US and European stocks rally; Strong Italian and French bond auctions as euro fears easing; Aussie rate cut seen after weak jobs figures
Here's my 90 seconds at 9 am summary of overnight news in association with Bank of New Zealand, including news that US and European stocks rallied overnight as confidence grew about US economic growth and there were fresh signs of an easing in the European sovereign debt crisis.
However, unusually for when global stocks rally, the New Zealand dollar didn't rise overnight. This is because weak local inflation figures yesterday suggested our official cash rate will stay on hold at record low levels for longer and signs the Reserve Bank of Australia is likely to cut interest rates next month after very weak employment figures.
US stocks were up around 0.5% in late trade after Bank of America posted a profit and jobless claims fell to a four year low, suggesting the US economy is beginning a tentative recovery. See more here from Bloomberg.
European stocks rose 1-2% after Italian and Spanish bond auctions were successful as fears about the European crisis continued to ease. See more here at Reuters.
The European Central Bank lent almost €500 billion euros to European banks at around 1% just before Christmas against often poor collateral.. Some of those banks are reinvesting that money in European government bonds at higher interest rates, effectively making a nice 'carry trade' profit on the way through that is bolstering their balance sheets.
Also boosting global stock market sentiment, Bloomberg reported that Chinese authorities have eased lending rules for big Chinese banks, allowing them to increase lending to big companies by 5% and reducing their risk weightings for lending to small businesses, helping them boost lending. See more here at Bloomberg.
Elsewhere, Brazil cut its key interest rate for the fourth time in 8 months, slicing another 0.5% off its cash rate to 10.5%.
Also, Australia reported almost 30,000 jobs were lost in December, meaning our nearest neighbour saw a net 100 jobs lost in calendar 2011, which was the worst year for job creation in 20 years. Almost all economists now expect the Reserve Bank of Australia to cut its official cash rate again next month. See more here at Bloomberg.
Meanwhile, the New Zealand dollar remained surprisingly weak overnight after New Zealand's Consumer Price Index fell unexpectedly in the December quarter, cementing in expectations the Reserve Bank is likely to hold its official cash rate right through much of this year, possibly into 2013.
See more here on the inflation figures from Alex Tarrant.
No chart with that title exists.
31 Comments
Some more on the strange goings on in the oil Industry
>>>>>>
It`s not just in the financial world that is completely out of whack…
Yesterday Hovensa announced they would shut their refinery at St.Croix because they had lost $1.3 billion over the last three years. St.Croix is one of the most modern refineries in the world – upgraded to refine heavy Venezuelan crude into gasoline for the US with a capacity of 500k bbl/day (Hovensa is a Hess/PDVSA joint venture).
Sunoco have recently mothballed Philly and Marcus Hook (335k and 178k bpd), Conoco has mothballed Trainer (185 bpd).
In Europe Petroplus closed Petit Couronne and Cressier (161 and 680 bpd, Repsol closed Petronor (240 bpd).
So in the last few months the US/Europe has lost nearly 1.7 million bpd of refining capacity because the refineries can`t make money.
Yet it was announced on Monday that petrol in France had reached the highest price ever (when crude was $147 the Euro/$ was 1.60) and I have heard (3rd or 4th hand so hard to verify) that in Sicily people have been reduced to counting coins in their pockets to pay for 2.5 or 3 litres of petrol at a time (no minimum 5litres there anymore….).
Some thing is not right here ……
http://oilgeopolitics.net/Financial_Tsunami/Oil_Speculation/oil_specula…
>>>>
its going to get worse, if oil prices drop then the ethanol industry in the States will be uncompetitive now it has lost a lot of subsidy, then expect the wheat price to tank, which its going to do anyway due to over production.
>>>
World wheat stocks 'to hit record' in 2012-13
http://www.agrimoney.com/news/world-wheat-stocks-to-hit-record-in-2012-…
Strategie Grains backs record wheat stocks number
A second analyst in two days has forecast world wheat stocks hitting a record high next season, boosted by stronger harvests in most of the major producing countries.
