Bernard Hickey details the key news overnight in 90 seconds at 9 am in association with Bank of New Zealand, including news the BNZ business confidence survey for May showed a big improvement to its best levels in 18 months.
Confidence about the outlook improved to a net 42% positive from a net 21% negative as recently as March immediately after the earthquake.
It suggests confidence is stronger than many had previously seen and suggests either the Reserve Bank's emergency rate cut on March 10 has been very effective or was not needed.
See the full confidence survey results here on BNZ economist Tony Alexander's site.
Meanwhile, Australia will announce its budget later today, including a likely forecast for growth this year of 3.75%, almost 4 times our growth rate. Also, Australia's budget is expected to return to surplus by 2012/13, two years earlier than us. See more detail here at The Australian.
Meanwhile, Chinese and US officials are talking about their trade and currency tensions.
Treasury Secretary Tim Geithner has again called on the Chinese to spend more domestically, which would in theory reduce its trade surplus and ease some of the capital imbalances causing such grief in the global financial system. See more here at BBC.
Elsewhere, the oil price rose back over US$103/bbl overnight and gold rose again, suggesting the slump in commodity prices last week may be shortlived. Goldman Sachs forecast a rebound in commodity prices. See more here at Bloomberg.
Meanwhile, Standard and Poor's downgraded Greece's credit rating overnight by a further two notches to single B, which is 5 notches below investment grade and is lower than the BB+ rating given by Fitch to Hanover Finance in 2007. See more here at Bloomberg.
Greek 10 year bond yields rose to 15.7% on the single B rating, which indicates a one in five chance of default in the next five years. The euro fell on more fear about European financial market turmoil.
Hanover was offering 8.7% on its two year debentures back in 2007, suggesting Hanover's bonds were underpriced for the level of risk involved or that the risk of Greek default is over priced. Hanover Finance collapsed less than a year after that BB+ rating. Fitch gave no warning.
Greece is widely expected to default in some form in coming months.
The New Zealand dollar is back up to 79.5 USc on the firmer commodity prices.
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15 Comments
I'm filling my car right up today and buying some more commodity stocks as the short-lived profit taking on commodities is done and the market on the turn up again.
also , i see that The Baltic Dry Index broke its declining trendline, warning that the long down-trend is ending. Recovery above 1600 would confirm. This would be a positive sign, especially for resources stocks. Over-supply of Cape-size vessels depressed shipping rates despite reduced cruising speeds to conserve fuel (longer voyage times reduce the over-supply). And recent flooding in Queensland Australia slowed coal shipments, placing further downward pressure on rates. Rising rates should therefore indicate robust demand for commodities, particularly iron ore and coal.
it ain't over till it's over and it ain't over yet !
BDI....must be my glasses, I see no trend break myself,
http://www.investmenttools.com/futures/bdi_baltic_dry_index.htm
What URL are you using?
Interesting view point on oil and commodities....bounce back based on what?
Sure pure profit taking is quite possible, but the fears of a downturn in the global economy could have caused that profit taking and the trend down continues....which seems the more conventioanl outlook...
As always there is two sides to the trade.
Longer voyage times....no point in ships sailing if they are not full....so less frequent sailings will counter it.....
regards
Investors in Greek debt may have to write-off 50pc of their loans "or more" if financial stability is to be restored to the beleaguered country, a leading rating agency warned. http://www.telegraph.co.uk/finance/economics/gilts/8503345/Greece-anger… http://online.wsj.com/article/SB100014240527487038642045763108515039801…
"balance of both risks and fundamentals still points to a supply constrained world,”
One bounce does not a trend make, but you can confidently connect the low points, and if the base-line's ramping......
Here's what you need Rob:
http://www.trademe.co.nz/Trade-Me-Motors/Cars/Other/auction-344922448.h…
Business confidence ?
For me the best economic/ political thermometer is gold. Real world recovery means a gold price around US$ 800.- to 1'000.- over US$ 1’200.- a warning sign and over US$ 1’500.- everything can happen to the patient. US$ 1’800.- emergency situation – US$ 2’000 plus ______________!
Currently gold US$ 1'513.-
First and formost Gold is a commodity, always has been its just that at some stage the majority decided to use it as a unit of exchange for goods and services to aviod the wants of coincedence.
Unless the printing of money stops and interest rates rise to beat inflation its unlikely the USD will ever correlate with gold. Gold dosnt really change in price it just reflects how much paper and ink or electrons these days is being created from nothing with interest attached based on economic growth for payment. Thats not going to happen once you get your head around compounding interest, astronomical numbers and resource constrants for more growth that are currently in front of us.
One world currency any one?
Naturally controlled by those who have bought you the current state of affairs!
"Picton businesses have railed against plans to move the ferry terminal out of the town, with one saying a move "would be the death of Picton". stuff
How about a safe anchorage for the yachting mega rich.....room for 100 mega sized yachts...think of the labour demand to look after that lot...Smiley Wavey would put the word round...
Safe from the raghead terrorists...and every one of the owners would want a shore base...something really flash ...better than the neighbours....
And the crews would need feeding and the demand for stuff and booze would be like huge.....
Airport nearby for the choppers zipping over from wgtn or up from Chch...A place to be when Queenstown is quiet or wet or bloody cold.
Pull finger Picton....getting rid of the terminals could be the best thing to happen.
Cook st could become the sailing boating mecca of all time.....
It could be the greatest race Walter.....the Arapawa Run....out Queen Charlotte Sound, round through Cook Strait and back into Tory for the run to the line...or try rounding the Brothers on the route...so many places to 'film' the race from...a celebrity on each yacht....ballast!.....run it the weekend after the warplanes event.....Picton would boom! No bloody ferry to bugger the sailing event.........
"New Zealand's dollar weakened against most of its major counterparts after the International Monetary Fund said it may be as much as 20 percent overvalued." bloomberg
20%.....what would the drop do for the price of petrol and diesel....it will put them up by more than 20%...because of the taxes...so that would see petrol reaching to $2.70 a litre....and diesel to over $2......and this would do what for the food prices and the mounting cost of shifting building material and the hourly rate for labour......?
Bollard may well be forced to break his promise to stay cheap until post the election to help boost the govt position...he may well have to raise the ocr to strengthen the Kiwi$ to ward off rising imported costs that will bugger the little bit of life left in the economy. People will travel fewer ks and spend even less and make do even more. Retail will enter a death dive. Regional retail is already in the dive. Compound this and you have further falls in govt revenue numbers. That would enlarge the deficit....the downgrading of the govt debt position is pretty well a certainty. That would drive up borrowing costs and bring on a full blown depression as in some of the piigs.
Look at it from the viewpoint of the foreign lenders..the fools buying nz debt...in NZ$ !!...they face a 20% loss on their loans if they were dumb enough to deal in Kiwi$...what will they do from here on when lending to NZ.......the deals will not be in Kiwi$ and or the rates will be much higher as in Greece where 15% is common.
Put this inside out and ask why is the Kiwi20% overvalued?.....what magic came up with that %......it means we should be paying 20% more for imports because that is all we can afford because the country is not earning enough because we are not productive and because we have a wasteful state sector sucking the life out of the economy. If a huge oil and gas deposit were to be discovered under the seabed, it would reset the value of our potential export earnings and thereby wipe out the 20% in minutes...our current value v the basket of currencies would be determined to be correct...bigger than huge and the Kiwi$ could rise to parity with the aus....
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