a record high of $1,291 before settling down to $1287 currently (up about $10). Other commodities didn’t seem to have much success though, with crude down 1.8 per cent (473.52) and copper off 0.5 per cent.
I'm also into platinum..you read it here first..it's the next bubble after gold!!
Financial genius Lawrence Summers, asleep at the White house. This is the fool that lost the Harvard fund millions and is the main man in charge of rescuing the US economy!
You couldn't make this shit up.
http://gawker.com/5224980/lawrence-summers-is-asleep-at-all-times/gallery/
It's understandable he called.
Buffet never did anything real or constructive or productive in his life - only creamed off the efforts of others - in the same way Key did.
That wealth - that token that can be expected to be exchanged for goods and/or services at some point, has to be underwritten, and I'll bet Buffet is going some head-scratching about now.
In a rising game, his game is easier. In a static game, harder. And in a declining game, harder still.
I think his biggest worry is that the whole game is based on growth, and growth is unsustainable. If he's tumbled to that, a gypsy lifestyle based out of a small southern village may well appeal.
Who better to ask advice on that score?
actually there was a very good doco on Buffet last night on the sky Doco channel.
if you're interested it's repeated today at midday on SKY channel 74.
one thing he did say, when i saw it last night, was that without the invaluable investment advice from well known NZ investor, The Duke, he would be nothing...go figure...we are not worthy Duke !!
Gold tipped to reach $US 1500/oz. by years end ( CNBC.com ) ............. Better buy-back some of those PNA's Wolly , set to go on a rip & a tear !
This is the life , sitting in the 30'c tropics , annoying the good intelligent folk at interest.co.nz ............... and RadioNational coming thru live , on the computer ..............Bliss my friends , sheer bliss ! .............
[ The Duke and Rob-of-the-North about to slug it out , oh joy ................. ding ding ............... round one ................]
Beware Gummy Bear...when cnbc screams buy, it's past time you said "Bye"....gold is manipulated every which way by the power brokers and I expect a gut sickening drop to be in the planning. PNA is a copper producer with some gold....wait for the drop and then look at OZ...a gold producer with some copper!
I pulled out having made a bundle and I am happy to wait for the next collapse..regardless of the events and the time involved. Wish I had bought the paintings from Vincent when he was asking only the price of a breakfast in Paris.
Interesting to look at the breakdown of Australia's mining earnings ; it is dominated by iron ore and coal . Gold is a small % of the total . Copper too .
Given the need internationally for an alternative store of value to the greenback , gold appears a viable solution . There's no end to which Bernanke will not abuse the $US .
There's a guy in Kaikoura who's a bit of an artiste , wanna beat the stampede , and snap up some of the Kunzie canvases ?
Wish I had bought the paintings from Vincent when he was asking only the price of a breakfast in Paris.
Yes Wally, don’t miss another opportunity, take GBH’s advice and travel to Kaikoura – www.goldart.co.nz
Newcrest Mining (NCM $40.77)
Recent shareprice appreciation has come from NCM now being “too big to ignore”. Newcrest is the world’s fourth-largest gold mining company, with a strategic focus on large-scale and low-cost gold projects in the Asia Pacific region. As the local comparables for Newcrest have rapidly disappeared we have now decided to align our NPV calculation method with that of NCM’s Canadian peers. The net result is a change in our DCF-based valuation from A$49.13/sh previously to now A$46.42/sh.
I was just going to suggest NCM as an option for those interested in gold but you beat me to it. The ASX is totally awash with gold miners though. Check the following link for gold and silver producers:
http://goldnerds.com.au/o/content/view/13/28/
Personally I reckon you might do even better out of others such as LYC (rare earths) or AVM (copper).
Yup I'd say too late to buy gold now. It may keep going up for another few months and keep the bugs happy breaking some more all time highs. Trouble is by the time you've paid all the fees and had all the expense of storing it, you will lose on the deal as you will keep it too long and it will crash, just like all the other bubbles. Buy USD now, it will go up and up within the next 12 months, despite the printing frenzy. The printing is irrelevant to value anyhow, as all it's doing is reducing the leverage (a tiny bit). The growth in debt over the last 10 years makes the printing pale into insignificance.
a friend of mine who is extremely wealthy and a big equities investor and has huge good stocks tells me as soon as gold hits 1500 bucks an oz , he's out irregardless..
i'm well in front on some 2nd tiers etc.in OZ..IGR, SBM, ROL,NCM etc
i hopped into a pile of CGT on the ASX LAST WEEK....they've just closed a billion dollar deal with the 3rd biggest chinese smelter and their CEO used to head Sino Gold which is one of the biggest players.
i got in at $ A0.48.