Alternative energies could get whacked if the fossil fuels ( particularly oil & natural gas ) slip back in price .... particularly so , as they are reliant on government subsidies for survival . Gummy says to investors to tread warily , eyes wide open , in the alternative energy sector .
...... the heavily subsidised bio-fuels are highly vulnerable to the whim of politicians ......
...... and if the price of sugar ( Brazil ) or corn ( USA ) should rise because of demand , people have a more pressing need to eat these commodities than to put them into their SUV's petrol tanks , then profit margins for bio-fuel manufacturers will get crushed ...
My money is on falling demand.
On ethanol
>>>>
(Reuters) - The Senate voted overwhelmingly on Thursday to eliminate billions of dollars in support for the U.S. ethanol industry, sending a strong message that the era of big taxpayer support for biofuels is ending.
http://www.reuters.com/article/2011/06/16/us-usa-senate-ethanol-idUSTRE…
The feedlot industry could increase its demand, last year up to %30 of Canada's wheat went as feed. I think that we need to be carefull like Gummy said all is not what it seems. When I was in California in December there were a huge number of cattle trucks on the road, shipping steers out of dry Texas. The cattle were not all killed Oregon and California had one of the best growinf seasons on Record, the drought effect won't be as big a deal as the press are making it out to be.
When I think of the Cattle market the name Hillary Clinton comes to mind
http://www.commodex.com/Hot_Story/Hillary.htm
I believe she has gone on to make some 20 mill on the back of cattle futures.
AndrewJ, any insight on this Hawkes Bay receivership? - http://www.interest.co.nz/rural-news/57472/receivership-sister-companie…-
Its a problem when you make sheep farms into dairy farms and then expect dairy returns and dairy land prices. BNZ is going to get burnt they just dont want the contagin into all the other farms with similar land and incomes, then they get forced to value down these other properties. It pays to remember that ones deposit is anothers promise to pay. Personaly want my deposits back, so lets keep our heads in the sand.
Ethanol question
The survey added that farmers faced rises in input costs averaging 7.2% this year, well ahead of inflation, although Creighton failed to expand on the forecast.
And it revealed that more than 90% of bankers believe the removal at the end of last month of the tax credit for blenders of ethanol into forecourt fuel will have only modest impact on the agricultural economy, or none at all.
Data on Thursday showed US ethanol production falling for a second straight week last week, by 3,000 barrels a day, although, at 941,000 barrels a day, output remained historically high.
US ethanol stocks rose 4.1% to 19.54m barrels, the highest since June.
http://www.agrimoney.com/news/warning-over-us-land-bubble-as-price-grow…
US stocks up 0.5% in late trade after BoA posted a profit and jobless claims fell to a four year low.
Careful Bernie, thats the trouble with blindly parroting what someone else says without checking.
US: Headlines. NJC 50,000 better than expected. Yet NY yawns. It's a capacity problem. US unemployment offices process approx 80,000 claims per day, (400,000 per week, every week) With Martin Luther King holiday closed, claims should have fallen 80,000, but only fell 50,000. Not so good.
Ron Paul in 2002 – next all others, most of them stupid and corrupt republican candidates.
http://www.youtube.com/watch?v=tLX_6rgvbEU&feature=player_embedded
Ross Blade in the Business Spectator ( 17/1/12 ) poses the question , " Will large EV's cook the planet " ...... he's not a fan of large electric Holden Commodes , it seems ......
.
....... but he does bring us back to the debate on thorium , as a safer material for nuclear power plants ........
Been on a A380 lately ? they arent all they are cracked up to be going by this ;
Airbus says it has found new cracks on metal brackets inside the wings of two A380 super-jumbos.
It follows inspections prompted by engine problems on a Qantas A380 in 2010 and the grounding of the super-jumbo fleet.
A different kind of crack on the same part forced the emergency landing of a Singapore Airlines A380
goNZ - worldwide massive financial restrictions have to be made by government/ companies in order to reduce costs. The management are certainly not cutting their salaries, but department budgets. These scenario lead into: Industrial accidents, human and environmental catastrophes.
