90 seconds at 9 am with BNZ

90 seconds at 9 am with BNZ: US home sales, retail sales boost Dow; ECB calms market with open chequebook; Qatar wins world cup; Australian 5th banking pillar

3rd Dec 10, 9:03am 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 the Dow and the New Zealand dollar rose after good economic news from America and calming news from Europe's stressed financial markets.

US existing home sales rose 10% in October, which was more than expected. Meanwhile, US comparable chain store retail sales rose 5.3% in November, which was more than the 3.5% expected.

Hopes that consumers, who drive more than two thirds of spending in the world's largest economy, may be coming back to life helped lift the Dow more than 100 points in late trade.

The New Zealand dollar, which often tends to ebb and flow with appetites for risk on global markets, rose in tandem to 74.5 USc. See our interactive chart below.

Meanwhile, the European Central Bank (ECB) held a meeting and a news conference where it managed to calm some of the stress evident on European bond and bank credit markets.

The ECB pledged unlimited loans for banks through the first quarter of next year, delaying plans to exit this credit support facility. The ECB also went into bond markets to buy sovereign bonds, driving down the yields for Spanish, Irish and Portugese government bonds.

Meanwhile, Russia won the right to host the 2018 World Cup and Qatar was the shock winner of the right to host the 2022 World Cup. Both Qatar and Russia are swimming in cash from high oil and gas returns. They both have debt to GDP ratios of just 7%. Bloomberg has more economic detail here.

Meanwhile, across the Tasman, the Government is preparing to announce the creation of a 'fifth pillar' for the banking system.

It would provide support for credit unions and building societies to compete against the Big 4, including NAB (which owns BNZ here), ANZ, Westpac and CBA (which owns ASB here.)

Thoughts that Australia could create its own version of Kiwibank have been scotched by the Australian Treasury and Australia Post as being too expensive.

No chart with that title exists.

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24 Comments

by Christov | 3rd Dec 10, 9:21am 1291321308

Sorry Have not read the article yet B.H.....just could not resist posting this Bloggers comment from an article in the Telegraph....in relation to Britons sinking further into credit card debt.

Posted by Gerald Schmidt .

This is actually good news.

1. The bank of England wants us to spend money

2. The bank of England punishes you for saving

3. The bank of England is printing money, which means the longer you hold it, the less value it has - so spend it now on dope, crack and alcohol

4.The bank of England says the spending money is good for the economy.

5. The bank of England wants you to be a debt slave. After all the frees't person in the world, is the person who doesn't own anyone anything! And people like them are dangerous.

So if you are poor in the future, you can die on the street, in the cold knowing that other people are warm because of you and your selfness act!.

So refreshing to see the upside of misery.....P.S. wonder if he meant "selfness" it worked anyway.....perversely so did..... "own anyone anything"

and the breakdown of the voting for those interested in the grimy politic of FIFA...

Round 2: Netherlands/Belgium 2 votes, Spain/Portugal 7 votes and Russia 13 votes (Russia obtained an absolute majority) 2022 FIFA World Cup Round 1: Australia 1 vote, Japan 3 votes, Korea Republic 4 votes, Qatar 11 votes, USA 3 votes (Australia eliminated) Round 2: Japan 2 votes, Korea Republic 5 votes, Qatar 10 votes and USA 5 votes (Japan eliminated) Round 3: Korea Republic 5 votes, Qatar 11 votes, USA 6 votes (Korea Republic eliminated) Round 4: Qatar 14 votes and USA 8 votes (Qatar obtained an absolute majority)

by Christov | 3rd Dec 10, 9:30am 1291321814

Breaking news......There's been a report of an amassing of Weapons of Mass Destruction in the region of Qatar.......more news as it comes to hand/mind.

by Christov | 3rd Dec 10, 9:49am 1291322975

The flaw in his plan Sore-loser is that... Power Corrupts.... and embraces equal opportunity.

by Andrewj | 3rd Dec 10, 9:56am 1291323399

How Russia got the world cup, Fear

http://www.telegraph.co.uk/news/worldnews/wikileaks/8175406/WikiLeaks-P…

Michael Hudson

http://www.counterpunch.org/

The Borrower and the Billionaire

by jfal013 | 3rd Dec 10, 9:59am 1291323564

Eat this ...

