90 seconds at 9am with BNZ

90 seconds at 9 am with BNZ: Strong Chinese data sparks fears of new rate hike; NZ$ slides with A$; Air NZ buys Virgin Blue stake

21st Jan 11, 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 from China that the world's second largest economy grew a stronger-than-expected 10.3% in 2010.

Figures for the December quarter showed economic growth from a year ago of 9.8%, which was faster than forecast and faster than the 9.6% seen in the September quarter.

This helped drive inflation of 4.6% in the month of December from a year ago, which was also faster than expected.

This sparked concerns that Chinese authorities will have to slam on the brakes to control inflation and avoid any social unrest that might be generated by rising inflation.

The People's Bank of China has already hiked interest rates twice in the last four months and is expected to have to hike again soon.

Concerns about a forced slowdown in China hit commodity linked currencies such as the New Zealand dollar, the Canadian dollar and the US dollar.

The New Zealand dollar fell to 75.8 USc from 77.8 USc earlier in the week. The Canadian dollar or the 'Loonie' fell through parity against the US dollar.

The oil price fell US$2 a barrel to US$88 a barrel on fears about a Chinese slowdown.

Meanwhile, Air New Zealand announced overnight it planned to buy up to 14.99% of Virgin Blue, but had not plans for a full takeover.

Such a stake would be worth up to NZ$200 million at current prices.

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54 Comments

by muzza | 21st Jan 11, 9:49am 1295556587

Bernard, have you seen an email doing the rounds from Wednesday about Julia Gillard and is this top 10 material, if authentic?

Evidently she says Muslims who want to live under Islamic Sharia law should get out of Australia, that she's tired of this nation worrying about whether we are offending some individual or culture, that we speak mainly English, that we have a Christian heritage and if not happy here then leave, we didn't force you to come, you asked to be here. Immigrants, not Australians must adapt, take it or leave it.

Blimey! Is this for real?? Very non PC. Wonder what John Key would say?

by Sqaure | 21st Jan 11, 2:21pm 1295572905

Muzza, check out http://www.snopes.com/politics/soapbox/australia.asp

(it is, for the most part, not true)

by Andrewj | 21st Jan 11, 9:49am 1295556574

Welcome home, its time for another haircut.

by Bernard Hickey | 21st Jan 11, 2:25pm 1295573127

My bloody hair again. Time I went bald I think.

cheers

Bernard

by Gummy Bear Hero | 22nd Jan 11, 2:26am 1295616372

........ be grateful that they havn't invented olfactory computing yet , 'cos we'd be commenting upon the odiferous state of your arm-pits , guy !

by Wolly | 21st Jan 11, 9:50am 1295556644

I am waiting to see how bloody long it will take Fisher and Paykel Appliances to realise they have a once in a lifetime opportunity to secure a major share of the market across the whole of eastern Australia.

How many appliances will need to be replaced.....a staggering number...one more week and it will be too late to grab the chance because you can bet the Asian imports will get the jump.

Sit back and watch in amazement as this market chance is left to rot in the mud.

by powerdownkiwi | 21st Jan 11, 9:55am 1295556914

yep - you could flood the market

by spectreofdoom | 21st Jan 11, 3:55pm 1295578528

one more week and it will be too late to grab the chance because you can bet the Asian imports will get the jump.

Aren't most F&P products Asian imports these days anyway????

by Wolly | 21st Jan 11, 4:02pm 1295578979

Heck no spectre they are mexican imports!..and some stuff still made in NZ. Not sure if the F&P factory in Queensland was still operating.

by spectreofdoom | 21st Jan 11, 4:12pm 1295579538

Not sure if the F&P factory in Queensland was still operating.

