90 seconds at 9 am with BNZ

90 seconds at 9 am with BNZ; Libyan turmoil; oil prices surge; China prepares; Fonterra payout review

22nd Feb 11, 8:57am by David Chaston

David Chaston details the key news overnight in 90 seconds at 9 am in association with Bank of New Zealand, including news that western intelligence sources are reporting that Col Moammar Gadhafi’s rule in Libya seems to be coming to an end and he is on his way to exile in Venezuela, according to British reports. This has been denied officially. This caps a week of protest, deaths, and defections. Apparently, aircraft have bombed protesters in Tripoli.

Of course, there is trouble in other MidEast countries as well, and there are global consequences. European stocks retreated, and the oil price has surged.

US oil prices are up more than $10/bbl to over US$95. Mideast prices are now over US$105/bbl.

The violence in Bahrain has led to the cancellation of their F1 Grand Prix event.

There have been calls for a ‘Jasmine revolution’ in China as well, and the Chinese authorities are wary. But more police and security forces showed up for the demonstrations called for on social networks. It turned out to be a non-event in China.

Separately, China has told its banks to prepare their capital structure to withstand a credit crisis. And HSBC has warned its clients to avoid Chinese equities at least until the second half of 2011.

Gold rose to a record US$1,406/oz, and the Dow, after surging to 12,380, has settled back above its Friday level of 12,320.

Here, the exchange rate has changed little overnight, and currently sits at US0.7616; this after reports that Fonterra is poised to raise its payout by at least 30c, which would be worth about $400 million to the local economy.

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39 Comments

by Wolly | 22nd Feb 11, 9:01am 1298318503

Gold at $12320....jeeeeeeeez

by Gummy Bear Hero | 22nd Feb 11, 9:05am 1298318753

You wish ! ........ That's the level of the DOW . ....

... Why don't we copy the Americans , they have Presidents Day holiday . How cool to have Prime Ministers Day in NZ ...... Line up the useless farts from the past , get a truckload of over-ripe tomatoes , and BLAMMO !

by powerdownkiwi | 22nd Feb 11, 9:29am 1298320185

Don't worry about gold Wally - it always pans out.

I wonder how many folk realise what the ramifications of this unrest really are - this is about the West having gotten cheap energy out from under the owners, via various backsheesh and/or corruption deals.

Those are unravelling, which means the price of energy is going to go up - more that it would have via ultimate scarcity alone. In fact, if those folk can defend it, they're better off keeping it to themselves, than having money from its sale. You don't do anything with money. You do things with energy.

That unravelling, and that upping in price, means your energy is just going to get more expensive.

Which means EVERYTHING is going to get more expensive.

Interesting (sorry BH, couldn't resist) times.

by andyh | 22nd Feb 11, 9:40am 1298320816

Saudi is the big one. If that domino falls.........

The Islamicists will be rubbing their hands with glee. They will preparing as we speak to fill the voids left by these collapsing dictatorships. A swathe of the ME oil producers run along similar lines as Iran? The US State Department must be doing its nut.

The deeply ironic thing is that a significant component for the trigger for all this unrest has been provided by another US institution - the US Fed and its attempt to export inflation.

What comes around goes around I guess.

by powerdownkiwi | 22nd Feb 11, 9:58am 1298321897

http://earlywarn.blogspot.com/2011/02/libyan-oil-production.html#more

http://www.theoildrum.com/node/7528#more  (the multi-coloured world graph is a doozy)

Yeah - this is a case of climbing over each other to get to the stern-rail, just as the ship does her final plunge.

The interesting thing will be what this does to the Fonterra promise. Milk is oil......

by David George | 22nd Feb 11, 10:03am 1298322182

"The US State Department must be doing its nut" After decades of meddling in the mid east I guess this is inevtablle .

From the partition of Palestine to the1953 overthrow of the democratic Iranian government and massacre of thousands organised by the CIA at the behest of BP http://en.wikipedia.org/wiki/1953_Iranian_coup_d'%C3%A9tat

To the support for murdrer, tyrant and terrorist Giddaffi (again at the behest of BP) it's very easy to see the west copping some serious flak. I'd be very surprised if these new governments will be pursuing business as usual with the likes of BP.

by anonentity | 22nd Feb 11, 10:39am 1298324381

Gadafi bombs his own people..two of his jets refused to do it and flew to malta.How did they think in the age of the internet,The Clepocratic princelings could survive.

When the blacks got the second hand TVs from the white folk..as the white folk upgraded to colour,the southern rights movement started because they realised they were being made a mug of.The internet has done it faster than an old Black and white TV.. All they wanted was peacfull change..They didn't get it..So Pandoras box,slowly opens..and a newer..New Normal forms. On the back of everything else thats happening,We are watching History happening.

by David George | 22nd Feb 11, 10:19am 1298323141

So what,. you just sort of woke up "feeling" this. Quick go and start buying then before you start thinking What do you "feel" would be good investing right now?

by Gummy Bear Hero | 22nd Feb 11, 10:57am 1298325444

Meebee the Duke has had a change of career , and the reason he's feeling " incredibly bullish " today is that he's now a veternarian's assistant , and it's semen collection day ? ....