Worldwide national debt levels are now so high, that infrastructure maintenance/ services are at risk. In some cases this will lead into frequently and massive failures of entire technological systems. The consequences will just add to the cycle of more costs and more debt, broken societies and more damage to environment, water, air and soil - our planet.
Portugal to need "debt haircut" as economy tips into Grecian downward spiral Portugal's borrowing costs have jumped to record highs and are tracking the moves seen in the culminating phase of Greece's debt crisis, dashing hopes that the country will be able to stave off contagion by embracing drastic austerity.
http://www.telegraph.co.uk/finance/financialcrisis/9026144/Portugal-to-…
Headlines scream about equity markets going up....but if you look for the truth, it's out there!
"The International Monetary Fund has slashed its global growth forecast for this year and exhorted the European Central Bank to boost liquidity to stave off a deeper eurozone crisis"
See what has happened?....the IMF blundered into exposing the gravity of the crisis without looking to see if other players were rorting the markets with buy signals...
We have had this yo yo madness now for three years...and no matter how great the equity burst of enthusiam is said to be....it all falls over....because the piigs EU and world debt farce continues to grow larger.
In this case Gummy I think they let the cat out of the bag instead of the BS....somebody stuffed up...the tune being played was to be "recovery in C minor"....oops
I remain utterly stunned that so many could be so stupid as to think the piigs EU debt/bank/fiasco FU has become recovery in just 24 hours of market manipulation...but there you are....most people are stupid.
"ANZ chief economist Cameron Bagrie said the result indicated "there's not a lot of demand pressure out there ... people are having to fight aggressively to move goods".
The Reserve Bank could put up its feet, he said. "To think interest rates are going up any time soon is just ridiculous. They are not going anywhere."
http://www.stuff.co.nz/the-press/business/6289741/Inflation-low-but-so-is-the-growth-rate
Until the bank collapse begins over the Greek default/ haircut/bailout/farce and cascades through the system in just 24 hours...who will pay the piper in the end...more to the point what will credit cost when the dust settles on trillions of dollars lost in the game of musical chairs.
In Topic: Uber-Bearish Predictions That Nobody Hopes Come True
Yesterday, 03:46 PM
If the religious belief of the population requires a higher stock market in order to sustain the belief...then the market has to go higher.The employees of an enterprise do not work hard to sustain it if it looks like it's not worth it.
Most of the so called productive workers in a consumer based system...do very little but recieve massive amounts of compensation...Green arrows make the slavery seem like it's going to pay off in the end...that it's worth it.
They can imagine the bright glorious future with very little social engineering and are happy...and spend significant amounts of the incomes they recieve...and that sustains the delusion.
The glorious march to damnation with glee is sustained because all the poor unfountunate ignorant souls on it believe they are on the path to salvation...it's not until they reach the logical conclusion when they find out that the reasonable assumption they embraced and fell in love with and have followed all their lives...was wrong.
So then it becomes paramount to postpone arrival at the logical conclusion of the equation for as long as possible...the longer you postpone the arrival the more paramount it becomes...Until that is the sole purpose of existance.
Becaue once you can no longer postpone the shattering of the delusion that all have become hopelessly dependant upon to derive their happiness from...they become depressed...
It's why it's called a depression.
You don't have to hope a depression happens...it's inevitable.
so then i guess you all hope you don't live to see it...
so then you want to die just before mass realization by the population.
you basically want to sell your inflated assets at the hight of teh delusion to greater fools.
So then you need to inflate the system to the point that the bag holders can afford to buy the inflated assets you are attempting to dump on them...and they must desire them really bad as well.
They basically have to be killing themselves trying to obtain them...Imagine trying to sell massive amounts of toys without a yearly mania to sell them into...
Like dangling food just out of the reach of a starving for salvation person.
You all crack me up.
How are you ever going to escape the inevitable by hoping it never shows up?
The Universe is perfectly fair, everyone and everything gets what they and it deserve, and there is no hope.
There's always hope ...
ain’t no reason to worry-bout nothin’. When Benron Bernocchio is in charge, you can just print more cash. No problems.
So what’s happening today? Let’s list them…
France downgraded.
