90 seconds at 9 am with BNZ

90 seconds at 9 am with BNZ: Strong US employment data; China readies more stimulus; now Hungary threatens the euro

9th Jan 12, 8:24am by David Chaston

David Chaston details the key news overnight in 90 seconds at 9 am in association with Bank of New Zealand, including news that we start 2012 with the exchange rate at 78 US cents and the TWI at 70.

It is being held up by three factors – risk is back on because markets are more comfortable with the US economy – growth and employment data has been surprising economists on the upside; China seems to be getting ready for a new round of stimulus and this is buoying Australian markets; and the euro crisis is still stumbling along.

In fact, the NZ dollar starts this week at almost a record high against the euro; it was last at this level in August. Concern has now shifted to Hungary which has a new populist government that threatens to thumb its nose at the austerity restrictions the EU wants to impose.

Actually, Hungary is not in the euro, but Austria is, and the Austrian banks are hugely exposed to Hungary and would be the main casualties if Hungary defaults; Austria could need rescuing.

We also start the year with the oil price slightly higher than before Christmas – and, gold is also at a similar pre-holiday level, although it did take a big US$100 per oz dive in thin trading just before New Year.

The Dow is almost 5% higher than its pre-holiday level.

Today we get data on the November trade balance, and on Wednesday it is November’s building consent data that is released.

We hope you had a good holiday break and are refreshed and raring to go in 2012 – we are. We have some exciting new initiatives planned, building on our very successful 2011. We are looking forward to rolling them out for you.

No chart with that title exists.

We welcome your comments below. If you are not already registered, please register to comment

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

45 Comments

by skudiv | 9th Jan 12, 9:02am 1326052940

I liked the table you guys were inserting for the daily update over the holidays, it's a quick conversion into NZD for gold and oil.

by stp | 9th Jan 12, 9:59am 1326056381

Ponzi Planet - The Danger Debt Poses to the Western World

from Spiegel - Have a Happy New Year........

by skudiv | 9th Jan 12, 10:03am 1326056624

If property is in a bubble, how come rental yields outside of Auckland are 5-7%? Sounds like a reasonable return for an inflation adjusting low risk asset.

by Leadbelly | 9th Jan 12, 11:53am 1326063206

There has been fantastic demand for our regional property in the last 5 odd years. No dramas at all. Absolute shortage in the range above a standard rental/investment property is the feedback we have received.

by Matt in Auck | 9th Jan 12, 10:28am 1326058120

Re:China. Doesn't sound like the kind of stimulus that will help aus or nz much.... cars, tourism, trade with emerging markets.

by Billy | 9th Jan 12, 10:33am 1326058423

Encouraging start to 2012. Everything is so upbeat :-)

by Gummy Bear Hero | 9th Jan 12, 10:44am 1326059055

....... there'll be hell to pay in the office when Hickey gets back .... David clearly hasn't upheld the finest commandments of Bernard's Bible of " Gloom , Doom & Despair " .......

Chaston will be chastened !

by skudiv | 9th Jan 12, 12:19pm 1326064790

I'm eagerly awaiting the latest report on kiwisaver performance. Should smack home some reality of making money for nothing. Is there a fund that invests in the actual shares of the funds themselves? Thats my pick for the best performer. The companies themselves are in business for the cashflow, and with a captive market should be doing well.

Actual performance has been in decline since inception, not likely to change anytime soon.

by Gummy Bear Hero | 9th Jan 12, 7:58pm 1326092307

No fund invests in the shares of the KiwiSaver fund providers , as so many of the providers are privately owned . However Tower Group is one fund company listed on the NZX . And in Australia there are several Aussie fund managers listed on the ASX .

..... they do seem to earn fatter profits than their " clients " do ...... funny thing , that !

by Roger Witherspoon | 9th Jan 12, 10:37am 1326058667

A very cool video.

http://www.youtube.com/watch?feature=player_embedded&v=Hdpf-MQM9vY#

Shows how behind we are.

by skudiv | 9th Jan 12, 10:48am 1326059315

That is very cool. Shows what can be done if you want to get it done. Meanwhile back in Chch...... hows that rebuild going?

by Gummy Bear Hero | 9th Jan 12, 11:04am 1326060274

Mummy Gummie's house got done , all nice new false ceilings . Excellent crew did the job ...