.... Use the rubber-gloves this time , buddy !

by Rob of the North | 22nd Feb 11, 11:21am 1298326913

make a change from him always having his head up his own arse, Gumbo !

by powerdownkiwi | 22nd Feb 11, 10:20am 1298323225

well, Dukey, here's your china-shop:

http://kunstler.com/blog/2011/02/white-is-the-new-black.html

He can be a bit much sometimes, but this one nails it.

I'd hate to be a renter too. But then, I'd hate to be a leveraged landlord, relying on tenant incomes continuing at present levels......

by andyh | 22nd Feb 11, 10:48am 1298324880

To paraphrase a Simpsons episode:

'Thats some good trolling there Dukie. Some mighty fine trolling'

by Justice | 22nd Feb 11, 4:38pm 1298345887

So.........how you feeling now dipshit? Still bullish?

by Andrewj | 22nd Feb 11, 10:22am 1298323329

PDK, love this from oftwominds,

Here is an excellent summary of energy realities: A physicist models the city:

West illustrates the problem by translating human life into watts. “A human being at rest runs on 90 watts,” he says. “That’s how much power you need just to lie down. And if you’re a hunter-gatherer and you live in the Amazon, you’ll need about 250 watts. That’s how much energy it takes to run about and find food. So how much energy does our lifestyle [in America] require? Well, when you add up all our calories and then you add up the energy needed to run the computer and the air-conditioner, you get an incredibly large number, somewhere around 11,000 watts. Now you can ask yourself: What kind of animal requires 11,000 watts to live? And what you find is that we have created a lifestyle where we need more watts than a blue whale. We require more energy than the biggest animal that has ever existed. That is why our lifestyle is unsustainable. We can’t have seven billion blue whales on this planet. It’s not even clear that we can afford to have 300 million blue whales.”

I highly recommend this excellent analysis of energy consumption and productionwhich was forwarded to me by knowledgeable correspondent Nathan P.

The author analyzes his own annual energy use and leads us to the conclusion that our 10,000 watts a day lifestyles must be trimmed to around 2,000 watts a day to be sustainable with current technologies.

by powerdownkiwi | 22nd Feb 11, 10:36am 1298324190

Cheers AJ - Yes, I'd read that somewhere.

Makes you wonder about the disconnect - the folk who say nothing, then pipe up again about wealth, investing, houses, the economy, migration, exporting, demographics, as if the topic had no relevance.

It's all energy.

Well it was - had a juvenile Koura in the pelton nozzle this morning, so it sort of wasn't energy. Back in bizzo, if a little damp.

by Gertraud T. | 22nd Feb 11, 10:36am 1298324160

What will the Arabs do, when the water runs out?

http://www.guardian.co.uk/environment/2011/feb/20/arab-nations-water-running-out

Also powerful video by Dmitri Orlov on vinceseconomic blog about peak oil:

http://vinceseconomicblog.wordpress.com/2011/02/21/dmitri-orlov-peak-oil-lesson-from-the-soviet-union/

by Kunst | 22nd Feb 11, 10:56am 1298325398

Globalisation and international trade agreements will solve the issues for resources such as oil and water. The Saudis pump the oil and New Zealand ships “100%NZpure” water around the globe – with a little bit cow- shit (1/2 teespoon p/l) in it - for colour to look and taste like Coke - 2% participation by Fonterra - and growing !

by powerdownkiwi | 22nd Feb 11, 10:57am 1298325423

That'll be like the Free Trade Agreement between Australia and the US.

1400 pages.

You can write a free trade agreement in one sentence: "there will be free trade between - and - ".

And the other 1399.9 pages?

exemptions.

It would have been shorter to list the inclusions.

by Kunst | 22nd Feb 11, 11:04am 1298325888

1400 pages (not thin paper) - that's half a tree - what a waste !

by powerdownkiwi | 22nd Feb 11, 11:05am 1298325949

yeah - goes against the grain, doesn't it?

by Kunst | 22nd Feb 11, 11:11am 1298326298

Bureaucrats are probably one of the biggest and wasteful tree- eaters.

by powerdownkiwi | 22nd Feb 11, 11:31am 1298327491

bet there's woodgrain in those dashboards, too

by Andrewj | 22nd Feb 11, 10:36am 1298324160

Angela Merkel’s Christian Democrats have just suffered the worst defeat since World War Two in the Hamburg elections. Their vote share collapsed from 43pc to 21pc. A casualty of rising bread costs or Gefühlte Inflation as they say in Germany, perhaps, or bail-out rage?