KCM in thailand is a goodie but the Thais are just as capable of suddenly nationalising all their assets and whammo?
NEWSFLASH!
interest.co.nz commenter and rock star " Wolly" turns out to be a home-schooled kid living in the Marlborough backblocks...John Key has called for a meeting and Dipton Bill has also asked for "Wolly the Kid's" advice on global finances....we are not worthy ?!
"..The report shows in the first half of this year alone $204 million worth of foreign funds left our shores, largely due to a pull-back from Australian investors."
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10675307
Canary in the coalmine anyone!
there was meant to be a graphic with that one , wolly, but unfortunately this site won't take them when you click "save"
however, i suspect my post is still the truth....so pull ya socks up and put ya cap on straight or thou shalt be caned within an inch of your life...come to think of it..you might like that Wolly u old dolly!
"South Island farmers have said as many as a million lambs forecast to be born in Otago and Southland could die in the bitter cold." herald
At $100 a pop that comes to $100 million lost to the region. Possibly higher prices in the market for lamb at xmas...and that doesn't factor in dairy losses.
" corruption on steroids."
This sort of thing would never happen here in Noddy...we are different!
Snow may kill up to a million lambs and is also killing a lot of sheep in worst snow falls in Southland for 50 years.
http://www.stuff.co.nz/southland-times/news/4153041/Wild-weather-threat-to-a-million-lambs/
Hawkes bay's getting a hammering too, lots of dead stock. My sheep are in the worst condition Ive ever had them in. I cannot believe winter could be so hard. Drove around today and my ewes look much better now Ive seen everyone elses, going to be a late season for us all and hard on the meat companies. Got a nice letter from the regional council explianing why my bore fees are going up by about 6x. Its too hot in the States and way tyo cold here I need to find somewhere in the middle.
Talking to contractors today, getting a price on ripping up the grapes, thought I could send the Regional council the ashes as a momento to studity. (mine too, thinking I could make a living from Horticulture, now I know better, an expensive lesson that wont be forgotten in a hurry)
Savi blanc from Chile is for sale in the states for $2 a bottle. You can buy Californian reds at $2 a bottle but the better stuff costs $4. We are stuffed for the longest time.
Andrew & other farmers
When each year 100'000 plus lambs die, leaving behind suffering and financial stress, caused by weather conditions - there must be better farming solutions for some regions of New Zealand ?
The world is changing and forever = new ideas/ visions = more diversity in NZfarming.
Read more here: http://en.wikipedia.org/wiki/Reindeer
Reindeer meat is popular in the Scandinavian countries. Reindeer meatballs are sold canned. Sautéed reindeer is the best-known dish in Lapland. In Alaska and Finland, reindeer sausage is sold in supermarkets and grocery stores. Reindeer meat is very tender and lean. It can be prepared fresh, but also dried, salted, hot- and cold-smoked. In addition to meat, almost all internal organs of reindeer can be eaten, some being traditional dishes.[31] Furthermore, Lapin Poron liha fresh Reindeer meat completely produced and packed in Finnish Lapland is protected in Europe with PDO classification[32][33].
Reindeer antler is powdered and sold as an aphrodisiac, nutritional or medicinal supplement to Asian markets.
Caribou have been a major source of subsistence for Canadian Inuit.
Reindeer meat? Reindeer f’ing meat? You’ve got to be kidding me!
Kunst, maybe I could interest you in a brand new business proposition? You know if you get in quick there’s an absolute fortune to be made, an absolute fortune. And I can tell that to a bright chap like you, you won’t let an opportunity like this one just slip you by. Oh no, I can tell you know where the smart money is. Yes I do! And I think this is a golden opportunity just right for a guy like you to get in on the ground floor. The sky is the limit with this one, baby, and it’s being kept very quiet at this stage. But I’ll let you in on the secret, but the big boys are all over this one like a rash. Now, let me tell you everything I know about Ostriches.......
By the way, Southland is likely to be too warm for Reindeer which is an Artic species, not a temperate one.
Under climate changes is sheep farming long term sustainable ? Can farmers endure the suffering and dying of 100’000 + of sheep and the loss of massive income during spring time ? I reckon some regions of New Zealand aren’t suitable and sheep farming should be abandon.
http://www.odt.co.nz/news/farming/120820/does-sheep-farming-have-future?page=0%2C1
What hinders sheep farmers living in Southland to look for alternatives ? Obviously weather conditions for reindeer are great and the quality of meat is excellent - good potential for a driving export market and NZ market also..
