90 seconds at 9 am

90 seconds at 9 am: NZ$ under 83 USc at near 2 week low after US stocks fall; Obama says 'will use force' against Iran to stop bomb; RBA and RBNZ told hold

5th Mar 12, 8:15am by Bernard Hickey

NZ$ under 83 USc at near 2 week low after US stocks fall; Obama says 'will use force' against Iran to stop bomb; RBA and RBNZ told hold

Here's my review of the key news over the weekend in 90 seconds at 9 am, including news the New Zealand dollar slid more than a cent late on Friday and over the weekend after US stocks fell on more concerns about the global economy.

The New Zealand dollar tends to rise and fall in tune with expectations about global economic growth, which in turn drive expectations for commodity prices and therfore commodity currencies, such as ours and the Australian dollar.

US stocks fell around 0.3% on Friday night after German retail sales fell much more than expected and Spain warned its budget deficit would rise beyond its targets and beyond its committments to its European partners, suggesting the European debt crisis may have quietened down but is far from over. See more here at Bloomberg.

Also of concern for the global economic outlook, growth in China's non-manufacturing sector fell sharply in January, Xinhua reported from the sector's Purchasing Managers Index (PMI).

However, China's big four banks increased their lending sharply in the first 2 months of 2012, suggesting the Chinese government is getting ready for fresh stimulus when it announces its budget later today at a annual Communist Party congress. See more here at Bloomberg.

Meanwhile, US President Barack Obama warned Iran he was not running a policy of containing Iran.

He said he would do whatever it took to stop Iran getting a nuclear bomb, including using force if necessary. However, he warned against 'loose' talk of war. See more here at BBC

Closer to home, the Reserve Bank of Australia is expected to hold its official rate at 4.25% tomorrow, while the Reserve Bank of New Zealand is expected to hold its Official Cash Rate at 2.5% on Thursday. See Alex Tarrant's preview here, which includes my Fixed vs Floating views in a video.

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31 Comments

by Andrewj | 5th Mar 12, 8:35am 1330889723

Just interesting

http://www.nytimes.com/2012/03/04/magazine/how-london-surpassed-wall-st…

by andyh | 5th Mar 12, 10:09am 1330895394

http://www.bloomberg.com/news/2012-02-29/global-fuel-demand-outside-ira…

''Excluding Iran from the global oil market would increase the shortfall between worldwide supply and demand sixfold, based on February production and consumption estimates, the U.S. Energy Department said.

Global fuel use averaged 3 million barrels a day more than output when Iran is excluded from the calculations and 500,000 more when Iran is included, the department’s Energy Information Administration said in a report yesterday''.

So the US EIA confirms that global oil demand is ALREADY running ahead of supply by 500,000 barrels a day (that before you take Iran out of the equation). Theres a term for when this happens isnt there? Makes you think eh?

Or maybe not.

by powerdownkiwi | 5th Mar 12, 10:38am 1330897085

Andy

http://www.guardian.co.uk/environment/2012/mar/01/global-mining-boom-landgrab-africa?newsfeed=true

It's what you get when you expand exponentially. The doubling catches the linear-thinkers unawares.

Gonna be an interesting next few years. Coal is set to re-take the top energy position, within less than 5, probably 3, years. Going forwards, that is not. Peak Coal 2027, or thereabouts. Elementary, my dear Watson.

by andyh | 5th Mar 12, 11:17am 1330899420

Well even the guru Ambrose Evans-Pritchard is starting to wake up to reality (one for your top 10 BH):

http://www.telegraph.co.uk/finance/commodities/9122311/Plateau-Oil-meet…

Selected quotes:

- What is deeply troubling is that Brent crude should have reached fresh records in sterling (£79) and euros (€94) - with a knock-on effect on US petrol prices, mostly tracking Brent - even though the International Monetary Fund has sharply downgraded its world growth forecast-

