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90 seconds at 9 am with BNZ: Fed to hold rates near zero til mid 2013; Keeps doing the twist; Euro hits 11 month low as Merkel says 'Nein' again; NZ$ at 76 USc

90 seconds at 9 am with BNZ: Fed to hold rates near zero til mid 2013; Keeps doing the twist; Euro hits 11 month low as Merkel says 'Nein' again; NZ$ at 76 USc
14th Dec 11, 9:00am by Bernard Hickey

Bernard Hickey details the key news overnight in 90 seconds at 9 am in association with Bank of New Zealand, including news that the US Federal Reserve's Federal Open Markets Committee (FOMC) has decided to leave US official interest rates on hold at 'exceptionally low' levels of almost 0% until mid-2013.

The US Federal Reserve also said it would not change its 'Twist' programme of selling short term bonds to buy longer term bonds in an effort to lower longer term interest rates.

It also warned that financial stresses in Europe were a big risk for the US economy. See more here at Reuters.

There was one dissenter from the FOMC's decision, Chicago Fed President Charles Evans, who voted for more monetary policy easing. See more here at Bloomberg.

The Dow lost some moderate gains after the decision, given some were hoping for slightly more easing or comments about future easing.

However, the main action remains in Europe, where the Euro slumped to a fresh 11 month low of US$1.30 on concerns the European summit decision over the weekend has done nothing much to solve the crisis or boost flagging growth in the Eurozone.

Markets were disappointed by comments from German Chancellor Angela Merkel reiterating her opposition to an increase in the European Stability Mechanism  (ESM) beyond current plans for a €500 billion euro fund. See more here in BNZ's currencies report on our site.

Meanwhile, inflation in Britain fell to 4.8%, sparking speculation the Bank of England will have more room for quantitative easing or money printing to boost the economy.

The New Zealand dollar was weak in early trade, in line with waning appetites for risk as European crisis deepens. The New Zealand dollar dipped below 76 USc in early trade.

No chart with that title exists.

 

 

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47 Comments

by  Andrewj  |  14th Dec 11, 9:06am 1323806785
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by  Andrewj  |  14th Dec 11, 9:33am 1323808433

part II,  MF knock knock on effect?

 

 

And a London bank source told Agrimoney.com last week that they had heard of a "quadrupling of expected fees on one financing deal, albeit off a low base".

"Capital is getting a lot tighter, especially in the last three months," the source added, noting that Europe's banks, closest to the eurozone crisis, "are probably the key players in trade finance".

The tightness in credit has been blamed for accelerating price declines in agricultural commodity futures over the last three months, besides being noted in other sectors too, such as mining.

http://www.agrimoney.com/news/us-flags-threat-to-agribusiness-from-tigh…

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by  Roger Witherspoon  |  14th Dec 11, 9:52am 1323809560

I'm starting to get bothered about the US and Iran. Things seem to be coming to a head there with unrest in Syria, US troops in Afghanistan despite the most extended and vulnerable supply lines of any army ever. Factories mysteriously blowing up in the night. Iran threatening to close the Strait of Hormuz and saying they didn't.

Presumably the US will not tell us beforehand when they destroy the Iran nuclear arms project..... Is this why they invaded Iraq and Afghanistan?

Scary, scary stuff.

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by  anonentity  |  14th Dec 11, 10:20am 1323811207

Oh and news just in is that a Russian Aircraft carrier  bound for Syria, has cruised a bit too close to Scotland and caused the Royal airforce to scramble jet fighters..Just a bit of flirting before the dance?.

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by  neco  |  14th Dec 11, 10:26am 1323811590
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by  anonentity  |  14th Dec 11, 10:58am 1323813529

Zero Hedge has reported that the straights of Hormuz have been closed..If this is true the price of oil will go balistic.

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by  skudiv  |  14th Dec 11, 1:20pm 1323822041

later denied

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by  JP  |  14th Dec 11, 11:22am 1323814978

No chance of war with Iran unless US and its allies think the current world financial system is toast.

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by  Kate  |  14th Dec 11, 11:27am 1323815261

That's settled then - war it is!