---
Farmed reindeer can generate many of the same products as the other deer species - velvet antler (although both males and females have antlers), meat, trophy bulls for hunting preserves, and by-products such as robes, hides and shed antlers. A few reindeer owners have mentioned to me that reindeer venison is far superior to any other kind of meat.
Other benefits of raising reindeer include the following.
1. Reindeer can be raised on the same farm as other deer and livestock (but different pens), thus reducing facility, set-up and operational costs.
2. Reindeer are low-maintenance, easy-handling and relative disease- free animals. They do very well in areas that have cold winters and/or marginal land.
3. Costs for handling facilities and equipment are often lower than for other cervidae.
4. There are "fewer" restrictions on reindeer movement between states and countries.
A really unique and attractive aspect of reindeer is the demand for them in commercials, parades, and other promotional events. Reindeer are trained to pull sleighs and can be ridden. Also, being associated with Santa Claus makes them a big attraction with the public, and especially with children. Several bed and breakfast operations have indicated that their reindeer are a major factor in bringing in business. I notice that several Christmas tree farms have reindeer - the promotional opportunities should be obvious.
So adding in a few "trained" reindeer to your farm can bring in additional tourism and advertising revenues, as well as a lot of free publicity.
So where do you get more information on reindeer
I’m not aiming for replacing the sheep industry, but away from quantity (inflexibility) adding some more diversity in agriculture. The key for success for a small country like New Zealand are quality, branding and uniqueness. Therefore better mobility in changing market demands and under climate change are other important advantages.
sulatejuusto
Elk Kunst....the munny is in Elk....I can let you buy a breeding pair for oh say $100000..half price ok...but you gotta catch the buggers cos they is in the Fiordland bush somewheres.
Oh come on Kunsty...you catch them suckers and they will bring you a cool million each...honest...just you send my hundred grand to me c/- Bernard.
I think you are right Andrew. Have you had a look in the produce section of your supermarket lately? Peaches and plums from California at prices cheaper then local produce in season, snap peas from Zimbabwe, tomatoes from Aussie etc, etc. The reality is that with high land prices and labour in NZ we are importing more and more from overseas when we can easily produce our own.
I read recently that inflation won't take off again like the 70's and 80's because of globalisation. If prices get too high in one country you import a cheaper alternative from a low cost country. This is at work with manufacturing now in China and when costs rise too high there it will shift to India and so on. Thisis why the USA will find it vary hard to create jobs - the costs are too high there.
Although many farmers are optimistic in NZ, the reality is that much of the worlds food will be produced in Africa, the old Russia and South America - all with lower costs than ours.
Wolly, it not theft, they used to have two workers doing water applications and monitoring now its over 20 I hear. Its an important job and yet somehow the big boys overpump and dump it in our rivers. Have you seen the size of the new Regional Council building in Napier, its all environmental and we need to pay for it as its an example of how we should all be living. The coucil is leading by example unfortunatley its a bit ugly in its wake.
$ is nearly on .74 to the US. Going to be a great year for someone.
Anyone followthis guy?
http://wealthadviseruk.blogspot.com/2010/09/canary-in-markets.html#comm…
The chart explains itself I think, shares markets have to catch up to oil prices, but oil prices will move lower in the next 5 weeks.
Here is how it will play out....
--Already today big money moving into US Treasuries, continuing the flow over the past few months. Money will quickly exit shares for treasuries (hedge fund managers may be slower than me, but they will catch up now). Shares will be sold. Lots of shares.
--This is because QE2 is coming in November, and the Fed will buy $5trillion of treasuries with it, driving prices up and interest rates down even further.
--As money flows into US treasuries (from around the world), more money flows to dollars. The dollar will go up.
--A rising dollar (ironically) pushes down anything priced in dollars (oil, US shares, silver, maybe even gold, but gold may escape).
--This is exactly what Bernanke wants to avoid (he said today he wants inflation), but it proves that perhaps rather than being malicious, he is simply ignorant or impotent.
--As hedge funds and banks move to treasuries, ahead of the Fed launching QE2 (yet more easy money for the banks) there will simply be no one left to buy shares, the few retail investors left will scramble to get out.
This is how crashes happen. It may take a day or two, it may take a few weeks. It may go even lower than my prediction of 4300 for the FTSE.
I am off to bed now, I expect to wake up to a lower FTSE tomorrow morning.
Im on a roll
tatement by James K. Galbraith, Lloyd M. Bentsen, jr. Chair in Government/BusinessRelations, Lyndon B. Johnson School of Public Affairs, The University of Texas at Austin, before the Subcommittee on Crime, Senate Judiciary Committee, May 4, 2010.