Word is that it is all go still - 200,000 of their work colleagues came over and moved the factory to Haier ground :-)

by powerdownkiwi | 21st Jan 11, 10:02am 1295557355

http://www.theage.com.au/opinion/society-and-culture/looking-after-no1-…

by steven | 22nd Jan 11, 8:29pm 1295681370

I must see if i can find the piece(s) of music the titanic's band was playing..........

regards

by Gummy Bear Hero | 22nd Jan 11, 9:44pm 1295685879

No witnesses survived who had heard the last song played by the band as the ship went under . Popular conjecture is " Near my God to thee " , appropriate to the circumstances . But others believed that " Songe d'Automne " was the final tune .

by Joseph K | 21st Jan 11, 11:03am 1295560984

That's an interesting and somewhat disturbing article in The Age. I didn't get out to the supermarkets after the Chch earthquake but I believe the shelves emptied quite quickly. Still, it's not the same as having people trading blows over cheese and sardines...

It's all another timely reminder to keep vehicles full with fuel and to have a disaster kit and plan to hand....

by steven | 22nd Jan 11, 8:31pm 1295681474

relying on shelves?

What happens in the long emergency?......30 years of powering down?

regards

by mark.s | 21st Jan 11, 1:52pm 1295571145

picture of Bernard Gump on the youtube clip start :)

by ian in rototuna | 21st Jan 11, 2:33pm 1295573619

BH,looks like you have had a can of hairspray blown up in your boat!!

by Wolly | 21st Jan 11, 5:36pm 1295584618

Oooooops...looks like a sod of a rainstorm is heading for Nelson on Monday....this could be bad.

by muzza | 21st Jan 11, 7:00pm 1295589643

If you want house after house virtually all the same in a subdivision you can get economies of scale with specialised sub contractors going from one house to the next. I saw one area in Tauranga like this, called I think Ve de Glen(?) and it is a shocker!

by KW John | 21st Jan 11, 9:07pm 1295597238

Your frightening people...

Create a growing awareness of the Passivhaus standard as well ... job done, and 'more power to your elbow'.

The building must be designed to have an annual heating demand as calculated with the Passivhaus Planning Package of not more than 15 kWh/m² per year (4746 btu/ft² per year) in heating and 15 kWh/m² per year cooling energy OR to be designed with a peak heat load of 10W/m²
Total primary energy (source energy for electricity and etc.) consumption (primary energy for heating, hot water and electricity) must not be more than 120 kWh/m² per year (3.79 × 10⁴ btu/ft² per year)
The building must not leak more air than 0.6 times the house volume per hour (n₅₀ ≤ 0.6 / hour) at 50 Pa (N/m²) as tested by a blower door,

by muzza | 22nd Jan 11, 5:14pm 1295669657

Well haven't been to Houston, but I have seen a number of these housing tracts in America and Australia and they are so souless you'd have to pay me to buy anything there rather than me pay anything for a place. There are vast developments in America with nobody living there as well. And now there is some evidence of areas being developed like this, albeit on a smaller scale, in NZ like the one in Tauranga I mentioned.

by Chris_J | 22nd Jan 11, 5:25pm 1295670353

Hugh, you know that I don't believe it's possible to reduce construction costs to the extent you discuss, however I would be interested to see how houses are produced for those type of price levels in the respective markets.

Do you have plans, specifications and detailed costings from the bulk builders in the locations you are discussing? It is very important to know where savings are being made. For instance if most of the savings are because of cheap (immigrant) labour then it's not relevant to NZ. If savings are because of production and design efficiencies then it would be very interesting to us.

I've looked on realtor.com at new construction in Houston and prices appear to be heavily impacted by foreclosure sales and discounting. What is the true cost of building these houses? (I imagine that would be very different to the prices that mortgagees are attempting to recover).

In regards costs, some real facts rather than grand statements would be useful.

As I said without floorplans, details of specifications and details of costings statements such as being able to build a starter home for $140-160 are meaningless.

You can build a basic 90m2 3 bedroom for $100k on a flat site with no garage, fencing or landscaping, sections can't reasonably be developed for under $50k per site, so even if the underlying land was worthless, it seems unlikely much of a property could be constructed in your price band - certainly nothing of the standard that currently sells for around $350-400k on the city fringes.