- Oil is not supposed to ratchet defiantly upwards in a downturn, which is what we have with the Euro zone facing a year of contraction in 2012, and much of the Latin bloc sliding into full depression. Japan‘s economy shrank in the fourth quarte -

- The unpleasant fact we must all face is that the relentless supply crunch - call it `Peak Oil’ if you want, or `Plateau Oil’ - was briefly disguised during the Great Recession and is already back with a vengeance before the West has fully recovered.-

Nothing to se here folks, move along now........

by steven | 5th Mar 12, 11:32am 1330900326

Worse is this one,

http://www.guardian.co.uk/environment/video/2008/jul/11/canada.oil?INTC…

The EROEI is 6 to 1, and since our world needs by your point 8 to 1 or better (Im still not convinced at 10 to 1 let alone 8 to 1) so we are losing 2 barrels equiv from somewhere else......and thats if they are being honest about that 6 to 1.....

Coal, Ive seen suggested the coal in ground "reservces" is actually optimistic, and that peak coal is probably this decade....URLs on 2027?

regards

by noponies | 5th Mar 12, 10:18am 1330895918

Rather disengenous of Obama to talk of war but to then qualify that with it not being 'loose' talk of war. I'm puzzled as to what consititutes loose talk of war?

So what if Iran develop nuclear power and or weapons. It basically just levels the playing field in the gulf, which is of course exactly not what the US wants.

by powerdownkiwi | 5th Mar 12, 10:25am 1330896333

The oxymoron of our times:

http://www.med.govt.nz/sectors-industries/environment/green-growth

Sure, it's the way to steer the bleating herd in the right direction, but oxymoron it is.

by steven | 5th Mar 12, 11:00am 1330898448

yep, what waffle.....a large pile of mostly useless recommendations....

They need to be forthright and now....

Tis simple, encourage buiding of bio-fuel plants, so tallow to bio-deisel seems to be quite workable/effective...such that we have enough of it for core services...

Electricification, buses and rail...

regards

by Kate | 5th Mar 12, 11:27am 1330900038

OMG - read the recommendations - what an utter load of bureaucratic twaddle. How embarrassing for those on the advisory panel... just another taxpayer paid advisory junket.

In summary - they are a suite of recommendations for bureaucracy to continue doing what it is doing which is SFA, protection of the status quo waste of taxpayer money - that being more 'educating', more 'informing', more 'advising'.

The only thing I can see in there that isn't something already done by our bloated bureacracy is the idea of a "biodiversity trading" regime! Didn't read the detail but I'm guessing they mean like our 'carbon trading' regime? How utterly pathetic, pure and simple tradeoff to maintain the status quo of ongoing resource extraction/exploitation.

No matter how much we'd like to - we can't "think tank away" environmental limits or bottom lines.

100% Pure Greenwash.

by powerdownkiwi | 5th Mar 12, 11:59am 1330901952

Kate - yes. Reading between the lines, we are to disembowel EECA (such a drag on progress), brainwash the greater mass into thinking mining is harmless, and commodify what is left of the commons, so it can be flogged-off (sorry, traded). They also appear to think that productivity via efficiencies is an open-ended process. That's just plain wrong: you can strive for 100% efficient, but you'll never get there, and 100% is unbetterable anyway.

Deep down, though, these folk know the game is up. Little comments like "no economic activity happens without the use of natural resources" pop up every now and then.

They have to be supported, inasmuch as it's the only way to move the mass in the right direction. They probably know that growth in economic terms, is not attainable, but that the greening of thinking is essential if we're to survive what will be the biggest mass-morph our species have ever been subject to. Remember thay have to change the thinking of the Hughey/PB types, and those folk are a long, long way behind the eight-ball. So too, are both Labour and the Nats, of course.

by steven | 5th Mar 12, 12:18pm 1330903093

Hughey and PB types are unchangable, IMHO they are too extreme, but a tiny %, the rest of us will take time to change but with no leadership in sight its not happening yet........Im not so sure these ppl see as much as you give them credit for...I think its quite possible to be right for the wrong reason......

regards

by Kate | 5th Mar 12, 12:23pm 1330903414

They have to be supported, inasmuch as it's the only way to move the mass in the right direction.

