Bernard Hickey details the key news overnight in 90 seconds at 9 am in association with Bank of New Zealand, including news that US Federal Reserve Chairman Ben Bernanke has again reassured US investors he is ready to use all the tools he has available to promote a stronger US economic recovery.
But Bernanke again stopped short of detailing which tools he could use or how he might use them, disappointing many who are hungry for an announcement of a third round of money printing or quantitative easing known as QE III. See more here on the speech from Reuters.
Investors will have to wait for a key meeting of the Fed's policy making committee on September 20/21.
The Dow closed down 1% as Bernanke also said the risks to the recovery had increased. See more here at Bloomberg.
US Treasury yields fell again to near record lows as bond investors priced in a slide back into recession. The 2 year Treasury yield fell to 0.19%, while the 10 year fell again under 2% to 1.98%, while the 30 year yield fell to 3.31%. See more here at Bloomberg.
Markets are also waiting for the detail of a widely previewed speech from US President Barack Obama due late this morning New Zealand time. Obama is expected to announce a US$300 billion package to create new jobs.
The plan is expected to include extensions of payroll tax cuts, new aid for state and local governments, a tax holiday for US corporations repatriating funds and new infrastructure spending. (We will update with the details after the speech.) See a Reuters preview of the speech to a joint session of Congress here.
Meanwhile, the European Central Bank announced overnight it would hold its official cash rate at 1.5%, pausing a programme of interest rate hikes begun just 5 months ago to control inflation. ECB President Jean Claude Trichet said the European Economy faced "intensified downside risks" and was less worried about inflation.
These comments weakened the euro sharply against the US dollar. It fell to around US$1.38. See more here at Reuters.
The New Zealand dollar also firmed towards 60 Euro cents and 52 British p as talk of lower European rates and money printing in Britain grows at the same time that New Zealand is expected to increase rates. This will make the Rugby World Cup an expensive trip for European and British tourists.
However, the Kiwi is off its highs against the Australian dollar, making it better for Australian rugby tourists.
No chart with that title exists.
13 Comments
US wages have fallen by 66% since 1969.
"Here's what we thought we knew. In the last three decades, gross domestic product doubled but the typical worker's real wages barely increased. For those with only a high school degree, salaries fell slightly. Some economists called this period of lazy wage growth the "Great Stagnation."
It turns out that "stagnation" was too optimistic.
In fact, real wages for middle class men have declined by 28 percent since 1969, according to a report from the Hamilton Project. For men without a high school degree, they've fallen by a whopping 66 percent. "Stagnation is too weak a word," said Michael Greenstone, author of the report. "This is decline." "
http://www.theatlantic.com/business/archive/2011/09/the-greater-recessi…
Same dynamics here I suspect.
Yep its all gone to the top 1~5%.....
regards
I’m concerned that the NZ$ could be regarded as a safe heaven and therefore already stressed exporters, especially in the fragile agriculture sector going to be hit hard. Lower demand of agriculture products (e.g. high prices) and a high NZ$ could cripple our one- sided economy in a matter of a short time only.
But the property market is strong - hmm ohh dear !
zero hedge seems to think the debt ceiling gets blown out on Monday,
http://www.zerohedge.com/news/here-we-go-again-us-breach-transitory-deb…
"The reason we bring this up is because as the data below demonstrates, the US Treasury will breach its brand new debt ceiling... on Monday. That's right: as of yesterday, total US debt was $14.717 trillion (obviously an all time record, and every day closer to parity with US GDP), while debt subject to the ceiling was $16.772 trillion, or just $22 billion below the total before someone has to go ahead and commence the whole debt ceiling fiasco from scratch. And since as the Treasury is auctioning off another $32 billion in 3 Year bonds on Monday, that process better scramble or else all that rhetoric about Social Security being nothing but a plundered ponzi scheme will be proven true yet again."
?
http://www.nasdaq.com/aspx/stock-market-news-story.aspx?storyid=2011090…
?
regards
wb Bernard btw......
regards
Bernard, are you able to access more specific data relating to this article?