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by  Gummy Bear Hero  |  14th Dec 11, 1:36pm 1323823008

..... it's too close to Christmas to start a war ..... even Iranians have an inalienable right to sharing a Christmas tree and a stuffed turkey with their families ....

We'll re-book the war for mid-January ..... just hope that it doesn't coincide with a little North Korean skirmish .......

... hmmm , I wonder if Turkey really is stuffed , not in the Eurozone are they ?

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by  Anarkist  |  15th Dec 11, 8:16am 1323890180

Roger,

Yeh, its part of a long term geo-political strategy, developed by policy wonks in the United States. They're only too transparent about their agenda, publicly releasing policy documents on the web about it, as well as their roadmap for achieving their goals. Its become only too apparent that American powerbrokers are certifiably insane.

http://noagendashots.blogspot.com/2011/08/syria-war-next-on-path-to-per…

www.brookings.edu/~/media/files/rc/.../06.../06_iran_strategy.pdf

http://www.strategicstudiesinstitute.army.mil/pubs/display.cfm?pubid=721

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by  Wolly  |  15th Dec 11, 8:30am 1323891058

Put the boot in anarkist...I bet you don't take advantage of the fuel supply in any way shape or form do you....oh yeah you are a real revolutionary....what a gift to humanity you are.

Oh by the way anarkist...if you have any spare time from your devotion to the revolution...could you let us know how the world would be if the Iranian religious masters of the peasants were in charge....do tell.

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by  Anarkist  |  15th Dec 11, 9:22am 1323894145

Wolly,

You think that the Iraq war was about CHEAP oil? With oil prices now at least six time what they were in 2002? I'm sure the higher oil prices are windfalls for Oil Companies affiliated with U.S. powerbrokers, who's reserves lie primarily in marginal oil regions in Africa and in the Americas. 

"Mamdouh Salameh believes the oil price would now be no more than $US40 a barrel, less than a third of the current price, if not for the Iraq war.

An oil economist adviser to the World Bank and the UN Industrial Development Organisation, Dr Salameh says that among the world’s biggest oil producers, Iraq alone has enough reserves to increase flow substantially. Production in eight others – the United States, Canada, Iran, Indonesia, Russia, Britain, Norway and Mexico – has peaked, he says, while China and Saudia Arabia, the remaining two, are nearing the point of decline. Before the war, Saddam Hussein’s regime pumped 3.5 million barrels of oil a day, but this has fallen to just 2 million barrels."

http://www.nakedcapitalism.com/2008/06/did-iraq-war-cause-high-oil-pric…

And U.S. Powerbrokers were only too happy to work with the Iranians, when it was in their best interests to ensure plentiful and cheap oil to make Ronald Reagan's economic management look good. Not to mention the fact that one could argue that the Shah of Iran fell from power, largely because he was colluding in the U.S. government's policy of  plunging the world economy into a deep recession, in order to rush through structural reforms aimed at suppressing the power of the working class and the newly burgeoning social movements that arose in 1960s and 1970s.

"In this, he has remained consistent for 30 years: in the Seventies he was not persuaded of the benefits to Opec of hiking crude prices by the 400 per cent that came about in 1973. The importance of North Sea oil and the fall in Opec's contribution to global production, from 70 per cent to less than 30 per cent, are testimony to his wisdom... King Faisal sent me to the Shah of Iran, who said: "Why are you against the increase in the price of oil? That is what they want? Ask Henry Kissinger - he is the one who wants a higher price".'

Yamani contends that proof of his long-held belief has recently emerged in the minutes of a secret meeting on a Swedish island, where UK and US officials determined to orchestrate a 400 per cent increase in the oil price."

http://www.guardian.co.uk/business/2001/jan/14/globalrecession.oilandpe…

http://www.globalresearch.ca/index.php?context=va&aid=19992

"Brzezinski had already, at this time, hired Dr. Bernard Lewis as his special advisor on Muslim affairs.  Lewis devised what came to be known as the ‘Bernard Lewis Plan,’ under which, the United States, in partnership with Britain, France, and Israel, actively promoted a belt of Islamic insurgency and instability all along the southern tier of the Soviet Union.  The goal:  to launch a Jihad against the godless Soviet communists along their vulnerable underbelly.

