90 at 9 with BNZ

90 seconds at 9am with BNZ: Key fights for The Hobbit, Aussie dollar strength, negative yield on US treasuries, Goldman's 50-year bond

26th Oct 10, 9:00am by Gareth Vaughan

Gareth Vaughan, sitting in for Bernard Hickey, details the key news overnight in 90 seconds at 9 am in association with Bank of New Zealand, including news that Prime Minister John Key will meet Warner Bros film executives today and says it’s a 50-50 call as to whether The Hobbit movies will be made in New Zealand.

Key says Warner's faith in making films here has been shaken after an actors union sought collective contracts outlining minimum standards. Around 2000 people staged a rally in Wellington yesterday in support of the films to coincide with the Warner executives’ arrival. The films are expected to cost about NZ$630 million to make.

The New Zealand dollar fell to its lowest level against the Australian dollar in almost a decade. A few minutes ago it was trading at A75.88 cents, its lowest level since November 13, 2000. And the Aussie dollar is again close to parity with the greenback at US99.24c as both consumer and producer prices rise in Australia.

In November 2000 the New Zealand dollar was trading at just US39.42c with the Trade-Weighted Index (TWI) at 46.20 compared to US75.26c and 66.55 today.

Economists believe the Reserve Bank of Australia may lift the official cash rate from 4.5% on November 2 but here the Reserve Bank is expected to leave the OCR on hold at 3% this Thursday.

In the US Bloomberg reports the Treasury has sold US$10 billion worth of five-year Treasury Inflation Protected Securities at a negative yield for the first time as investors bet the Federal Reserve will succeed in halting deflation by buying debt in an attempt to boost the economy.

And Goldman Sachs will sell US$250 million of 50-year bonds, yes 50 year bonds, this week in an offering directed at retail investors.

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26 Comments

by Alan | 26th Oct 10, 9:30am 1288038600

Whats the big deal about 50 year bonds?

How many perpetuals are listed out there?

Shock! Horror!

Infratil sold bonds with a lifetime of more than 1,000 years - YES 1,000 years. Can you believe it? Wow!

by steven | 26th Oct 10, 10:01am 1288040493

That there are ppl stupid enough to buy them...

regards

by Gummy Bear Hero | 26th Oct 10, 1:27pm 1288052828

If someone is so lacking in ideas that they're willing to stash their munny into 30 , yet alone 50 year treasuries ............ How the heck did they get any munny to invest in the first place ?

Whereas I implicitly trust the US government to remain solvent over the next 2 , 5 , 7 or 10 years ........... It's a stretch to believe that they won't default sometime in the far distance .

by Alan | 26th Oct 10, 1:34pm 1288053295

Are these bonds listed?

If so, then you aren't locked in at all, any more than owners of IFTHAs are 'locked in'? What you can exit for is another matter of course - IFTHA is selling for about 62.5c each today. I could be wrong, but I think they were issued for 100c each.

Alan.

by Gummy Bear Hero | 26th Oct 10, 1:40pm 1288053616

Good point ... ......... You'd wanna have the option to bail , if you believed that sometime in the next 50 years the Federal Reverse will raise interest rates above the current 0 - 0.25 % level !

by David Chaston | 26th Oct 10, 9:43am 1288039412

There are issues at YouTube preventing us from loading the video with today's 90 at 9 report. As soon as these are resolved, we will add it.

by steven | 26th Oct 10, 10:00am 1288040439

The interesting thing is the neg yield bet....and the comments on why........

"A negative yield suggests investors are betting Fed Chairman Ben S. Bernanke will be successful in preventing deflation and the risk of the economy slipping back into recession. "

Strange thinking processes..

Now if deflation was unlikely I would assume that there wouldnt be the scope for a substantial win...so there must be ppl and indeed a few who think deflation is likely...and are betting that way? So the contrarians are betting the other way....

Im with the deflationists and also expect a new dip and recession.....passing 10% "official" USA unemployment with ease......whats next 15%? thats close to 25% un-official Great Depression territory.

regards

by Basel Brush III | 26th Oct 10, 10:17am 1288041456

The population of US must be unbelievably thick to keep taking this rubbish from their financial elite.

The sooner we get a replacement reserve currency the better.

by VALENTINA | 26th Oct 10, 10:19am 1288041553

If the 5 year US bonds are inflation protected they must be expecting a devaluation of the dollar US on a long term basis, especially as they are at negative interest.

Could you shed more light on this Gareth?

by michael | 26th Oct 10, 11:03am 1288044218

Gareth: I see that not much has changed since the last RBA meeting, so I don't see the need for another rise in the next meeting, some jawboning will give them time for a December hike.

by Kunst | 26th Oct 10, 11:09am 1288044568

..and now the “US Super Rich” in the 100’s are wasting their 1’000’000’s to get into political power – another sign of desperation.

by Gummy Bear Hero | 26th Oct 10, 1:33pm 1288053209

They always have , Walter . Two recent examples are H. Ross Perot , who as an independent got 20 % of the vote . And fellow billionaire Steve Forbes also had a tilt at the White House .

Not so long ago Bob Jones here in NZ also had a crack at parliament , in the first-past-the-post election days . He got 20 % of the vote , give or take .

Do you think that any of these rich guy's would've made a worse or a better fist of things than the professional politicians who beat them ?

by Nicholas Arrand | 26th Oct 10, 11:51am 1288047088

"Auckland was again New Zealand's fastest growing city over the past year. Statistics just released show the city's population grew by 1.6 percent - or just over 23 thousand people - in the year to June...."