World cup spending welcome relief for retailers.
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10750280
Department stores (down 3.6 per cent year-on-year) and furniture stores (down 5.5 per cent year-on-year) were among the hardest hit by the retail spending slowdown, while spending at food and liquor stores rose 7.8 per cent during the same period
No details on volumes, is this a sign of inflation?
Apparently Auckland/Northland recorded a 7.3% lift in spending over July/August yet the article re regional economic activity only a few days earlier reports Northland being at the bottom due to weak retail sales.
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10750025
The data doesn't compute to me, maybe someone can clear it up. Or is it just propaganda?
You mean you actaully believe stuff you read in the Herald?
They are presenters not reporters.
Never said I believe the stuff, hence why I asked Bernard if he was able to source more data.
Unfortunately for a lot of people it might be their only source of "reporting" and they would never even question the data.
Meh
Here's the full Paymark news release that article is based on:
The latest figures from Paymark suggest that the spending boost expected to accompany the RWC will come as a welcome relief to retailers, with soft trading conditions across most sectors defining the last couple of months.
The value of transactions through the Paymark network increased 3.2 per cent (year-on-year) in July and 4.1 per cent in August. Both of these rates, as well as the average of 3.7 per cent for the two months, are below the 4.4 per cent growth rate averaged in the first half of the year.
The spending slowdown across the last two months appears to be have occurred across many industries and regions and Paymark Head of Sales and Marketing, Paul Whiston, says that the figures are typical of a mixed trend that has been noticeable over the past 12 months.
“It’s been fairly flat out there with sectors experiencing highs and lows at different points throughout recent months. This pattern has come through consistently over the past year and I think it would be fair to say that few businesses have escaped the mixed spending patterns, ” he says.
Of particular interest during the last month were department stores (-3.6 per cent year-on-year) and furniture stores (-5.5 per cent year-on-year) where spending remains below year ago levels. In addition to this, food/liquor stores (+7.8 per cent year-on-year) and hospitality outlets (+6.6 per cent year-on-year) show higher spending than the previous year, but the annual growth rate has declined from the higher levels of previous months.
Paul Whiston adds that the last two months’ trading will provide a reference point for comparisons during the RWC, and advises that the Paymark network is ready to process a huge increase in the volume of payments.
“New Zealand retailers are ready for this. Our network is ready to handle the increased volume of transactions and with the national upgrade of terminals that was completed in June we are all set to make the most of this exciting opportunity,” adds Paul Whiston.
Noticeably, annual spending growth was above the year-to-date average in Auckland/Northland (+7.0 per cent) during August – second only to Bay Of Plenty (+7.3 per cent) – so the extra RWC boost will make for generally strong trading conditions for many Auckland outlets.
Conversely, merchants in other regions including those experiencing slow-to-negative annual growth between August 2010 and August 2011 such as Wairarapa (+0.3 per cent), Canterbury (-3.5 per cent) and Marlborough (-2.4 per cent) will be looking for a kick-start from the RWC.
The number of card transactions for August was 2.6 per cent higher than a year ago with debit card use growing 3.2 per cent and credit cards experiencing low growth of 0.7 per cent.
And here's a link to a release with the full table.
https://www.paymark.co.nz/cms_show_download.php?id=590
cheers
Bernard
Thanks Bernard.
Obama's latest "jobs package" will cost at least US$447 billion
http://www.nytimes.com/2011/09/09/us/politics/09payroll.html?hp
with more than half being for the cut in payroll taxes.
Where does the money come from – just to pay what we destroy ?
It is not a question of if - but of when worldwide stock-markets will crash - next Friday - a week after or Friday the 30th of September 2011.
Experts warn the situation is far worse then before the collapse of the bank Lehman Brothers in September 2008 - not only accumulating, accelerating - but escalating.
http://www.youtube.com/watch?v=7e8GMfjgE58&feature=related
Looking into current developments on many fronts – the world will never recover again, simply because among the powerful in societies ethic and moral requirements and standards don’t prevail.
...or is it going to be - Friday the 28th of October 2011 ?
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