Using assets inside the Muslim Brotherhood, Brzezinski, his deputy, Samuel Huntington, and other Carter Administration national security officials, covertly backed the destabilization of the Shah's regime in Iran. Brzezinski had introduced the idea that any regime accused of ‘human rights’ violations forfeited its sovereignty, and could be subject to destabilization and overthrow.  By February 1979, the Shah was in exile and an Islamic Republic under the Shi'ite cleric, Ayatollah Khomeini, had been installed in Tehran. In Moscow, the overthrow of the Shah was viewed as an Anglo-American scheme, which jeopardized the stability of the entire Persian Gulf."

http://www.sasfor.com/index.php?option=com_content&view=article&id=116%…

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by  Wolly  |  15th Dec 11, 9:38am 1323895129

Well gosh anarkist..if Doctor Salameh said so then it must be right...he is after all an 'oil economist'.....!

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by  steven  |  15th Dec 11, 8:45am 1323891950

Securing oil....gas....

I fully expect that given the extremist right wing loons in the US Govn that when supplies start to get tight, free markets will go out the window and "rationing" will occur, controlled by the US Govn/military.

 

regards

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by  happyfunball  |  15th Dec 11, 10:30am 1323898206

No need to ration, the price would shoot up and demand would drop. 

You only need to ration if you have other demand controls, like the 'carless days' in the 1980's instead of the price hikes seen in the US during the same time.

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by  Andrewj  |  14th Dec 11, 10:13am 1323810793

 

Who Gave Permission To A Bankrupt MF Global To Sell Italian Bonds To JPM At A 5% Discount To Market Value?   http://www.zerohedge.com/news/who-gave-permission-bankrupt-mf-global-se…
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by  anonentity  |  14th Dec 11, 10:14am 1323810872

  Reports are slowly coming through of foriegn troops building up on the Syrian Jordainian border.The Russians and Chinese will not like that one.The rumour mill has it that they are Nato troops from Iraq.Strange times!

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by  happyfunball  |  14th Dec 11, 10:21am 1323811288

That would be wonderful for the people of Syria but highly unlikely, NATA has no stomach for another land war, no matter how brutal the Syrian dictatorship.

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by  Andrewj  |  14th Dec 11, 11:08am 1323814120

There were stories yesterday on the net that large numbers of US troops leaving Iraq where not appearing back in the States, whereabouts unknown.

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by  ngakonui gold  |  14th Dec 11, 11:04am 1323813888

Drop a bomb on all of the middle east including that peace loving nation Israel and maybe some of the worlds problems may cease.

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by  Josh  |  14th Dec 11, 12:53pm 1323820417

No, no no  ... the oil might catch fire!

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by  skudiv  |  14th Dec 11, 1:27pm 1323822453

Downgrading glass manufacturing shares; to sell.  There will soon be an oversupply issue.

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by  steven  |  15th Dec 11, 8:47am 1323892052

Except your wedding tackle will drop off if you pick any up.....of course that wont stop manufacurers selling it.

regards

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by  Roger Witherspoon  |  14th Dec 11, 11:22am 1323814940

I thought this was relevant to us.

http://www.johnmauldin.com/images/uploads/pdf/mwo121211.pdf

Nearly a decade ago, in the ad hoc Communist France vs Capitalist France (or in French the book Des Lions menes par des Anes), I wrote about the growing weight of government sectors (and employment) in the economy of France. It seems to me that everything that happened in the latest EU summit was about saving the "communist economy" (by guaranteeing its financing at a low rate); even if that meant sacrificing the "capitalist economy".

It is also hard for me to imagine that much in the way of reform will actually take place—why should one reform if money is readily available from one's domestic banks? Because we have signed on to a tougher, tighter fiscal treaty? We did not even manage to respect the previous, easier, treaty. Why assume that it will be any different this time? Fool me once, shame on you; fool me twice...

