David Chaston details the key news in 90 seconds at 9 am in association with Bank of New Zealand, with news that the European Central Bank has raised its benchmark rate by 0.25% as expected to 1.5% and has signaled its support for Portugal. It has abandoned its credit rating requirement for collateral security there, but has maintained its hard line on the Greeks.
Portuguese credit default swaps hit 1,000 basis points, at a level similar to Venezuela and Ireland, but way less than Greece’s 2,200 basis points.
Later in the day a Spanish bond offer went off well, calming markets somewhat.
This, along with good US jobs data, helped push the Dow up to a 3 month high and back to levels previously seen in May 2008. There were also good Aussie jobs numbers yesterday, better than expected.
This pushed their currency higher, and ours along with it. In fact, this morning we are at a one year high against the Yen, almost at a record versus the US dollar, and an all-time record against the beleaguered British pound at NZ$1 = UKP0.5210 The NZ dollar on a TWI basis is at its highest level since March 2008.
And finally, there has been stunning news out of the UK where Rupert Murdoch's News Corporation has announced it-s closing the huge “News of the World” operation because of the phone hacking scandal. Its rival The Guardian has led the attack. It may have been sacrificed to protect its planned full takeover of pay television group BSkyB. But it also may re-emerge as the Sun on Sunday.
Bernard Hickey is back on Monday.
No chart with that title exists.
24 Comments
Why do Chinese/ Indians buy gold now in stead of rugby tickets ?
Good interview with Rob Morrison on Nine-to-Noon at the moment.
These folk know where it's going - and are giving it a proactive heave.
What a difference from the 'not I, said the Little Red Hen" brigade....
But let us be clear. The EU itself brought this about by declaring war on the very investors needed to finance the vast borrowing needs of the European project. By baying for the blood of bankers and “speculators” (ie pension funds and the like who bought Greek, Portuguese, and Irish debt in good faith), Chancellor Merkel has set off capital flight and raised the spectre of defaults. Her specific demands for “burden-sharing” by Greece’s private creditors (and therefore Portugal and Ireland next) have changed the landscape. The agencies have no choice at this stage. Their job is signal default risk.
The ECB has warned tirelessly that attempts to punish investors in this fashion would back-fire horribly, set off a fresh contagion, and potentially spiral out of control. This is where we are today as Club Med bond yields go haywire again. Governments need to love and caress bond-holders, not spit at them.
By the way, holders of Greek and Portuguese long-term debt have already lost half their money based on current resale values.
A little less than expected for the taxpayer in the sale of South Canterbury Finance's Helicopters NZ to the Canadians. The deal has been done for NZ$154m rather than NZ$160m:
CANADIAN HELICOPTERS COMPLETES THE ACQUISITION OF HELICOPTERS NZ
Thursday, July 7, 2011 - Canadian Helicopters Group Inc. (TSX: CHL.A, CHL.B), the largest helicopter transportation services company operating in Canada, announced today that it has completed its previously announced acquisition of the assets of Helicopters (N.Z.) Limited, including the shares of Helicopters (Australia) Pty Ltd and other wholly-owned active subsidiary companies, as well as the assets of Helicopter Nominees Limited (collectively “HNZ”) (the “Transaction”).
The Transaction purchase price at closing was NZ$154 million. The reduction of the previously announced Transaction purchase price of NZ$160 million resulted primarily from a downward price adjustment due to the exercise by Totally Tourism Limited of its pre-emptive right to acquire HNZ’s 50% interest in Glacier Helicopters Holdings Limited(“Glacier”).
The financial impact of HNZ’s interest in Glacier was not material in the twelve months ended December 31, 2010.
In connection with the closing of the Transaction, CHL entered into a new revolving credit facility totaling C$125 million with National Bank of Canada, Caisse centrale Desjardins and Canadian Western Bank as lenders. The new credit facility replaces CHL’s previous revolving credit facility.
The Transaction was funded with a combination of cash on hand and a C$93 million drawdown on the new credit facility.