I write to you from a disgraced profession. Economic theory, as widely taught since the 1980s, failed miserably to understand the forces behind the financial crisis. Concepts including “rational expectations,” “market discipline,” and the “efficient markets hypothesis” led economists to argue that speculation would stabilize prices, that sellers would act to protect their reputations, that caveat emptor could be relied on, and that widespread fraud therefore could not occur. Not all economists believed this – but most did.
http://gregpytel.blogspot.com/search?updated-min=2010-01-01T00%3A00%3A0…
Another guy
http://animalspiritforecasts.blogspot.com/
the BS giveth and the market taketh away. The Fed stated it's mandate to produce and maintain inflation. The problem is it is failing. Inflation just will not peek it's head over Chinese goods, houses, and oil. How frustrating for Ben, to be Mr. Fiat with a mandate but without the means. I think Ben should fly to China and tell them to export some of their inflation over here, or at least raise the Manufacturer's Suggested Retail of the stuff from the factories they took while we were asleep. After all, if was Ben's predecessors that put America to sleep, not Ben. Why pin it on him?
And oil, oh worthy oil. We've already imbedded oil at $75 a barrel into our cost structure, which was reflected in the spirit of inflation past. What about the spirit of inflation future? Well, $75 a barrel slows down the world economy, so getting oil to get moving requires that Ben should fly to Saudia Arabia and tell those shieks that they need to allow oil to gradually levitate to $150 a barrel which is what all his economists are telling should be the next stop. You know, those smart guys. Alas, the world is slowing down and apart from designing soft drinks made with oil the demand is punk.
We just got a housing report today that made is obvious that housing was coming back. Starts up 10.5%! Now that should get things perking, but why are prices still falling. Whispering to the man behind the curtain he told me that Americans are becoming apartment dwellers. What an unintended consequence of 60 years of Mr. Fiats!
not sure he gets it.
Even in the bottom of the demand destruction - say mid-late '08, we, globally, were still going through 72-5 mbpd of crude, or 82-5 mbpd all liquids.
Even idling, that is daily energy consumption of the planet.
The trouble is that you can't 'value' something so essential. It's kind of like working what your blood's worth to you. It's an invalid valuation - you're dead without it. Therefore worthless.
This is a big Lie!
I think Chang may be thereabouts right on this ..see paragraphs "life support" and "Confidence game".....but I still can't help but think he see's it from a numbers standpoint.
Deliberate manipulation prior to and during this unholy mess still suggest objectives to be reached require complicity on the part of integral players....
For me Wally the jury is still out as to the remote possibility of China's complicity....or forced complicity.... or non participation resulting in the unthinkable.
While the research data is to be accepted at face value....there is no forgetting that logical outcomes are not always human objectives.
"Increasing numbers of New Zealand companies are likely to become insolvent as the economy moves slowly out of recession, says a local expert."
http://www.nzherald.co.nz/small-business/news/article.cfm?c_id=85&objectid=10675433
Now you know why Bolly has opted to pork the market with cheap cuts for longer....New Normal hello...where have you been!
Andrewj
Just bought a bottle of NZ Montana 2008 unoaked Gisborne chardonnay for over 10 euro imported by pernod ricard via the UK - it was the cheapest NZ wine in the state monopoly alcohol store. Prices are higher i think here since i last got NZ wine. I see wool is doing better. Pork is at record prices in the states. I hope you have some better luck meanwhile.
Andrew, Im fine, I do better in interesting times. Watch the bull sh*t about wheat Im looking at some of the figures on Russian garin imports and this is a dangerous place to be.
http://books.google.com/books?id=y4ji24mDK_YC&pg=PA136&lpg=PA136&dq=rus…
http://www.fao.org/docrep/007/y5069e/y5069e03.htm
This guy is onto it;
http://www.telegraph.co.uk/finance/china-business/8019004/Global-food-r…
Is there a global food risk?
Some commodity traders (or is it hedge funds?) might like to think so. Damn the social consequences of a spike in food prices, especially to third world countries, and the inflationary consequences in Britain.
The global economy is not in the grip of drought and famine, no matter how some traders want to play the markets.
These people are playing with fire, having been regulated out of other markets. They are liable to bring down the temple on their own heads. Interfering in food markets and spiking prices is the stuff of which revolutions are made.
Michel Barnier has expressed particular outrage to AEP in an exclusive interview at the Ambrosetti conference at the Villa d'Esti at this particular market practise.
Chelybinsk
We welcome your comments below. If you are not already registered, please register to comment.
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.