...... none of it was earthquake damage of course ....... it's a bloody old house ..... butcha can't tell the EQC accessors that . You can't tell those gumbies nuttin' . They know-it-all .

Reckon a few more pergolas and gazebos may be repaired around the town & it's environs next . ........ start with the easy stuff . Blow the budget of fripperies .

..... actually fixing up munted houses , that can wait .

by skudiv | 9th Jan 12, 12:03pm 1326063834

Meanwhile China can build future proof homes for thousands in 15 days, actually living in the homes -that can wait. We should get those smart Chinese over here to show us how it's done. Since we are showing them how to farm dairy cows, so they don't need to rely on imports...... whoops.

by Chris_J | 10th Jan 12, 1:03am 1326110637

Don't worry the Chinese are actually rebuilding ChCh!

The first major rebuild project underway is (I understand on good authority) using prefabricated hotel suites completely fitted out and built in China, shipped out and inserted into the new building.

(Check out the plans for the new $20m Latimer Hotel).

So much for helping the Kiwi economy.

That's progress for you!

Waste resources crunching everything, outsource not only materials, but also labour to China, then let the insurance companies not fulfil their obligations and stress out the locals to such an extent that they all take whatever's on offer, pack up and leave (to Queensland of course).

Mismanagement all round.

Take a look at the Rena for another dose of mismanagement.

Mickey Mouse would run a better outfit than what we have in Wellington!

by Wolly | 10th Jan 12, 6:04am 1326128681

This is no surprise CJ...quite likely a neat way to sidestep the gst theft...even if gst were applied to a Chinese made item...ie a finished furnished functioning room....it can only be on the declared cost....and we know that will be low....very low.

Begs the question......what is the gst on a Chinese manufactured kitset timber bungalow? Granted you would be foolish to plonk it in chch and await your quake fate but this option must become a reality as the free trade agreement begins to bite the idiot who wanted it.

We buy almost every small motor item from China now....they are good and cheap...so why not the houses....Do I see Kiwi families in Chinese kitsets built from NZ Rhbuarb exported as logs out of Tauranga....yes I do.

by skudiv | 9th Jan 12, 1:11pm 1326067914

Thanks to the internet we now know that even if you put 1 Billion monkeys in front of a typewriter they will not recreate the enitre works of shakespear.

by skudiv | 9th Jan 12, 1:20pm 1326068405

Dow 36,000: The New Strategy for Profiting From the Coming Rise in the Stock Market is a book by James K. Glassman and Kevin A. Hassett. It was published in 1999, shortly before the dot-com bubble burst, and predicted that the Dow Jones Industrial Average would rise to 36,000 within a few years. Parts of the book were also published in The Atlantic Monthly.^[

http://en.wikipedia.org/wiki/Dow_36,000

by Gummy Bear Hero | 10th Jan 12, 10:43am 1326145401

DJI to hit 36 000 points by 2025 ........ Glassman & Hassett were a tadge optimistic in their timing . 2025 and she'll hit their target .....

...... I wonder if they had the good grace to fulfil their $ 1000 pledge to charity ?

by Wolly | 9th Jan 12, 1:45pm 1326069948

What "strong employment data"...I posted enuff over the weekend to rubbish the claim....why do we continue to get the spin headlines...????

Here's the link...go read it...there is no strong anything...it's crap... http://globaleconomicanalysis.blogspot.com/2012/01/nonfarm-payroll-200000-labor-force.html

by skudiv | 9th Jan 12, 3:30pm 1326076241

Propaganda and lies Wolly. Gotta keep the sheep so confused by all the BS, that they keep playing the game. Bread and circuses, it's and old game.

by Wolly | 9th Jan 12, 3:53pm 1326077590

I expect better from BH skudiv.

I believe nothing coming from any US govt dept....I expect to be lied to.

