90 seconds at 9 am with BNZ

90 seconds at 9 am: QE II talk resumes on soft US industrial output data, Fed comments; NZ$, A$ firm; South Korea to buy gold

19th Oct 10, 8:59am by Bernard Hickey

Bernard Hickey details the key news overnight in 90 seconds at 9 am in association with Bank of New Zealand, including news that US industrial output was softer than expected and talk has resumed of a second round of a Quantitative Easing or money printing by the US Federal Reserve.

This talke of money printing and the resulting devaluation of the US dollar helped lift the NZ dollar back towards 76 US cents and the Australian dollar back to 99.4 USc.

The Federal Reserve System's Atlanta Presiden Dennis Lockhart commented that additional monetary stimulus was needed to revive the US economy, saying it would encourage investment in riskier and more productive activities.

He is not a voting member of the Federal Open Market Committee, but his comments suggest the mood is growing within the print for more QE.

The low US dollar and low interest rates is helping to boost the stock market as investors hunt for higher yielding assets and celebrate higher US dollar profits from foreign earnings.

The Dow as up 0.7% in late trade.

The talk of money printing is also encouraging companies with US dollars to buy assets offshore. Yesterday private equity giant KKR bid A$1.75 billion for Australia's Perpetual Ltd.

Meanwhile, South Korea's Central Bank has announced plans to start investing more in gold as it looks to diversify its foreign reserves away from US dollars.

The gold price was firm around US$1,372/oz in overnight trade.

No chart with that title exists.

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.

23 Comments

by Pants Down | 19th Oct 10, 9:43am 1287434580

Hi Bernard

Anychance you or one of your contributors could write a peice on buying at mortgagee auctions

Pros , cons , pitfalls , what to watch out for etc .

Im quite interested on the Purchasers pre-settlement insurance options etc for willfull damage and that sort of thing and the ways that you can protect yourself from the owners trashing the place or refusing to move out

May be quite useful information for a lot of people looking for a cheap entry into property given the current climate

what do you think ?

Pants down

by Nicholas Arrand | 19th Oct 10, 10:15am 1287436523

Like everything in life: You get what you pay for ( or not ,as the case may be!). I f you want a cheap entry point, as you suggest, that doesn't always come from a morgtagee sale. How would you feel/behave if the situation was reversed?

by cam | 19th Oct 10, 10:47am 1287438448

That would be interesting.

I would like to see an update on the Brother in laws guide to mortgages and what one should do.

cheers

by Gertraud T. | 19th Oct 10, 10:25am 1287437112

Unrelated to any topics but interesting to mull over.

A world clock as you have never seen before, data collected from different sources for the year 2010.

http://www.poodwaddle.com/worldclock.swf

by Pants Down | 19th Oct 10, 10:31am 1287437460

Nicholas , Im not looking to debate the morality of the process but at the end of the day if people cant pay there debts they loose there house it an unfortunate fact of life . Mortgagee auctions are a reality

although its benifiting off someone elses misfortune at least Its one way to get on the ladder in Auckland for young first homebuyers who are locked out at current market prices without needing a needing a mortgage that will suck out the majority of income . Just base the price on the risk

by Nicholas Arrand | 19th Oct 10, 10:39am 1287437960

Have you seen a mortgagee sale contract? It basically says " This is the property ", that's it. All the other standard clauses are deleted. That's the clue! There are no guarantees, warantees or protections that can be taken, if the reluctant vendors decides to 'take action'. If they have nothing~they have nothing to lose, and you'd be hard pushed to get any insurance cover at an economic price to protect yourself. Just getting them 'out' can be a trick and a half.

by Vanderlei Luxemburgo | 19th Oct 10, 10:46am 1287438390

yeah i heard of a couple in taranaki who sprinkled 50kg of salt all through their gardens and lawn and bore on the day they left their property, and nothing could be done to them...... caveat emptor isn't it?

by Nicholas Arrand | 19th Oct 10, 10:59am 1287439141

And the people in my wife knew, who put cement down the toilet, flushed it, just before the 'final inspection' by the 'lucky' buyer. Very expensive, when they finally found the answer, as it had knackered more than just the one property!

by Sam | 19th Oct 10, 11:04am 1287439454

I guess one thing you could do is try and get immediate possesion on auction day and make sure the damn thing is vacant on auction day and move in stat. People win and lose in life and it seems these people aren't big enough to lose. I bet they were the also the people annoying us with thier bragging about thier property smarts around the bbq in the summer of 2006.

by anonentity | 19th Oct 10, 10:59am 1287439196

Yeh the Romans did that to Carthage..making sure the place stayed dead for good.

