Bernard Hickey details the key news over the weekend in 90 seconds at 9 am in association with Bank of New Zealand, including news from late on Friday night that Standard and Poor's has downgraded the credit ratings of nine Euro zone nations. See David Chaston's Saturday article.
Standard and Poor's cut the ratings of Italy, Portugal and Spain by two notches and cut France by one notch to AA+, saying European leaders had not found solutions to its debt crisis. See more here at Bloomberg.
However, the market reaction was muted. The downgrades had been expected and previous downgrades of America (and New Zealand for that matter) have not proved the disaster that many had feared beforehand. The Dow fell 0.4% late on Friday and US markets will be closed on Monday for the Martin Luther King Jr holiday.
European stocks fell 0.3% and the Euro fell to an 18 month low. See more here at Bloomberg.
The impact of the long feared downgrades is likely to be muted. Eurozone nations buy less than 10% of New Zealand exports and the widely feared increase in bank debt funding costs has yet to reach the levels seen likely to push up mortgage rates independently of the Official Cash Rate. Also, the European Central Bank's indiscriminate lending to European banks before Christmas on generous terms of up to three years seems to eased growing tensions in credit markets, for now at least.
The rise in the New Zealand dollar to a record high of over 62 euro cents is good news for importers of European produced goods.
Meanwhile, a potentially even bigger piece of news was the collapse of talks between the Greek government and Greek creditors over the weekend. See more here at Bloomberg.
The government wants the private creditors to accept a restructure that implies a 'haircut' of more than 50%. If an agreement cannot be reached then there is a risk Greece could formally default, which may trigger its exit from the Euro and more financial market turmoil.
Elsewhere, fuel prices have risen over the last week in New Zealand as oil prices have firmed.
Nigerian oil worker strikes and continued tensions around Iranian oil supplies are keeping oil prices high.
However, there was news over the weekend that Europe may delay sanctions on Iranian oil imports by six months, which may keep a lid on oil prices. See more here at Bloomberg.
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18 Comments
Things sure have turned a corner. Or is it my perspective that has changed? ECB's refusal to print has been contradicted by its actions, going for qualitative instead of quantitative easing, if the ECB is accepting junk bonds, then who cares about S&P ratings?
The Ponzi Bonds give unlimited cheap funding to the banks and govt's, and it wont be a big deal to change the LTRO into infiniteTRO. Hedge funds will have their revenge, and get their bailout from the EZ, just like every other financial institution. They have made the choice, it's death by inflation, not deflation. Soon those shiny lumps of metal will buy a lot more stuff then they do today.
A joint "Biggest Ever" naval operation between Israel and the US has been called off for "budget reasons" maybe Obama realised that $150 oil might not be a good thing. Iran is getting more reckless by the day, as the latest escalation, involved the CIA/Mossad killing a nuclear expert.
The turmoil is far from complete, and as long as JPM continues to short the PM's market, it's a good time to buy.
The Nigerian protestors are as unfathonable as Bernard's choice of hair-dressers ....... the poor are rising up to protest against a subsidy that helped the rich !
...... the poor don't own SUV's there , they only average $US 2 per day in income .
The subsidy has been in place for years , at the behest of the Nigerian government's best friends , a small cartel of rich cronies ......
.. sometimes there is none so blind as the poor & downtrodden ...... and Bernie's hair stylist , as well ...
There is far too much oil in Nigeria – it is almost everywhere.
http://www.yourblackworld.com/2011/12/23/nigeria-hit-with-worst-oil-spi…
http://www.reuters.com/article/2011/12/23/us-shell-nigeria-leak-idUSTRE…
Despite the obvious real estate bubble re china their outlook remains upbeat, I reiterate.
Things have changed..Russia says "an attack on Tehran is an attack on moscow"...As I cant see anyone wanting radical Islam with a nuke...What are Russia and Chinas real aims?...If the West pulled out of the ME. It would be Chinas and Russias nightmare.This is going to the line.I dont like the smell of it.
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