I remain utterly gobsmacked at how stupid so many Americans can be.....the % is the same as here in NZ!

by skudiv | 9th Jan 12, 2:01pm 1326070909

Q. "Do you think Obama is running the country like a Rich Dad, or a Poor Dad?"

Rober Kiyosaki. "Obama? Obama doesn't run the country, Goldman Sachs runs the country."

http://www.youtube.com/watch?feature=endscreen&NR=1&v=siXG53YpNsk

Interesting, he said it in 2010.

by Wolly | 9th Jan 12, 3:43pm 1326077015

Woopeeee...

"A civic memorial service will be held to mark the one-year anniversary of the February earthquake, it has been announced.

The Christchurch City Council said the service would be held from noon to 1.30pm on February 22 at North Hagley Park, with the Christchurch Earthquake Awards to follow"

Parker wants to focus on the community...!....or is it a wish the community focus on something other than the CEOs fat salary and 14% pay rise...

Let's all have a get together....(don't mention the slack CCC pre quake action that would have prevented deaths and injuries should a quake smash chch)...I said don't mention it...

by goNZ | 9th Jan 12, 4:47pm 1326080830

Is that handy to the golf course?

by Wolly | 9th Jan 12, 4:24pm 1326079460

Sky are running a programme about confident tricksters ...think it's called American Greed....anyone know the difference between confidence tricksters and politicians ?

by goNZ | 9th Jan 12, 4:30pm 1326079822

Quax not letting Len duck for cover - this could get smelly ?

An Auckland Council member has turned to the Official Information Act in his quest to have reports released on plans to stuff Auckland with dwellings.

Dick Quax doesn't think shoe box apartment living, wall-to-wall townhouses and the denial of suburban living is a viable option for the city's future.

He says there's council commissioned analysis which is crucial in the debate about whether Auckland should be what mayor Len Brown describes as a 'quality compact city'.

"The fact of the matter is the spatial plan has to be based on evidence, and whatever evidence is out there, should be made available to the councillors," he says.

Dick Quax is disappointed he has to use an act of Parliament to get information from his own council

by Wolly | 9th Jan 12, 4:37pm 1326080223

Dick must think it's a democracy...haha.

by Wolly | 9th Jan 12, 5:23pm 1326082982

Warning Fake High Quality Gold, Silver Coins and Ignots

http://www.marketoracle.co.uk/Article32516.html

http://www.ozcopper.com/fake-silver-warning/

by iconoclast | 9th Jan 12, 5:33pm 1326083637

Wolly: what's an "ignot" ? is it a high-class "willnot"

by Wolly | 9th Jan 12, 6:28pm 1326086896

An "Ignot" is what you call a person who buys a bar of copper thinking its a gold ingot.

by moa man | 9th Jan 12, 5:36pm 1326083775

Skudiv, you got that bandsaw warmed up yet?

by skudiv | 9th Jan 12, 6:06pm 1326085597

I really really don't want to aye. This is not good news.

by skudiv | 9th Jan 12, 6:28pm 1326086919

I bought direct from the mint, paid a premium for it, and I'm "not allowed to cut."

by Wolly | 9th Jan 12, 6:34pm 1326087260

Of course you're not allowed to cut....but can you prove it's real?...so many of the fakes are Aussie coins...wow.

by DGCanuck | 9th Jan 12, 6:46pm 1326087986

I'm not buying any till I find out how to prove it's real, without cutting.

by DGCanuck | 9th Jan 12, 7:03pm 1326088993

A couple of the comments on that video may be worth paying attention to. The weight was high and there was this

"You could probably test these with a high end multimeter so as not to damage the bar. Silver has the greatest conductivity of any metal."

by DGCanuck | 9th Jan 12, 7:03pm 1326089002

A couple of the comments on that video may be worth paying attention to. The weight was high and there was this

"You could probably test these with a high end multimeter so as not to damage the bar. Silver has the greatest conductivity of any metal."

by skudiv | 9th Jan 12, 7:20pm 1326090000

Or you can do the ring test, sounds beautiful. Place one on your fingertip, then hit it with another one, it makes a kinda bell-like ringing noise, that goes on for a bit, totally different to fiat coins.