Looking at the median new home advertised on realtor.com in Houston, which is about $US240k (based on more normal exchange rates somewhere around $NZ350-400k), you would get an average quality 250m2 house on 800m2, which is the type of property that in NZ would be worth $450k in a fringe subdivision. But how much of that US price is because of foreclosure discounting for 3 year old homes that have never been lived in?

http://www.realtor.com/realestateandhomes-detail/18710-Agua-Vista-Drive…

Remember, facts without grand statements please Hugh.

by steven | 22nd Jan 11, 8:49pm 1295682553

Costs handbooks were something I used to use a decade+ ago a great little "secret".

Excessively high material costs, in a gut feel sense I tend to agree....I dont DIY (improvements) any more....the costs dont add up...yet no one is apparantly making money growing timber.

As an aside over in Blenheim I was buying fresh fruit in 1kg punnets off the producer at a fraction of the cost of the local supermarkets and far better quality....ditto I have 4kg of Bush's honey far cheaper than the shelves....got to wonder just where the money is going....

Low productivity, possibly matched by a shortage of builders charging excessively in my relation's experience was anything to go by recently.....not to mention terrible work quality....I had to re-align/set the sliding doors for them only to find the frame was out of wack by 4~6mm...but at least they work now.

Land costs, this is a symptom of easy credit, speculative building and greed. materials and labour costs have gotten out of control because the return was too good to be true and last....not a restriction on building....add in the distances travelled entail high energy use and thats the kicker....energy isnt cheap any more...

regards

by Chris_J | 24th Jan 11, 1:21pm 1295828490

Hugh, Rawlinsons are fairly accurate and there it would only be possible to cut the costs by small amounts on the square metre rates quoted (maybe 20% at most).

What is the USD square foot rate quoted by RS means for a budget (brick, asphalt shingle roof) 1500 sqft house or similar? I assume you know or have access to the data.

by steven | 22nd Jan 11, 9:40pm 1295685600

The thing is....why would builders want to build $160k "starter" homes when the can build bigger ones for a bigger profit...?

250m2 house is huge!.........

US materials are way cheaper, given economies of scale goes a long way to explain that, and yes given the present state of the US market which is still collapsing and that there are huge tracts of sub-divisions not yet built on in the US trying to compare the US with NZ is difficult. These un-used sub-divisions....house prices should never have risen if Huge's wild theory is anything to go by....which it isnt IMHO....

regards

by scarfie | 23rd Jan 11, 11:33am 1295735603

Just remember Hugh that mass production = soulless. Why do you think old villas are in such demand despite their usually appalling thermal performance? They are individual and predominantly hand made, conforming to a general type but the pattern modified for each owner. So it is pleasing to drive down a street in say Ponsonby, but aweful to go through one full of GJ Gardners.

You site Bill Levitt but here are some of the downsides to the American Dream courtesy of Wikipedia.

"Today, "Levittown" is used as a term to describe overly-sanitized suburbs consisting largely of identical housing."

and this is what happens to these sterile environments?

"Oddly enough, although Levittown is remembered largely for its homogeneity, the houses of Levittown have by now been so thoroughly expanded and modified by their owners that their original architectural form can be quite difficult to see."

Your work in highlighing the problem of overpriced land is great.

Go further Hugh and work towards full deregulation of the building industry and it put back in the hands of people. Like the Levittown example the users are the best placed people to work out the design, and is sounds like Houston is heading that way.

The trouble with Houston is it sounds like they are still following the Levittown model, which is fatally flawed on most fronts. Eventually people will realise this and learn again how to design communities. The process could take centuries rather than years though.

by muzza | 23rd Jan 11, 5:37pm 1295757462

Remember the 100 sq m Beazley Homes (little boxes of ticky tacky) of 40 or so years ago?