Hopium will save everything.
Spain downgraded.
JPM missed earnings.
No worries, Hopium will save everything.
Hopium will save everything.
The USSA is above its debt ceiling again.
No worries, Hopium will save everything.
Italy downgraded.
Hopium will save everything.
The EFSF slush fund was downgraded.
Hopium will save everything.
Shitigroup missed earnings.
No worries, Hopium will save everything.
Wednesday morning the IMF says the world economy sucks so badly that it needs $1 TRILLION in new cash.
No Worries says the market…Hopium will save everything.
Chinese GDP was good, but was the worst in 2.5 years.
No Worries says the market…It is so bad it’s good: the Chinese government must print new cash for the banksters so no problems.
GERMANY WAS DOWNGRADED WEDNESDAY!
No worries… Hopium will save everything.
Yes folks, even Germany was DOWNGRADED today yet the market says – “Who cares! We gots Benron Bernoccio watchin our back.”
Courtesy Larry Levin www.tradingadvantage.com
20 January 2012
MEDIA RELEASE
Serious Fraud Office prosecution/SCF
Mr Graeme Brown has taken step today to have the order prohibiting publication of his name lifted. The Court has granted this application.
Speculation and rumour has been rife in Timaru and elsewhere about the 5 defendants and the charges they face.
Mr Brown was a former CFO for South Canterbury Finance, a position he held for about 3½ years before resigning in January 2010.
He faces one allegation of false accounting, which he denies and he will be strongly defending the charge.
There will be no further comment at this stage.
I am all laughed out...you just don't believe this sort of idiocy can take place...
"Underfire Christchurch City Council has today admitted recent criticism over its performance is "justified" and has ordered an $80,000 review of its communication with the public."
http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10780038
See....the problem is with the quality of the spin and the colour of the BS...$80,000 should fix it.
They don't have a big enough PR budget, heck even our regional council have a PR team ,costs 800k a year. A friend who is a councilor told me that once they get hold of the minutes and do there stuff he cannot tell by reading the press release which meeting they are talking about and often wonders if he was even at the meeting.
Does the Strait of Hormuz turn into a show of military power in the next few months ?
..and when it does, under an increase oil prices, what are the economic consequences for New Zealand ?
"Government officials are considering whether to investigate the legality of Christchurch City Council boss Tony Marryatt's controversial $68,000 pay rise.
Michael Gousmett, of Rangiora, wrote to Local Government Minister Nick Smith on December 21 requesting an inquiry into the salary increase under the Local Government Act because of the "intense public interest in these difficult times".
He asked that the inquiry cover the "circumstances leading to this decision" by the city council and whether councillors had acted beyond their authority over its review of Marryatt's performance and subsequent salary rise from $470,400 to $538,529, backdated to July 1 last year.
Smith's private secretary wrote to Gousmett on January 10, saying "Minister Smith has asked his officials to look into the matters you have raised".
http://www.stuff.co.nz/national/politics/6292680/Marryatts-pay-faces-new-scrutiny
Don't read this as anything other than a load of humbug..."are considering" is Sir Humphrey speak for 'doing nothing about it'.
Guess what's going up?
"While the rent increases will be painful for tenants they will be good news for landlords, who are currently benefiting from a winning combination of rising rents, low mortgage interest rates and low vacancy rates". stuff .co
Oh apart from rents........go on you know the answer.......yes it's the total govt landlord subsidy payout of course....heading for $2billion no doubt....fabulous stupidity and farce...
Dumbo govt using borrowed money to pump the property bubbles and keep the parasite rolling in the money made on selling created credit...
This is called porking the market using taxpayer future liability(debt) for the certain benefit of those who will of course vote for more of the same....and you thought only Helen Clark was up to this sort of rorting scam aimed at buying power.
And meanwhile Bollard is porking it as well with every effort possible to make that created credit cheaper for longer...
Why are the vacancy rates low?........because the low income peasants cannot afford to save and cannot afford the bloated property prices ....bloated because the landlords are being encouraged to buy more renters.....to harvest the subsidy.
Does any of this enter that space between your ears Bill English?
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.