by rc | 19th Oct 10, 11:23am 1287440600

Surely you could lay charges of willful damage to property & seek compensation?

by Nicholas Arrand | 19th Oct 10, 11:26am 1287440786

From who? You've just bought the last asset they didn't have! ( ie: even if you win in court~ and that's not cheap~ what have they got to pay with?)

by Pants Down | 19th Oct 10, 11:31am 1287441085

the idea is that the bank owns security over the pysical property but not the chattels .

the owner can rightfully strip out all fittings and there is no comeback

by Pants Down | 19th Oct 10, 10:50am 1287438651

Yes I've seen plenty and Indeed your right , that's why they usually end up being sold heavily discounted to account for the risk that is entirely on the purchaser .

People who look at buying through mortgagee base there math's on worst case scenario

Pre-settlement Insurance can sometimes be arranged through brokers , I'd like Bernard to comment on what can be done to mitigate the risk and what steps if any can be taken to resolve the specific issues that arise when buying at mortgagee auction

by Kate | 19th Oct 10, 11:12am 1287439938

In the US - the mortgagor/banks are paying mortgagees thousands of dollars in cash to leave their houses intact.

by Wolly | 19th Oct 10, 12:18pm 1287443936

"....If we completely ban it land prices will fall."Key.....doh.....that would mean young Kiwi famers could start farming without a crippling bank debt...wouldn't it?....oh I see what you mean John, heaps are already up to their eyeballs in debt to the banks .... and the sale prices would likely fall so far so fast the equity would go poof and the banks would be in the shite for hundreds of millions on the bloody balance sheets..gosh we can't have the banks losing money can we....quite right JK...bugger the young farmers...save the banks!.

by Gummy Bear Hero | 19th Oct 10, 12:33pm 1287444798

Thankyou Kravis Kohlberg Roberts ............ Anyone wanna counter-bid for my Perpetual Trustees stake ? .......... We're in the Gummys , the yummy funny gummys ....... oooooooooooooooooh yeah !

[ Moral : Kiwis can freely buy assets in other countries , and repatriate ALL of the profits back to NZ .............. Hmmmmmmmmmmm ...... Must run that past dear Goofy and the Labour-Hickey Party ]

by Andrewj | 19th Oct 10, 12:39pm 1287445159

Going down?

http://www.stuff.co.nz/business/industries/4248254/PGG-Wrightson-boss-r…

by Boatman | 19th Oct 10, 12:55pm 1287446146

Yes , I would like to see a comment on the process at Mortgagee Sales . Did anyone see The Weekend Herald Property insert had more Mortgagee sales advertised than I have ever seen before, so it looks like these sales are rising in number ?

In Auckland , many of these are investor owned , and the ones I have viewed have all been vacant

I also agree with the person who said if you cannot pay your debts , you cant keep the property ( which you don't own anyway ). Its like the youngster who goes out an finances a Holden V8 only to discover he cannot afford the installments. It gets repo'd.

What people fail to understand is that when you get a mortgage , you become a tenant of the Bank , but the Rent is not fixed ,it goes up and down , and you have to pay all outgoings for rates , insurance and maintenance .You also carry all the market risks. For this you get any capital gain on 'sale' . You can of course pay it off , but in essence you remain a tenant of the mortgagee until the mortgage is paid up .

by michael | 20th Oct 10, 5:13am 1287504796

China has rised OCR a few hours ago, what a diferent scenario for commodity exporters as of tomorrow. Chinese funds will find interesting rates at home and will gradualy leave emerging mkts behind. NZ has been right about not allowing foreigners into the farm land ownership, the exodus of those capitals would have plunged farm prices to extremes not seen before.

by michael | 20th Oct 10, 5:31am 1287505917

If the AUD declines as a result of China's OCR , what will happen to NZ's recovery ?

by Andrewj | 20th Oct 10, 7:36am 1287513379

Michael, Isn't it odd that the Chinese response to inflation is to raise rates meanwhile the west is trying to create and encourage inflation and force rates lower.

by VALENTINA | 20th Oct 10, 7:56am 1287514590

Micheal, It is not odd at all they have a bigger plan. It is called loss leading. By providing cheap labour they have captured the worlds wealth (the west is also dependent on them for a vast proportion of manufacturing etc) then they lent the money to back at cheap rates until the west are in hock to them to monumental proportions.

The chinese can now raise the value of their currency so it becomes virtually impossible for the west to pay the debt back.

Basically the chinese can now call the shots. Its a bit worrying actually (understatement)