90 seconds at 9 am with BNZ

90 seconds at 9 am with BNZ: Euro debt tensions mount as Irish rating cut to junk; Talk about fresh Fed money printing holds stocks up; NZ$ down on 'risk off' trade

13th Jul 11, 9:01am by Bernard Hickey

Bernard Hickey details the key news overnight in 90 seconds at 9 am in association with Bank of New Zealand, includuing news Moody's has downgraded Ireland's sovereign credit rating to junk.

It now joins Portugal and Greece as nations inside the Eurozone with junk credit ratings. See more here at Bloomberg.

This took the gloss off something of a recovery overnight on global markets. The Dow closed down 0.5%, having earlier been stronger on talk the US Federal Reserve may choose to add more stimulus to the world's largest economy to try to get it going again.

Minutes from the Federal Open Markets Committee (FOMC) meeting from last month showed the Fed discussing options for more stimulus and not ruling out a third round of money printing or quantitative easing known as QE III. See more here at Reuters.

Also pulling down on markets was a poor result from global aluminium giant Alcoa, which reported weaker than expected profits. It is the first of the corporate reporting season and is closely watched. See more here at Bloomberg.

Meanwhile, Italian bond yields fell slightly overnight, recovering a little after Monday's rout.

Prime Minister Silvio Berlusconi pledged to push through an austerity plan faster than initially expected to try to calm down markets, which now fear a spread of the European sovereign debt rot from Portugal, Ireland, Greece and Spain (PIGS) to Italy. See more here at NYTimes.

Meanwhile, the New Zealand dollar fell the most of the most heavily traded currencies overnight, hitting an overnight low of 81.1 USc. The New Zealand dollar tends to rise and fall the most in line with perceptions of risk on global markets, given it is seen as a commodity linked currency and commodities are the most volatile assets when expectations of global growth change. This is seen as the 'risk on' and 'risk off' trade.

The New Zealand dollar had been as high as 83.8 USc on Monday and risk has definitely been taken off the table in the last two days.

The euro remained weak on fears about contagion in the European debt markets. See more here at Bloomberg.

No chart with that title exists.

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19 Comments

by Andrewj | 13th Jul 11, 9:39am 1310506789

A cracker from Charles Hugh-Smith

http://www.oftwominds.com/blog.html

by scarfie | 13th Jul 11, 9:59am 1310507940

What he doesn't cover in that article is the conditions of commercial leases, which are generally much tougher than residential in terms of the guarantee of the term and the payments.

Unless you are clever, even if your business folds your are still often left with the personal obligation of the lease payments. No hiding behind limited liability there.

What are the downstream effects of that when you still have assets ie: a family home.

by Andrewj | 13th Jul 11, 10:31am 1310509901

But it is whats happening in Agriculture, from animal id through to permits to farm, its all happening here. We have to sit an exam to use drenchs we need a licence to drive a quad bike and it goes on and on.

by scarfie | 13th Jul 11, 10:38am 1310510311

Yeah i know what you mean. I have posted before about the compliance BS hoops I would have to jump through to get my invention compliant. Worst for me is the cost of that compliance, which is prohibitive to the point that it won't happen. I am at least sort of lucky I can work in the grey areas, but it doesn't really smooth the way.

It is not that my product doesn't have world wide potential, only every wood burner.

But for me, if I was going to outlay the major expense involved in compliance, why would I do it here when I could do it in the US. Same cost but 50 x the market to recoup that cost. It then begs the question as to why I would have the business based in NZ.

by Colin Riden | 13th Jul 11, 10:18am 1310509125

CHS provides a great description of the true problem with the US economy, and it is no better in NZ.

by scarfie | 13th Jul 11, 9:44am 1310507040

Rob of the North posted some positive info on Italy yesterday, I wonder how that information compares with that available on this chart. http://blog.thomsonreuters.com/index.php/euro-zone-crisis-focus-on-italy/

by scarfie | 13th Jul 11, 10:31am 1310509918

A bit off topic, but a good piece on Libya/Gadaffi anyway. Meaty stuff is at the end.