The media all over the world, but especially in France, are presenting the crisis as a financial one, as if the governments and the politicians have no responsibility. This crisis is in fact very typical of a communist system arriving at the end of its ability to borrow and make the productive system service the debt it has accumulated, simply because the productive sector is going bust.

And nowhere is it more visible than in France. The "communist sectors"—which I define as the sectors in which there are no market prices and lifetime employment—have grown remorselessly since 1980. The market sectors are falling by the wayside one after the other as everybody can see:

This is not a banking crisis but a political crisis, and as Toynbee wrote, political crises always occur when the elites have betrayed. For reasons that I have never really understood, such crises tend to end either with reforms (in countries where people drink beer) or in revolutions (where people drink wine). As far as France is concerned, it seems to me that we drink both, but with a marked preference for wine.

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by  John Kelly  |  14th Dec 11, 11:49am 1323816550

An excellent link, thanks. It really is a slow motion train-wreck. I wonder how many Greek civil servants have been let go as a result of the 'austerity' policies. Not that the austerity stuff makes much sense.

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by  happyfunball  |  15th Dec 11, 10:32am 1323898375

I thought it was impossible to 'let them go', as written in their constitution?  Thats why they had to lower wages so drastically instead of shrinking the government sector.

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by  scarfie  |  14th Dec 11, 5:56pm 1323838601

All underwritten by oil. Where is PDK?

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by  powerdownkiwi  |  15th Dec 11, 8:58am 1323892684

Home is the sailor, scarfie.

Spent the last few months sailing the Pacific; Auckland-Tahiti/Moorea-Hawaii.

The boats are there, someone has to do it.....

 

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by  steven  |  14th Dec 11, 8:28pm 1323847707

weird....its now a communist system we have...

yeah right....

regards

 

 

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by  John Kelly  |  15th Dec 11, 9:23am 1323894192

Yeah, the use of communist as an adjective was a bit unnecessary.

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by  Roger Witherspoon  |  15th Dec 11, 12:58pm 1323907093

I'm not so sure, this is France we are talking about. A lot of French people have a very different conception of the proper role of the state in the ownership of the means of production, distribution and exchange.

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by  anonentity  |  14th Dec 11, 2:03pm 1323824614

  It seems they are on the Jordainian/Syrian border,(special ops)  facing a load of Syrian tanks, Assad seems to think Jordan is arming deserters and sending them back across the border.Jordan has been told to desist or face the consequences.

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by  goNZ  |  14th Dec 11, 2:27pm 1323826026

If Assad attacks Jordon, its all over rover. I imagine the Arab League will unseat him and about time too

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by  Kunst  |  14th Dec 11, 2:48pm 1323827307
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by  Wolly  |  14th Dec 11, 2:04pm 1323824675

 "As in all the previous summits, the only truly definitive decision on Friday was to have another meeting in three months' time"

 http://www.marketoracle.co.uk/Article32088.html

it's a laugh a summit...

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by  skudiv  |  14th Dec 11, 2:20pm 1323825627

And all the hedgefunds that bought Greek debt at 30c in the Euro, will get paid out at par come monday.  The upper echelons are terrified of the consequences, if suddenly the insurers are called upon to pay out.

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by  Alex Tarrant  |  14th Dec 11, 5:32pm 1323837168

Key gets a telegram from Barroso (Just in from an EU newsletter):

"Dear Prime Minister, I would like to congratulate you on your reappointment as Prime Minister of New Zealand and wish you every success in the exercise of your second mandate. My colleagues in the European Commission and I look forward to working with you and your government with our ambition to upgrade the relationship between the European Union and New Zealand to a treaty-level agreement. It was a pleasure meeting you on your home-ground in September this year. I hope you will take the opportunity to visit us in Europe as soon as your time permits. I am confident that we will be able to work together in the excellent spirit of collaboration that we have enjoyed so far" 

José Manuel Durão Barroso

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by  Gertraud T.  |  14th Dec 11, 6:04pm 1323839087

Who wants a "treaty" with Europe?