Quick! Get out and buy property !

"...Natural increase - more babies being born than people dying - accounted for the bulk of the increase."

Or not........

by Gareth Vaughan | 26th Oct 10, 12:23pm 1288048997

An update on the Hobbit - http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10683118

by DC | 26th Oct 10, 10:54pm 1288086899

This whole hobbit moving overseas.... It's certainly a both feet forward and shot both of the them, for everyone if it does go abroad.

by Kate | 27th Oct 10, 8:49am 1288122580

See it for what it is - globalisation at work: a crisis of capital.

NZD was .55 to the US when the project was commissioned... it's now .75 to the USD.

Add to that, the tax subsidy at 15% has now been outbid by nation states with weaker currencies - who, like the US, are fighting in the currency war.

And then, to add insult to Warner Bros. injury... the offshore workers want to discuss the price of their labour. Even if these local labourers agreed to work for free, it wouldn't make a dent in the economics of the capital crisis WB is facing on the project.

To my mind the execs are down here to assess the sunk capital - not the labour laws.

by Matt in Auck | 26th Oct 10, 7:48pm 1288075709

I think the whole Hobbit thing is quite hilarious in a pythonesque way...our PM running around trying to make sure we keep the hobbit...where else but little ole NZ????????

by philthy | 26th Oct 10, 9:42pm 1288082531

I'm really struggling to see the funny side of this one, it won't be funny for the people who might lose their jobs because some idiot unions.

"where else but NZ" there's a quite a few countries offering bigger tax cuts to get the movie than the government here is.

There sure are some stupid unions around, and ego inflated, self centred actors in this country.

It must be soul destroying for the people who put so much effort into getting those movies here in the first place, only to have it undone in an instant with childish actions, like going straight to a blanket ban.

The whole premise that a contractor should be treated as an employee if they meet the conditions that came up in the 3 ft 6 court case are ridiculous.

I doubt there would be a single person in the country is actually a contractor by those measures.

by Matt in Auck | 26th Oct 10, 10:11pm 1288084263

Philthy - lighten up! I know its sad, its just the headline is quite comical, of a Prime Minister trying to "keep the hobbit" here..its all a bit small town NZ, and perhaps sums up the lack of economic depth here....it would be a story in Aus, but far from major headline

Paul Holmes ONCE AGAIN wrote a great piece in the Weekend Herald, about how some of these egotistical actors don't seem to realise there is a pretty bad recession happening. their minds are back in the mid 2000s

I've really changed my views on Holmes, as he has probably changed as a person too (much less egotistical, and very human, which I guess he's always had, just his human side was sometimes overidden by the ego)

by philthy | 26th Oct 10, 10:36pm 1288085784

I'm not so convinced it wouldn't be a headline in Aussie, I was watching the American news before on CNN I think and it was big enough to be news on that.

It's certainly a ridiculous situation alright, one that it should never have come to.

The only good thing to come out of it will how badly the unions have now shot themselves in the foot.

Their attempts to sabotage this government have no bounds, even if it means trying to destroy an industry they will do it.

by Kate | 27th Oct 10, 8:55am 1288122957

Take the emotion out of it, philthy, and actually the best thing Key could do to "save the Hobbit" would be to devalue the currency. Simple.

by neco | 27th Oct 10, 9:24am 1288124691

Warner bros are milking it for what it's worth, and with other countries offering mega-incentives who can blame them. If however the filming in NZ was a done deal (as we have been led to believe by so many commentators) before the union dust-up what was the contractual basis of the agreement between Jackson and Warner bros? Opting out because one has suddenly taken a dislike to a country's employment laws hardly sounds credible if any sort of formalised agreement were in place.

by Alen1 | 26th Oct 10, 11:02pm 1288087369

400,000 doocuments just released about Iraq war crimes, totaly ignored by main stream media, reveal how devastation inflicted on the Iraqi people has only intensified over the past seven-and-a-half years. The US has engaged in sociocide—the systematic destruction of an entire civilization. In addition to the hundreds of thousands killed, millions more have been turned into refugees. There has been a staggering growth of disease, infant mortality and malnutrition. The US military has destroyed the country’s infrastructure, leaving an economy in ruins, with an unemployment rate of 80 percent....To establish US domination over the oil-rich and geostrategically critical country.

by DC | 26th Oct 10, 11:46pm 1288089989

So the Americans went into Iraq to find the weapons of mass destruction (and didn't find any). And now they are working on helping the people, trying to change them into a more westernised way of life, when I firmly believe that they don't want to. Sure it wasn't an A rated socio model before but it was better than what they have now. Is it all because of the oil? Who knows. I have grown suspicious. Looking at the horrendous goings on in Africa over the last few decades the Americans didn't get involved there? Or was it because oil wasn't involved?

by Tim | 27th Oct 10, 8:56am 1288123009

It's deafening how quiet the Labour party are over the Hobbit. They realise how unpopular their stance on this would be.

Goff's view is that PJ is just another tall poppy who should be cut down to size.

by Kate | 27th Oct 10, 9:01am 1288123286

It's also surprising how deafeningly quiet Don Brash has been given he just got paid hundreds of thousands to write a report on how to lift Kiwi wages to catch up with Aus.

How else is that supposed to be done if Kiwis themselves don't want it ?