They were cheap, don't suppose you will be wanting to live in one these days Hugh because nobody else wants to.

by Wolly | 22nd Jan 11, 6:54am 1295632480

"The CNBC talking heads, mainstream media pundits, clueless Washington politicians, corrupt Wall Street shysters, and non-thinking robotic masses have been convinced that the actions taken by Ben Bernanke, Barack Obama, Tim Geithner and Congress have averted a financial disaster and saved the world. One hundred years from now when Chinese historians look back on the period from 2000 until 2025 they will ask themselves, "what the hell were they thinking?" The causes of this Crisis are as clear as day to anyone willing to see. A small group of Wall Street bankers and corporate interests through their proxy, the Federal Reserve, created the largest housing bubble in the history of the world generating hundreds of billions in obscene undeserved profits, while destroying the wealth and futures of millions of middle class Americans. Once the fraudulent nature of the bankers' pillaging of the nation's wealth came to light, the entire ponzi scheme collapsed, as they always do."

http://www.marketoracle.co.uk/Article25728.html

We have our very own sheepish masses...our very own property bubble built by the banks...our own stupid clueless politicians and sooner or later the bubble must deflate...leaving in its wake a trail of losses and two decades of recession.

No amount of cheap credit will now stop a trend to get out of debt by households. A trend that will influence a generation to avoid bank debt. The beginning of the end for the banks as parasites on the wealth of the country. The same new trend is emerging across the rural sector. The banks are fighting this with demands that farmers borrow more...that they should regard "lazy balance sheets" as a sign of poor management....

Well....are you a poor manager.....are you stupid enough to take out a mortgage.....are you too dumb to understand?

by Wolly | 22nd Jan 11, 8:23am 1295637786

Hamilton...that sinking feeling....psssst wanna buy a lemon?

"But the city council says it cannot find problems with the houses. They remain stable on stilts even as the land around them falls."

http://www.nzherald.co.nz/property/news/article.cfm?c_id=8&objectid=10701270

by Wolly | 22nd Jan 11, 8:42am 1295638964

The fuse is burning!

"Irish Government Collapses, Six Cabinet Members Resign, Election March 11; How To Negotiate Haircuts

In a fitting tribute to a disgraceful performance by Irish Prime Minister Brian Cowen in which Cowen crammed losses of Irish banks down the throats of taxpayers, his government has at long last collapsed. Six cabinet members (40%) resigned representing justice, health, trade and enterprise, defense and transport. Earlier in the week his foreign minister resigned making the total six"

http://globaleconomicanalysis.blogspot.com/2011/01/irish-government-collapses-six-cabinet.html

"The two opposition parties expected to win the March 11 election and form the next coalition government, Fine Gael and Labour, have pledged to reopen negotiations with the EU and IMF.

I offer the following suggestions on how to negotiate.

The correct procedure is to announce intent to default with a statement something like "The Irish government refuses to bailout UK, German, French, and US banks too stupid to realize that Ireland was in the midst of a gigantic property bubble."

No doubt EU, ECB, and IMF will offer to cut interest rates to 2% or some such number, perhaps even 0%" Mail online

by muzza | 22nd Jan 11, 5:28pm 1295670499

I have spent some time in Ireland 6 months ago, parents from there.

Things are not good there obviously, and the politicians are hopeless, but It's a country with an incredibly well -off section of society, professionals seem to earn some serious money, farmers still get very good EC benefits and the people I was talking to jet here and there including intending to come NZ for RWC. And the ski fields at present in Europe are humming. Just another side to the coin there.

by Nicholas Arrand | 22nd Jan 11, 6:30pm 1295674240

I had friends Gerry and Katheleen, business owners from Athlone, county Westmeath, round for dinner on Thursday. Yes; they jet about, and come here each year to see family but ,(1) Gerry is appalled at the state of current Irish everyday life, and (2) he has little to no interest in the RWC and (3) many of his friends have 'gone to the wall' after a lifetime of real, hard work. He blames the banks and politicians ( of course!), and the 'blind stupidity of property speculators who thought there was a quick way to riches'. Take his comments for what you will.

by LOL | 22nd Jan 11, 6:40pm 1295674841

The RWC is a sick joke.

by muzza | 22nd Jan 11, 9:07pm 1295683629

Lol, if you don't like rugby just say so, but as an event it will be a big occasion for NZ

by steven | 22nd Jan 11, 9:42pm 1295685749

Will the Pollies give the ppl what they want I wonder? is a default that bad for the Irish ppl? who actually looses the most?