I disagree - external energy shocks are likely to hit within the next five years and we will be totally unprepared. One would think we need to focus our 'growth'/industrial efforts on having the infrastructure and expertise to re-engineer our own patterns of consumption toward local self-sufficiency. This is the preparatory policy work that isn't even being given a cursory consideration.

I'd rather we looked at what we don't have the ability to manufacture here now and in the future - rather than what we should be manufacturing for export into the future. Time we started thinking about the island nation that we are.

by Stephen Hulme | 5th Mar 12, 12:06pm 1330902368

But Kate - the overiding principle is to employ the middle classes no matter what?

Isn't that what every parent/voter demands?

So jobs are found despite Mr English's protestations to the contrary.

by powerdownkiwi | 5th Mar 12, 12:16pm 1330902981

SH - that is why some education is needed. Was, actually, we're 30-40 years too late for education. TSHTF from now on, so it needs leadership, simple explanations and guidelines. If they have to sell it as 'growth', so be it.

Here (my place) we just teach sustainability straight. When asked why, we tell that straight too. Says a lot that no Pollie is capable of telling it straight - that includes the Green pollies, who have to know better.

Ironically, the ongoing scarcity of energy will have everyone 'employed' flat out. They won't be 'paid' much, relatively, but it'll be meaningful. The diffo between surviving and not, always is.

by Kate | 5th Mar 12, 12:41pm 1330904505

Saw that article - yes, a perfect example of how absolutely ineffective this government's budget management has been. No matter how bloated the public service is - it's the waste-of-money programs and projects (such as this latest Advisory Group - which I note had to have its own "secretariat" set up within MED!!!!) which cost the big dollars.

If the government were axing programs and projects (for example some of the hundreds of quasi/quangos out there) and the people that manage all these unnecessary entities - fair enough. But, hanging onto the quangos and their associated programs/projects, but with less people to administer this 'machinery of government', is just paying lip service to the real work at deconstructing the behemoth.

Indeed I get the impression that the only surviving middle class we'll have in the near future are the Wellington-based bureaucrats.

by wtf | 5th Mar 12, 1:58pm 1330909098

You're right Kate, a good round of Quango culling wouldn't go amiss. Jobs for the mates. I'd like to see a 12-24 month morotorium on "consultants" too. And the recent suggestion here for HOD salaries to be radically cut would help. We have a very good system in NZ of Parliamentary select committees. Lobby groups and individuals can make unpaid submissions and they can be weighed up by MP's and the policy analysts all ready within the bureaucracy. Don't need to pay retired politicians and business people to compile innane reports. If they feel strongly about something they can patriotically submit their opinion for free like the rest of us.

by steven | 5th Mar 12, 11:48am 1330901322

So the ECB QE's and the banks take it and put it back inthe ECB...you odnt get inflation if the money isnt actually in ppls pockets, and it clearly isnt.

http://rt.com/programs/capital-account/spain-liquidity-banks-money/

regards

by Stephen Hulme | 5th Mar 12, 12:18pm 1330903112

Ahh Steven - one can pledge the ECB deposits at any of the recognised Futures Exchanges just the same way as punters pledge electronically registered US Government securities for the same initial+maintenance margin purposes.

So banks' trading desks spending the money into the gambling dens is not precluded.

by steven | 5th Mar 12, 12:26pm 1330903600

but it still stands, its not in ppls pockets....so they cant spend it.

regards

by skudiv | 5th Mar 12, 12:23pm 1330903417

Has any country ever used nuclear weapons against civilians? If so, they are the one to keep an eye on.