The result is that wars against them take a long time and kill a lot of people, and they are singularly indifferent to the suffering they cause. Threatening them with a trial simply closes off political options to end the war. It also strips countries of their sovereign right to craft non-judicial, political solutions to their national problems. The dictator and his followers have no reason to negotiate and no reason to capitulate. They are forced to continue a war that could have ended earlier and allowed those who would have died the opportunity to live.

http://www.stratfor.com/weekly/20110711-libya-and-problem-hague?utm_source=freelist-f&utm_medium=email&utm_campaign=20110712&utm_term=gweekly&utm_content=readmore&elq=6f4326f352e447ec951e37b1eb2dfbcf

He asks the interesting question of what would have happened in South Africa if there had been the risk of prosection to the white rulers.

by Wolly | 13th Jul 11, 11:51am 1310514694

"Rod Petricevic was delivered a sharp lesson in the High Court at Auckland yesterday that justice will be served in the Bridgecorp trial irrespective of whether he says he can afford it or not." ,,,,,Fran O'Sullivan

Roast Rod is on the menu!

by Andrewj | 13th Jul 11, 12:04pm 1310515453

And as small businesses struggle the big ones get this treatment

Murdoch's News Corp Generated $10.4 Billion Profits And Received $4.8 Billion In "Taxes" From The IRS

By Tyler Durden

http://www.zerohedge.com/article/over-past-4-years-news-corp-generated-…

by LloydM1 | 13th Jul 11, 12:12pm 1310515941

Big business helps writes the legislation & heavily influences it , so really it's no surprise sadly. Money talks !

by LloydM1 | 13th Jul 11, 1:22pm 1310520126

Big business destroys jobs Marty. Labour is the biggest cost to most companies, so the attack on it continues. Spun employment figures globally only help support the lies that business create jobs that benefit society in a meaningful ethical way.

by powerdownkiwi | 13th Jul 11, 1:31pm 1310520673

It's the demand for the resource that creates the demand for the labour.

It can be driven by any ideology.

You should read Nevil (Shute) Norway's 'Slide Rule'.

by Andrewj | 13th Jul 11, 4:33pm 1310531601

Thanks PDK just downloaded it onto my Kindle, thats got to be at least an energy saving, compared to buying the book?

by Andrewj | 13th Jul 11, 12:49pm 1310518170

When time comes to address Italy's debt, "haircut" won't be an appropriate metaphor. It’ll be more like putting their heads through a lawnmower, and without anaesthetics.

http://theautomaticearth.blogspot.com/

by Andrewj | 13th Jul 11, 1:05pm 1310519111

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/86334… Europe steps back from the abyss, for a day The European Union has reached "crunch time" in the words of George Papandreou, Greece's despondent premier. Its leaders can longer allow themselves the luxury of "indecisiveness, errors and tactical politics" as the debt crisis engulfs 40pc of the eurozone's economy and almost half its population.

"Let us be clear: if there is no relief we are going straight into the abyss," said Romano Prodi, Italy's ex-premier and former head of the European Commission.

Relief came just in the nick of time at 9.15 on Tuesday morning when somebody – most likely the European Central Bank (ECB) – intervened in the Spanish and Italian debt markets. Systemic contagion has been halted. A global crash has been averted. At least for a day.

by Wolly | 13th Jul 11, 2:22pm 1310523723

Mind you don't step in the stuff left by junk piigs. It will make you very Moody.

by Vanderlei Luxemburgo | 13th Jul 11, 3:30pm 1310527833

hey wol i've seen you banter the $5bn figure about as Treasury's budget. Are you serious about that? what does that $5b comprise?

by Wolly | 13th Jul 11, 2:55pm 1310525745

"Europe Readies for the Worst"

http://online.wsj.com/article/SB10001424052702304584404576442402737685830.html

are you ready for the fallout!

by HarryM | 13th Jul 11, 3:36pm 1310528167

"We continue to believe that core Europe will end up bailing out peripheral Europe as the cost of not doing so is at least double the cost of doing so," Credit Suisse analysts said in a research note on Tuesday.

Continue to believe...........