I just wonder....

by Wolly | 22nd Jan 11, 9:10am 1295640638

Back off pollies...the market is ours to pillage......!

"WESTPAC chief executive Gail Kelly has cautioned that banks should not be made subject to the heavy hand of regulation as if they were utilities, as this would restrict their ability to lend.

She also warned of a ''structural shift'' in global funding markets, with pressure likely to remain on banks to pass on higher costs for at least the next 18 months" the age

by steven | 22nd Jan 11, 8:53pm 1295682821

yet such restrictions in texas seem to have had a great effect on curbing housing speculation.

regards

by walker janette | 22nd Jan 11, 9:41am 1295642474

Wolly, whats the link to Westpac where was that article?

by Wolly | 22nd Jan 11, 10:05am 1295643907

It's in the ...... http://www.theage.com.au/business/

by Wolly | 22nd Jan 11, 10:16am 1295644578

"Gold fell, heading for a third straight weekly loss, on speculation that borrowing costs will rise as the economy recovers, eroding the metal’s appeal as an alternative investment. Silver dropped to a seven-week low"

http://www.bloomberg.com/news/2011-01-21/gold-set-for-worst-weekly-run-since-july-on-china-concern-holdings-slump.html

To buy or to sell that is the question....is the "recovery" in the States just a Fed head fake!...yes....how long will the myth last?

by Wolly | 22nd Jan 11, 3:34pm 1295663645

Big correction looming.... http://www.marketoracle.co.uk/Article25768.html

by muzza | 22nd Jan 11, 5:31pm 1295670719

Are you excited?

by Gummy Bear Hero | 22nd Jan 11, 9:34pm 1295685297

I am excited ! ...... Those red lines intercoursing with the blue lines ........ Then the bluies get in a huff and move away from red , to form a double top .......... And the BPI is down in the dumps , along with the VIX ........... Sharing a bourbon or two ............ I know that it'll all end in tears , got to ......

....... God I wish that I was a chartist and a trader , what a winning way to contribute to the betterment of mankind ....

........ Meebee if I scroll to the bottom of the page , give my credit card details , and subscribe to the newsletter , maybe then salvation will be at hand for the sad & deluded Gummster .

by Wolly | 23rd Jan 11, 7:28am 1295720934

"Many expect New Zealand households and businesses will rediscover spending and investing appetites this year.

But with the debts still high, there is a risk deleveraging and the spending freeze will restrict these parts of the economy, strangling retailers even more after a weak Christmas" BH.

Weakness is now a normal state and English is dreaming if he thinks activity will blossom with the Rugby games. Sadly the RB is running with the 'cheap credit equals growth' policy and cannot yet understand the need to rid the economy of the debt bloating.

Unemployment will stay high. The fiscal hole will open wider. The ratings liars will be forced to be honest and downgrade NZ debt. Rates will shoot higher. The BS and spin will change to blame the cow jumping over the moon for the rising rates and longer recession. The budget will tighten the screws on the state waste but the pollies will take a pay rise!

Currently English is borrowing $50 million a day....every bloody day....day after day....week after week....stupid Kiwi cannot work out how much it comes to and hasn't a hope in hell of understanding what it will mean...but Kiwi knows what rising rates, insurance, road charges, gst, council fees and persistently more expensive food means....especially when real incomes are falling.

by steven | 23rd Jan 11, 9:25am 1295727941

Many are fools then......lets not confuse what is wished/prayed for ill-logically against what is real.....Im not so sure English is dreaming as he's praying......Im pretty sure of taht and I think JK is on his knee's next to him....

RB has 3+% OCR, higher than many basket case countries.......real interest rates are higher .......oh and Ive noticed that on eftpos machines these days many more places now dont have a credit card button option active....Visa etc is gouging them do they have stopped....

Unemployment - interesting thing is reading on what is happening in the US, in previous downturns US companies tended to hold on to staff aka NZ ready for the upturn, this time they didnt....result 18%+ real un-employment. There is also a tendancy to see recoveries without an attending / equal drop in un-employment....now look at NZ, we have kept staff....but I think 2011 will be bad, if NZ businesses really shed staff then BE's problems will magnify.....

