Bernard Hickey details the key news overnight in 90 seconds at 9 am in association with Bank of New Zealand, including news that weak Australian export figures yesterday indicated today's first quarter GDP figures are likely to show a contraction of up to 1.25% because of heavy flooding in Queensland.
This weak Australian data softened expectations of an early and sharp hike in interest rates by the Reserve Bank of Australia. See more here at The Australian.
This made the New Zealand dollar relatively more attractive than the Australian dollar, pushing it up over 77 Australian cents.
The New Zealand dollar also rose on a Trade Weighted Index basis to over 71 after it surged to a record high 50.09 pence and hit a new record high of 82.6 USc yesteday after strong business confidence figures.
Elsewhere, Moody's warned it may downgrade Japan's credit rating because of its high public debts, slow economy and ageing population.
Meanwhile, in Europe, there is fresh hope of a new bailout for Greece.
This boosted the euro and settled markets somewhat, for now. See more here at Bloomberg.
Some critics, however, believe Europe's problems are far from solved and and the latest bailout is simply another attempt to extend, pretend and shuffle away debts that will eventually have to be restructured.
The Dow rose 1% on relief that the European Debt crisis may have calmed for now. See more here at Bloomberg.
However, US consumer confidence fell to a six month low (see more here at Bloomberg) and US house prices dropped in March to their lowest level since 2003. See more here at Bloomberg.
This is raising expectations that the US Federal Reserve will have to resume money printing after its current programme of Quantitative Easing ends on June 30.
That would further weaken the US dollar against many currencies, particularly those with higher interest rates and that benefit from high commodity prices.
That includes the New Zealand and Australian dollars.
(Updates with links to news reports)
No chart with that title exists.
24 Comments
Beat wolly!
Yeah well I was doing worklike stuff see...been down to the gate...no rifle and yes without a worry in the world another Fallow hind bounces across in front not 40 yards away...how do they know..I wanna know!
steven : Yeah , but he actually says something of substance , and usually funny too .......
....... But hey don't let me rain on your self-celebration , knock yourself out , have a ticker-tape parade , buddy ..... Go on , you know you want to ..........
congratulations
GBH - um. actually......
When you boil Wallys myriad postings down, he's just blaming someone else - foreign banks, Aunty Helen, public servants - for something he's absolutely contributing to.
Folk just have to realise that 'investment' goes backwards, beyond the top of the gaussian curve. On the way up, the illusion is that money makes money. It doesn't, it just facilitates the next (and of necessity, biggest) dig into the cake.
Blaming others doesn't address the facts.
Will there be 'investment opportunities'?
Yep, but under a sinking lid - a new and permanent paradigm. So less and less chance of a positive return.
http://earlywarn.blogspot.com/2011/05/more-on-oil-importexport-statisti…
... ummm , unlike some others , whose myriad of postings boil down to peak oil / global warming / and frigging gaussian curves , actually ?
Apple ( NYSE : AAPL ) have made two announcements overnight . Soon they will unveil new versions of their iOS and Mac operating systems .
..... and , this is fun , they're set to launch a digital locker service , given users access to a vast library of songs . Listeners can download song , without actually copying it into their PC's and smart-phones memory .
The new service is to be called " iCloud " , and will be demonstrated next monday , in San Francisco .
Steve Jobs already has agreements signed with EMI , Sony Music , and Warner Music . Vivendi Music are next to sign up .
Google & Amazon look-out !
So lets get this clear. America prints money at 0% interest, and it spreads throughout the world on speculation ramping up commodity prices/share prices etc and they generally export inflation globally. (to devalue their liabilities)
So in the NZ way we produce primary sector commodities and export them, now the speculation turns onto our dollar driving it up, robbing us of the profits and rewards of the work. To top it off, because inflation is going to be high/we're going to grow (yeah right) we start to put up our OCR and the dollar will go even higher...
As much as I'm normally against this, is there a time to print money? Surely Treasury could issue some 0% bonds to the RBNZ, we could also devalue and pay off some debt at the same time. Crazy talk I know, but when is it time to fight fire with fire?