Nathans directors found guilty - http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=107…
With household expenditure accounting for 53 percent of the economy, Ireland’s ability to emerge from its deepest economic contraction in history may depend on persuading people like O’Neill to start spending the cash they have left. The yield on 10-year Irish bonds rose to a record today amid speculation that the nation’s credit rating may join Greece and Portugal in being downgraded to junk.
BOAhttp://www.nydailynews.com/money/2011/06/30/2011-06-30_bank_of_america_shells_out_85_billion_to_investors_after_mortgage_mishap.html?r=money
Should we have a quick vote while Bernard is away to see if we actually want him back?
http://www.stuff.co.nz/business/money/5253036/Freezing-deposits-plan-slammed
What a joke. They want to take the money off the savers so that the losers with no savings can carry on getting their dole and pay.
Is this the final step in the failed system stealing the money from savers?
Um....I think you should re-read what they are saying. the way i read it is, if a bank shuts you get no money.....if it re-opens the next day with this method you can get some immediately....this is of course flying in the face of past practice where the Govn backstopped personal deposits to stop a bank run. If you look at Greece however its pretty clear that they are having bank runs before the banks actually collapse.....so by the stage it gies toes up I would assume most ppl would eitehr have withdrawn their money, or teh Govn would have had to step in and cover ppl.
regards
>>>
Massey University head of banking studies David Tripe said though the Reserve Bank put forward two options, it appeared to favour all depositors potentially losing some of their money if their bank failed.
"Such a policy, if implemented, would impose financial hardship on large numbers of New Zealanders, including those with the least ability to bear the cost," Mr Tripe said.
>>
we now have covered bond holders, I take it they get first wack and wouldn't be included in this, so now the savers left, get to take the risk, I dont think interst rates are high enough for that. Better to take some cash out and stick it in a safe deposit box.
Its high interest rates that will finish us off. I read somewhere that a %1 increase in interest rates in the States would kill off %15 of consumption.
The method banksters use have been proven and tried Argentina.
If you have a small amount you get it the next day Steven. Thanks to the poor buggers who invested their life savings with the bank and now have their money frozen.
Anyone with a decent deposit would be stuffed.
and why is it you are or considered you should be guaranteed your deposit money?
There is always a risk with any investing that you could lose some or it all.
Why do you think one particular savings method deserves a risk free return?
regards
I don't. I just dont see why some loser with less than 50k is guaranteed when the retired granny with her life savings in the bank (whats left of her savings after the finance companies collapsed) should have her savings ring fenced.
As far as I recall yes this was something that could be done by people
about 4 mil. there aint enough banks.
Why is someone with less thank 50k in the bank a loser ?
why do you think?
Could be a young person , could be someone's life savings , could be many other reasons which = less than 50k. None of which might mean they are losers.
You would be best to check out bank runs and bank holidays that have happened history.
Especially what was happening in Argentine from 1996 forward to the present day....
The loser on the dole can continue to use the bank thanks to the savers money (those with over 50k ) being frozen.
You would not want to give depositors a better choice or they would all bugger off elsewhere,
how far can you push them? covered bonds is far enough for me, the return on your money will eventually be replaced by the desire to get your money returned, thats why so mnay choose the banks if that option closes a new one will open.
"The situation is magnitudes worse than where we were a few months ago and the global outlook is following the pattern of mid-2008 before the Lehman crisis, so people are getting nervous," he said.
Italy's finance minister, Giulio Tremonti, unveiled a draconian plan yesterday to balance the budget by 2014 and stay a step ahead of the bond vigilantes, warning of "disaster" unless €48bn of cuts were passed. "What is at stake is the survival of civil society in this country," he said.
http://www.telegraph.co.uk/finance/economics/8624143/ECB-tightens-noose-on-Southern-Europe.html
From your link:
Yields on Italian 10-year bonds rose to a post-EMU high of 5.21pc yesterday. Spanish yields reached 5.71pc before settling down slightly. The bond jitters follow a slew of grim data pointing to an economic relapse in both countries.
Good to know we are so much better off here - NZ goverment 10 year bonds were only averaging a yield of 5.11pc at our last bond tender:
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