CPI is certianly up, core inflation though is low....food I notice is the same or cheaper, but I did notice the high cost of food while on holiday....FFS I could go to Jones and but hugh punnets of great fruit cheaply or Bush's for honey or buy at the supermarket in tiny quantities and huge markups.....thats insane, if supermarkets need that to stay in business, that makes no sense....I think the pricing is loony myself.

2011 is of course our election year....the choice is becoming one of raise taxes or raise taxes....National's options are dire......Labour can "tax the rich"...............National has no options....

regards

by Gummy Bear Hero | 23rd Jan 11, 2:00pm 1295744404

Cullen tried to slug the " rich pricks " with his introduction of the 39 % income tax bracket . The truely rich merely used legal tax avoidence mechanisms ( LAQC's / trusts , etc ) ....... And the unforseen consequence was that they paid a smaller % of the total tax take than previously . ........ And it added 17 % ( NZIER ) to the housing bubble's increase .

........... " tax the rich " is you wish ....... but watch the burden fall more heavily upon farmers , business owners , and the middle-income earners .........once again !

Are Labour going to travel down this road one more time , the failed policies based on envy ?

by muzza | 23rd Jan 11, 5:39pm 1295757579

Yes, but other than that it will be good, wouln't you say Wolly?

by Gertraud T. | 23rd Jan 11, 1:33pm 1295742792

On a different theme from the Chris Martenson website:

"New generator based on Nickel Hydrogen, that consume milligrams of Nickel and no Hydrogen, can generate 10.000 watts of calorific power, the device was tested by professors in a public demonstration inside an italian university under inspection of uni professors".

As I am not a nuclear physicist, can anyone on this website comment and is more accomplished in this area?

This would be a phantastic solution to the energy problem.

http://lenr-canr.org/acrobat/RothwellJbrieftechn.pdf

http://www.journal-of-nuclear-physics.com/

Also a similar device:

http://www.blacklightpower.com/

by steven | 23rd Jan 11, 1:54pm 1295744083

Hi,

Dodgy I strongly suspect.....like he operates the website itself, so it isnt a peer reviewed scientific site/journal etc....yet thats what's it trying to appear to be.

I kind of need to sit down with the calcs, but from a brief read I think they are little more than a smoke screen, they dont really say anything at first glance...but Im 15+ years away from doing such things...

Time will tell.....

regards

And the guy himself,

Inventor: Andrea A. Rossi

Andrea Rossi is listed as the inventor. He is also the primary operator of the http://www.journal-of-nuclear-physics.com/ website and forum, where the information about the technology is posted.

He is a doctor in the Philosophy of Science and Engineering from the Universita’ Degli Studi Di Milano [University of Milan]. [2]

http://it.wikipedia.org/wiki/Petroldragon - Rossi was involved in a waste to energy project, and ended up serving some jail time in 1995 for conspiracy to engage in tax fraud for his involvement in a business that was trading precious materials between Switzerland and Italy. Appeared to be more like suppression than deserved punishment.

Though he did spend time in jail, Rossi said he was eventually cleared of all charges against him in this matter

by Gertraud T. | 23rd Jan 11, 9:38pm 1295771937

Steven, thanks.

So it's wait and see.

by Wolly | 23rd Jan 11, 2:35pm 1295746504

Our Hickey left out a potential black swan event in his blurb today in the Papers....no sooner has Bill English finished reading his budget than a giggle develops into rip snorting laughter with bodies falling off chairs to the floor.....now that would be a black swan!

by muzza | 23rd Jan 11, 5:45pm 1295757954

Have you fallen off your chair already and bumpted the head?

by Gummy Bear Hero | 23rd Jan 11, 9:52pm 1295772760

......... could be an improvement if he did , muzza !

by Wolly | 24th Jan 11, 7:58am 1295809115

"New Zealand houses are among the world's most expensive when incomes are taken into account - and Auckland and Tauranga homes are less affordable than those in New York, says a major survey released today."herald

So what...long as the banks are making fatter profits and free to farm the households...what more could govt ask for...