Oh yeah, thats right.

by steven | 5th Mar 12, 12:28pm 1330903715

Nuclear weapons are just bigger bombs....I mean firebombing a city is pretty lethal....just a little slower.

regards

by wtf | 5th Mar 12, 1:49pm 1330908593

You have to ask why only nuclear, biological and chemical munitions are weapons of mass destruction. Nagasaki and Hiroshima aside the 40 odd million killed during WW2 were all killed by conventional weapons. Regarding the fire bombing of Japanese and German cities, Robert McNamara's commentary in the Fog of War is very illuminating on the morality of killing civilians as a strategic tactic.

Korea was bombed completely flat by conventional weapons. Over 1 million civilians killed. US pilots had orders to kill everything in sight and leave no building standing. Entire population was driven underground to survive. How did a paranoid North Korean regime come to be again?

Vietnam/Cambodia/Laos over 3 million civilians killed mostly from B52 carpet bombing attacks.

Iraq/Afghanistan - officially they don't bother counting civilians anymore. First Gulf War 500 civilians incinerated in an air raid shelter by a single cruise missile.

Russians leveled Grozny in Chechnya pretty effectively, as well as large swathes of Afghanistan.

Seems to me neither terrorists or military need WMD

by steven | 5th Mar 12, 2:09pm 1330909798

because the USA defined them.....

regards

by kowtow | 5th Mar 12, 2:52pm 1330912333

Hiroshima/Nagasaki? And what about Nanking,December1937?

Paranoid North Koreans? (Government,not the oppressed people of an "egalitarian" Stalinist dynasty).

The answer to that is with people like Kim Il Sung,Stalin and Mao.It was the North that invaded in June 1950,not the south.

by wtf | 5th Mar 12, 3:07pm 1330913233

Nanking? Sure. Phillipines were devastated first by the US and then by Japan. Korea was a civil war cynically exploited by all the superpowers. The point is conventional weapons do a fine job as weapons of mass destruction. No nuclear, chemical or biological needed. The US is only the most hypocritical in their use. Their "conventional" warfare against civilians going back as far as the Phillipines, central America in the 1920's, Korea, Vietnam, Central America again, Iraq (including sanctions) have often amounted to genocidal crimes against humanity. The fact that the Japanese and others did the same thing doesn't mitigate or excuse them.

by kowtow | 5th Mar 12, 4:58pm 1330919901

Philipines,why let the Spanish off the hook?

by Wolly | 6th Mar 12, 5:56am 1330966573

60 seconds at 6am

"Poor migrants who speak little or no English are to be subject to stricter immigration laws under a review that will create a "two-tier" system to favour the wealthy, a leaked Cabinet paper shows.

Immigration categories are to be changed in an effort to "reduce the number of unskilled migrants who find it difficult to get jobs and are more likely to get benefit payments".

http://www.odt.co.nz/news/national/200215/wealth-filter-be-applied-potential-migrants

Finally a bit of thinking is going on in the Beehive....Labour of course will reverse this as soon as their snouts are back in the pig trough...too much of this could reduce the socialist rump to the bone.

by skudiv | 6th Mar 12, 6:31am 1330968660

And have a negative impact on the voting pool.

by Wolly | 6th Mar 12, 6:36am 1330968961

Shearer will be spitting tacks.....how to invite the whole of Somalia to come live in NZ on NZ benefits...that's our Labour goal....

by skudiv | 6th Mar 12, 6:52am 1330969952

So they can live in $400,000 homes in Auckland, and pay landlords extortionist rents, to keep the economy "whole".

by Wolly | 6th Mar 12, 6:58am 1330970322

Jeez Skudiv...you must have a copy of Labour's manifesto!...it's a fabulous future Shearer has planned for NZ....he has so many contacts in the Horn of Africa and that B....Clark will give him all the help he needs....

National need to beef up the new rules....and fast.

Now as a landlord and we know one or two don't we...an influx of Africans will mean some hefty landlord subsidy payouts each week....wonder how they will vote.....could be Shearer's secret army of support.