"The release of this data on some 21,000 Fed transactions over the last three years is one of the rare useful provisions in (the financial reform bill),"

"The document dump confirms that the $700 billion Treasury Department bank bailout out signed into law under President George W. Bush in 2008 was a small down payment on an secretive “backdoor bailout” that saw the Fed provide roughly $3.3 trillion in liquidity and more than $9 trillion in short-term loans and other financial arrangements. With hundreds of billions in US money going to foreign financial institutions, Sanders asks: "Has the Federal Reserve of the United States become the central bank of the world?"

http://www.thenation.com/blog/156794/feds-backdoor-bailout-provided-33-…

-Citigroup collected over $1.8 trillion.

-Morgan Stanley grabbed $2 trillion.

-Goldman Sachs took $600 billion.

-Bear Stearns received almost $1 trillion in short-term loans with interest rates as low as 0.5 percent.

- ECB took temporary loans of $8 trillion.

by Gummy Bear Hero | 3rd Dec 10, 12:36pm 1291332994

Thanks for clearing that up ! Neither me nor Fred could make sense of the Federal Reverse's balance sheet :

$ US 3.3 trillion in liquidity

$US 9.0 trillion in short term loans .

by Gareth Vaughan | 3rd Dec 10, 10:02am 1291323749

BNZ's parent National Australia Bank and Westpac were among the banks to tap emergency funds from the US Federal Reserve at the height of global financial crisis.

http://www.businessday.com.au/business/nab-westpac-tapped-fed-20101202-…

by Andrewj | 3rd Dec 10, 10:12am 1291324338

Lord Acton 1834-1902

Power tends to corrupt, and absolute power corrupts absolutely. Great men are almost always bad men.”

He also said

Socialism means slavery.

The danger is not that a particular class is unfit to govern: every class is unfit to govern.

The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks.

Lord Acton

The long term versus the short term argument is one used by losers.

by scarfie | 3rd Dec 10, 10:46am 1291326389

Well the anger and resentment that is building up is certainly clear, with America's gun ownership levels they should be worried. We have had ours(gun ownership) seriously diluted over the years, so that only the criminals have free and easy access to them.

But I think the author misses the point. All the "we" have to do is to stop buying cheap junk imported from China, and instead buy cheap junk made in America, such as GM cars.

Isn't there an old adage about the customer is always right. We, including NZ, are in this mess because people have chosen the wrong vote with their wallet.

by Kunst | 3rd Dec 10, 11:12am 1291327958

I just like to make clear Sore- loser isn’t Walter, but similar using different words in different situations - meaning the same.

How far are we away from - yes – “Viva La Revolution” - with crap- ideas like “NZFinancial hub of the South Pacific” - PM Key ???

Like I wrote many times before, in the current and upcoming worldwide scenario we urgently need steps to increase sustainable production in the real economy under the branding to be the world- leaders of a "NZ100% Pure Economy" - a visionary approach.

by scarfie | 3rd Dec 10, 1:27pm 1291336028

Agree.

Quite often what isn't taken into account is the embodied energy of products, which are all on the back of the artificially cheap price of oil.

On a similar note I was told recently that in the 1950's Fonterra and Nestle were the same size company. Nestle now dwarfs Fonterra without substantial resources their product in their home country.

Branding is critical and if we can develop and maintain it then their is potential to grow outside of our own produce limitations.

by rc | 3rd Dec 10, 10:44am 1291326290

http://www.stuff.co.nz/business/money/4419738/Blue-Chip-investors-lose-in-Supreme-Court

Not sure what they were thinking in the first place taking out a big mortgage at their age.

by scarfie | 3rd Dec 10, 11:11am 1291327903

I agree rc.

I have to say the article is a bit light though. The logical question you raise could have been addressed by the reporter. Just highlights the lameness of our mainstream media.

I only hope that they have the loan mortgaged against their current house, and that their current house is also mortgaged. That way they can stop payments, and by the time the mortgagee sale goes through the value of the property will reduced to a level that means GE take a hit as well.

So does the judge expect their lawyer to be an economist and detective as well?

What the judge appears to be saying is that there was dishonesty involved, but that their lawyer should have advised them of this.

I would be interesting to see more detail on what 'risks' the judge was talking about in his ruling.

by Gareth Vaughan | 3rd Dec 10, 11:25am 1291328708

FYI, Blue Chip investors & Whangarei pensioners Bruce and Dorothy Bartle lose to GE in the Supreme Court - http://www.stuff.co.nz/business/money/4419738/Blue-Chip-investors-lose-…

by Andrewj | 3rd Dec 10, 12:00pm 1291330822

Some credit market analysts had speculated that the ECB might launch a blitz of €1 trillion to €2 trillion of debt purchases, but this was never likely at this stage. Such action is anathema to Germany.