Interesting points. I've been wondering over the last few days about RBNZ purchasing foreign currency, which can't be too far away. Where do the Kiwi dollars used for these purchases come from? Newly printed?
Very interesting point. If the Americans keep printing and forcing inflation on us we should consider this.
The world definitely isn't fair and the market is definitely not free.
We need to be a lot more nationalistic and activist about this.
Gives me an idea for an opinion poll...
cheers
Bernard
Bernard, if the RNBZ fires up the inkjets, and Bollard resorts to <CTRL>+P then there will be a huge flight to safety into property .. your going to have to revise your property price forcasts UPWARDS !! LOL.
Hmmm - interesting. Perhaps the perfect time to introduce a land tax to capture some of those realised and unrealised capital gains. It would also have the effect of getting the property market moving again. We really want to force capital out into the productive sector.
A sort of nowhere to hide but productive business strategy.
By "productive sector", you mean agriculture, right?
Everyone knows that farming is the only alternative to selling houses to each other.
People have been telling me all my life that it's all we're good at and for.
Absolutely not - by productive I mean that sector that produces profit through labour/employment and innovation.
Which would include profitable agriculture - yes - farming for capital gains - no.
Kate - you don't get it yet, eh?
That profit has to buy stuff.
More than before.
If the stuff ain't there, and/or the making of the stuff stuffs the planet you are presuming to hand on to your kids?
And - for the record - no agriculture is 'profitable', if accounted properly. It all runs on an undervalued energy resource.
Come on, if you can't get it, what chance the drongo's?
Prifit requires growth, and growth, sooner rather than later, can't be had. Dick Smith is right.
... meebee Gummy needs stronger glasses , but can you point out to me where Kate mentioned " stuff " .... or more money to buy " stuff " ?
I didn't see that in her comment , nor did I assume that to be her meaning .
....... labour / employment / produces / profit / innovation / agriculture ..... nary a mention of " stuff " ....
I must be the drongo !
@ Kate, your right that's a tricky one because the question becomes in peoples minds, how do we outrun inflation? And its not easy to outrun because the Govt tends to understate inflation in the CPI so there is no real idea of what the real rate of inflation actually is. The growth in M3 money supply can give a good indication of actual inflation.
Having the right kind of business is not a bad idea IMO, since you can effectively transfer inflation to the expenses side of the ledger.. ;-)
there will be a huge flight to safety into property...
Not if they use those freshly minted $$$ to buy forex or even (why not?) GOLD
Bernard - who cares?
http://www.stuff.co.nz/business/money/5082928/Forget-slowing-dollar-Reserve-Bank-told
"Business leaders are urging the Reserve Bank not to intervene in the currency markets as the New Zealand dollar hit a second post-float high against the United States currency in as many days."
Business leaders?
Great! I look forward to your opinion polls, they are always cleverly worded and fun to be part of.
Gummy's Opinion Poll :
1 : Has Bernard crossed to the dark-side , and is now planking with Winsome Peters ?
2 : ... see above .
3 : .. we only have a single choice , go back to 1 .
RBNZ intervention is like using a water pistol to hold back the tide of global competative devaluation .. besides the whole Keynesian experiment is a failure, as per one example from the previous poster. Greenspan admitted as much not so long ago, things are just now beginning to spin wildly out of control.
Australia is in the same boat, and there are mumblings there too that their high dollar is hurting exports. And yet we sit and wait for our politicians and leaders to do something, but our clueless leaders continue to do nothing and we the voters keep them in power.
Got popcorn?
"...robbing us of the profits and rewards of the work"...bloody rubbish
Thought the post might generate debate, I don't necessarily think it's a solution or option, but the world does seem a bit unbalanced, with only the Brits & Americans allowed to play this game.
At the expense of my ignorance, how is it bloody rubbish Wolly? If America's free money wasn't slushing around the global economy looking for 1/2 decent economies (relatively speaking guys!!) to speculate on then our dollar wouldn't be as high and we'd earn more NZD for the exports?
A flood in a wee corner of OZ causes a 1.25% GDP contraction?
What does shutting down NZ's second largest city's CBD for 3 months and counting do?
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