Buy from a reputable dealer, these fakes are showing up on trademe/ebay type online sites.

by Wolly | 9th Jan 12, 7:35pm 1326090956

You are talking about silver right skudiv....gold will clunk not ring....wonder how many the Chinese mint turned out!

by skudiv | 10th Jan 12, 4:12am 1326121966

Yeh well you don't wont to dent gold. I don't have enough to be overly concerned though, as long as I think it's real, it is real. Perceptions shape reality and all that. If I ever need to sell, I will find out then, until that moment arrives I can ignore reality, just like so many people today.

I'll stick to silver, nearly at 5%, I don't wont more then that, I want cashflow assets. Things that make money every year.

by DGCanuck | 10th Jan 12, 6:42pm 1326174164

I'm trying to picture what a return to the gold standard would be like. What the steps would be to get from here to there.

by skudiv | 10th Jan 12, 7:00pm 1326175238

It can't happen. Say the price is low enough, those with cash will swap for gold, the treasury runs out of gold, aka a good old fashioned bank run. If the price is too high, people will swap their gold for money, causing inflation. It worked while people trusted it, and no-one wanted to break it. Then a French Lord, went and converted all his USD into gold, which was the tipping point for the gold standard, gold reserves were getting low, and the US was effectively insolvent.

Freegold is more likely, IMO. Where physical disappears from the open market, and gold becomes priceless. It could then be used to settle debts, and the value would be determined by the size of the debts and the amount of gold held by the debtor. It's just a theory, but more likely then a gold standard IMO.

by Wolly | 9th Jan 12, 7:43pm 1326091428

Let's get back to telling lies...it's so much fun.

Letter from America!

Dear Mish

"On today's labor report: Note how the labor force has flat lined for four years even though population growth has averaged 1.5 million for the past 55 years. From 1993 to 2007 population growth was 1.7 million per year!

Thus, the labor force should not suddenly turn flat since retirements do not even come close to explaining the chart. Yet, suddenly the work force has just been frozen in time although the population continues on the same upward trend.

The work force is literally one million smaller than during Bush's last year in office. This is statistically impossible, at least judging from historic trends.

We also are still 5.6 million people below the employment number of the peak year in 2007. So, practically speaking we have approximately 11.6 million more people unemployed than in 2007.

If we add the additional 6 million that should be counted as available for the labor force, the unemployment number at the U-3 level surges past 11% as you have said numerous times."

http://globaleconomicanalysis.blogspot.com/2012/01/employment-trends-since-1955.html

It is, is it not wonderful how large the US govt lies have become...How can the pollies and bureaucrats get around with such long noses!

by skudiv | 10th Jan 12, 8:15am 1326136509

These lies would be worthless without without complicit support from the media, every MSM site I looked at headlined the "blockbuster print." Knowlege is money, no wonder so many live week to week, feeding on slops fed out by the MSM.

by Wolly | 10th Jan 12, 5:20am 1326126023

Here's some more Mish on the lying!

"Fundamental Case for Structurally High Unemployment

•At the height of the internet bubble with a nonsensical Y2K scare on top of that, the economy managed to gain 264,000 jobs a month.

•At the height of the housing bubble in 2005, the economy added 208,000 jobs a month.

•At the height of the commercial real estate bubble with massive store expansion, the economy added somewhere between 91,000 and 173,000 jobs per month depending on where you mark the peak.

Neither the housing boom, nor the commercial real estate boom is coming back. Nor is there going to be another internet revolution.

Moreover, debt levels are high and millions are trapped in their homes, unable to move. Boomers in retirement or headed for retirement have insufficient savings so one cannot expect a spending boom of any kind. Instead, one can expect boomers to draw down on their savings (assuming that have any savings).

In conclusion, the only way the unemployment rate can substantially decline from here is if millions more drop out of the labor force, thereby creating an even bigger "gap" between reality and the BLS's alleged unemployment rate.

Mike "Mish" Shedlock

http://globaleconomicanalysis.blogspot.com