Rainer Bruderle, the German economy minister, spelled out Berlin's objections on Thursday just hours before the ECB meeting, insisting that "the permanent printing of money is not a solution".

A chorus of influential voices in Germany has warned that any attempt by the ECB to prop up Club Med with loose money would be a grave error, undermining German political support for monetary union.

http://www.telegraph.co.uk/finance/financetopics/financialcrisis/817756… jonlivesey Today 08:47 PM

Suppose you are the head of the ECB, trying to stem a rout of sovereign Bonds.

If you think this rout is mainly due to shorts, then if you threaten to buy huge amounts of Bonds, you might frighten them out of their positions, even at a loss, and that would calm the market.

On the other hand, if you think the rout is due to long term holders of your Bonds bailing ship and selling out, then piling into the market and pushing prices up just gives them a more attractive exit price. In effect, you are putting a floor under the market and inviting your long term holders to sell out to you.

So the disagreement between Trichet and Germany is really quite fundamental, isn't it? They don't even agree on the cause of the rout, let alone what to do about it

by Didge | 3rd Dec 10, 12:46pm 1291333618

Change of topic.

Arctic ice not melting, ha ha ha ha ha.

http://www.bbc.co.uk/news/science-environment-11903397

by Wolly | 3rd Dec 10, 3:07pm 1291342026

"Grape prices are likely to remain near current levels for the next two to three years and further declines in vineyard asset prices are likely, Delegat's Group told shareholders at its annual meeting yesterday." herald....

Bet that made the shareholders grumpy......and many others......

by Gummy Bear Hero | 3rd Dec 10, 3:34pm 1291343644

The Gummy one is very far from grumpy ........... Little old wine drinker , me !

by Kunst | 3rd Dec 10, 3:40pm 1291344028

Yes, I often think “the white” is a little bit hard on you.

by Wolly | 3rd Dec 10, 3:46pm 1291344414

I read the Wellington Council thinks the public are at fault for walking into moving buses....I do hope they haven't left any marks on the steel panels at the front....how many more 'accidents' before one of the pointy heads realises it might be a good idea to fit large padded bumpers to the front of the buses...and who thought it was a good idea to run buses through a pedestrian zone?

by Mark Daly | 3rd Dec 10, 4:07pm 1291345673

Spot on Wally. Our resident eccentric manners mall protestor has been more on the mark than the pointy heads at the WCC. You can't even put a foot out into the lane without being crushed by a big red its so narrow.

by Gummy Bear Hero | 3rd Dec 10, 4:38pm 1291347505

Wots-Up Bernard : No " Top 10 " yet ? ................ Getting to be a daily grind to find 10 economic stories of gloom and woe .......... So much good news keeps bursting out , all around the world , to thwart you ........

........... Hang in there , man , we have faith that your inherent desire to disseminate doom and despair will bear fruit ........... Rotten ones , hopefully ! Ha ha de ha .

by Bernard Hickey | 3rd Dec 10, 5:46pm 1291351578

FYI

The latest New Zealand Manufacturers and Exporters Association (NZMEA) Survey of Business Conditions completed during November 2010, shows total sales in October 2010 increased 3% (export sales decreased by 4% with domestic sales increasing 7%) on October 2009.

The NZMEA survey sample this month covered NZ$522m in annualised sales, with an export content of 29%.

“Sales growth stalled in October as the rise in the New Zealand dollar hit the tradeable sector,” says NZMEA Chief Executive John Walley. “Low margins due to the currency pressure and worries that the world economy is showing few signs of a sustained recovery are the main concerns expressed by our respondents.”

“The currency lottery remains the overriding issue for manufacturers and exporters. Even firms who are able to cope with the currency at these elevated levels are concerned because there is simply no good reason for the currency to be where it is today, so it might be anywhere tomorrow – returns from export efforts have become completely unpredictable.”

http://www.realeconomy.co.nz/138-sales_growth_starts_to_stall.aspx

by Wolly | 6th Dec 10, 8:22am 1291576961

"Former Papakura District Council chief executive Theresa Stratton has started work in Mayor Len Brown's office weeks after receiving a redundancy payment of $209,730. It is understood Ms Stratton has been able to keep the money because of an employment technicality."...herald

Haaarrrrrrrrrrrhahahah...you can bet she won't be giving it back too.....the rate payers will love it...what a xmas present....