 

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by  skudiv  |  14th Dec 11, 6:18pm 1323839881

With a facist, unelected leader.

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by  Wolly  |  15th Dec 11, 7:28am 1323887312

Classic central planning:

We can see the dirty hand of govt in the market place inhibiting the normal workings of supply and demand. Right now the building sector is not...repeat NOT adjusting to the drop in demand by lowering prices on services and basics like labour wood cement steel glass aluminium plastics and yes council bloody fees.

The mechanics of this involve the boosting of the govt splurge in infrastructure and govt building activity...everything from bridges to school toilet blocks....a drive on any main highway is currently a nightmare as the govt splurge is laying down new metal over new metal in an effort to look busy and use the money on offer.

That new metal has boosted the vehicle windscreen replacement industry!...and so the insurance sector...

This is Keynesian economics gone made. It is totally dependent on the economy growing quickly enough to pay for and pay back the borrowing....but also without a return of the consumer spend on new housing, the splurge by govt will have to continue...otherwise the realities of supply and demand forces will begin to dawn.

So you need to ask yourself this question: Will the world economy expand from this new normal debt bloated state...because if not, neither will the NZ economy...and pretty soon now English will be forced to end the central planning game...and the hole in the floor will open.

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by  Wolly  |  15th Dec 11, 7:37am 1323887848

Why have the parasitic banks been so desperate to entice govt into using central planning...the sort of madness loved by Stalin et al....not exactly the capitalist way old boy...?

The answer is as clear as the property bubble...without the govt splurge to prop up the demand side...the bubble would deflate....housing would return to being affordable...landlord subsidies would not be needed...etc etc.........................and oh shite the bank balance sheets would turn blood red.....they and their credit creation rorting game would fall apart.....

Now you know why, you are going to be taxed to death one way or another, to pay for and pay back the borrowing binge by English...as instructed by the banks....and guess what.....the borrowing he is doing is from or through       the       same      parasitic      banks...

How you like them apples, sucker?

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by  Gummy Bear Hero  |  15th Dec 11, 7:38am 1323887902

Gold and Silver are being sold off , along with the rest of the commodities , this morning . And oil's floundering at $US 96 / barrel , confounding the prognosticators and gloomsters who've wailed long & hard about it surging to $US 200 .

...... so Gold is just another commodity , huh . It's not " currency " as many choose to kid themselves , or the only true money . It can crash equally as quickly as it  can roar up . Bloody good thing we're not on a " Gold Standard "

Gold , just another commodity ....... who'd have thunk it  !

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by  skudiv  |  15th Dec 11, 8:06am 1323889615

Deflation games Gummy, BTFD.

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by  skudiv  |  15th Dec 11, 8:11am 1323889869

NZD isbeing sold off , along with the rest of the commodities , this morning . And oil's floundering at $US 96 / barrel , confounding the prognosticators and gloomsters who've wailed long & hard about it surging to $US 200 .

...... so NZD is just another commodity , huh . It's not " currency " as many choose to kid themselves , or the only true money . It can crash equally as quickly as it can roar up . Bloody good thing we're not on a " NZD Standard "

NZD, just another commodity ....... who'd have thunk it ! 

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by  Andrewj  |  15th Dec 11, 7:52am 1323888726

Europe is in trouble again, Credit Agricole just laid off 2300 workers today.

 Kyle Bass

http://market-ticker.org/akcs-www?post=199121

 

 Standard Charted came out yesterday and said this;

While commodity markets are "climbing a wall of worry", a mood set to extend into early 2012, "this could be the best time for medium-term investors to go long", the bank said.

 

While demand for many other soft commodities would prove "relatively sluggish", held back by soft EU and US economic growth, they still held the potential for considerable gains for long investors, particularly in the April-to-June period.

The futures market is undervaluing cocoa and coffee by more than 10%, compared with the average price forecast for the quarter, sugar by more than 20% and cotton by nearly one-third.

>>>>

 Then last night coffee down over %5

 

http://finviz.com/futures.ashx

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by  Andrewj  |  15th Dec 11, 7:56am 1323888997
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