Merkel will lose another three seats in the Bundesrat, reducing her to a lame-duck Chancellor.

http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100009544/s…

http://www.telegraph.co.uk/finance/financetopics/oilprices/8339440/Oil-shock-fears-as-Libya-erupts.html

Michael Lewis, commodities chief at Deutsche Bank, said oil markets are bracing for trouble. December "call options" with a strike price of $120 on US crude have doubled suddenly, indicating fears of a nasty escalation. "Libya raises the stakes," he said.

Mr Lewis said oil prices tend to cause economic damage at a $95 to $100 for US crude. As a rule of thumb, a sustained $10 rise in price lops 0.5pc off US growth over two years, and worse if it reaches a self-feeding tipping point. "It's like a $50bn tax," he said.

Mr Horsnell said the global energy crunch is haunting us again after a brief respite during the financial crisis. "In just two years, the world has grown so fast as to consume additional volume equal to the output of Iraq and Kuwait combined," he said.

by Rob of the North | 22nd Feb 11, 10:53am 1298325180

Western markets are strengthening, while eastern markets, apart from China, remain subdued. The world faces two major uncertainties at present:.. the outcome of pro-democracy demonstrations sweeping the Arab world, and the meaning (or lack thereof) of a convoluted 53-word sentence in the the G-20 communique from Paris.

paging Wolly and Duke...you guys are "masters of the universe"...interpret please!

by powerdownkiwi | 22nd Feb 11, 11:03am 1298325813

Rob - I'll do it.

Those who thought 'the markets', 'the economy', 'GDP', and growth, were some kind of paramount, ongoing 'given, were wrong.

And they have no idea that this is so, or why.

The lack of comprende just spilled over into their linguistic output

by Rob of the North | 22nd Feb 11, 10:58am 1298325488

for the mentally challenged , here's the sentence alluded to above:

"The full sentence reads: "While not targets, these indicative guidelines will be used to assess the following indicators: (i) public debt and fiscal deficits; and private savings rate and private debt (ii) and the external imbalance composed of the trade balance and net investment income flows and transfers, taking due consideration of exchange rate, fiscal, monetary and other policies."

click the link above if you want relativity to this in context with the full article from the Wall St Journal...

by Gummy Bear Hero | 22nd Feb 11, 11:26am 1298327161

For the mentally challenged ? .... I'll pick up that gauntlet : ...... The sentence interpreted into Joe-6-Pack speak is :

We will arbitrarily decide whether or not we think that the private sector is saving enough to bail both themselves , and the government out of its debt .... and we will equally randomly conclude whether or not our exports can finally get within eyesight of our imports .... and if not we'll consider manipulating our exchange rate , increasing subsidies , and the introduction of more tarriffs , 'cos we're too bone idle to get out of the shit the hard way , by work and thrift .

by Rob of the North | 22nd Feb 11, 11:28am 1298327302

Give that man a Snickers !

by Billy | 22nd Feb 11, 11:00am 1298325617

Would yesterday's revelation that Fonterra sells milk at $1.55 per 2 litre to supermarkets which then sells them to kiwis for betweeen $3.60 to $4.50 lead to protests here in NZ ?

by Kunst | 22nd Feb 11, 11:01am 1298325677

Today - the world is full of positive news – the “Phoenix” are safe the RWC is maybe coming and I’m sure it is someone’s birthday today.

by Rob of the North | 22nd Feb 11, 11:27am 1298327222

The mind can make a heaven out of hell or a hell out of heaven.

- John Milton

(1608 - 1674)

by powerdownkiwi | 22nd Feb 11, 11:38am 1298327880

Today might be the happiest day of my life, mused the Milligan.

The very thought made him sad.

Spike Milligan 1918 - 2002

by Wolly | 22nd Feb 11, 1:03pm 1298333023

It was only a matter of time and the ground started rolling again.

by Wolly | 22nd Feb 11, 1:18pm 1298333935

6.3.....just 5km beneath Lyttelton...that will have done some big damage.

by FCM | 22nd Feb 11, 1:20pm 1298334052

guys whole buildings in town have collapsed there are going to be dead this time people are walking around stunned ....my wife is in town I can tget hold of her....sirens all over the place....buildings are gone just gone...

by Elley | 22nd Feb 11, 1:23pm 1298334221

FCM, I hope you get news from your wife soon. Hubby was in Chch for his one 30mn-meeting a week but thankfully rang right when the shaking stopped. Phone lines down now, it sounds really bad http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10707996

by Kunst | 22nd Feb 11, 1:24pm 1298334252

Here in Kaikoura not as big (waves) as the one in September, but more rattling this time.

by Andrewj | 22nd Feb 11, 1:28pm 1298334495

Trying to get hold of my daughter at CHCH Uni all the phones are down.

by Wolly | 22nd Feb 11, 4:23pm 1298345019

"In the end, we're not going to sign any deal unless we believe it has a net benefit to New Zealand." Key in the Herald today.....

rubbish....the deciding factor will be the extent to which the Fed is happy to send Bollard a pile of ink wet banknotes. "you do what we want and we will provide the loot"