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90 seconds at 9 am: NZ$ slides 1 USc to 81.6 USc as BHP's warning about Chinese steel production sparks China hard landing fears; Fonterra auction price falls 4.5%

90 seconds at 9 am: NZ$ slides 1 USc to 81.6 USc as BHP's warning about Chinese steel production sparks China hard landing fears; Fonterra auction price falls 4.5%
21st Mar 12, 8:59am by Bernard Hickey

Here's my summary of the key news overnight in 90 seconds at 9 am, including news the New Zealand dollar fell a full US cent overnight to 81.6 USc after BHP warned it was seeing a flattening of iron ore demand in China.

This sparked a selloff in global markets and was a factor dragging US stocks down 0.4% in late trade.

See more here on BHP's warning at Sydney Morning Herald.

Investors are focused on whether China's economy, which now dominates the outlook for Australasia, will suffer a hard landing or a soft landing. There was also unconfirmed talk briefly overnight of rumours of a coup in Beijing that spread around China's microblogs. This follows the shock dismissal of high profile Chinese politician Bo Xilai last week. See more here at The Epoch Times.

Meanwhile, prices of dairy products in Fonterra's fortnightly internet auction fell 4.6% overnight for the fourth consecutive auction.

This was the biggest fortnightly fall since July last year and suggests demand from the likes of China is easing off. See more here on our site.

Meanwhile, oil prices fell 2-3% after Saudi Arabia promised to increase production. Commodity prices were down around 1% across the board overnight.

The US dollar is also strengthening as long term US interest rates have risen sharply in the last couple of weeks.

The key US 10 year Treasury bond yield is up more than 40 basis points this month.

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42 Comments

by  Andrewj  |  21st Mar 12, 9:04am 1332273875

 

Is the Ten-Year going to 3%? March 18, 2012

By Bruce Krasting

http://wallstreetexaminer.com/2012/03/18/is-the-ten-year-going-to-3/

 

it is a financial “unnatural act” when an A- rated bank can extend credit to a AA+ borrower and still make money in the process. This reverse credit arbitrage is made possible by the banks willingness to “borrow short and lend long”. The banks are doing it today because they have unlimited quantities of liquidity available to them through the repo markets at near zero cost. They are playing the carry trade. In the process, they are loading up their balance sheets with low yielding assets, and they are taking risks of rising rates. There is a limit to this.

As of this morning, many of those US financials that own the $1.8T of bonds are not so happy. The strong stock market, better economy and rising inflation expectations have clobbered the bonds the past few days. Some may think that the ten-year at 2.20% is a “buy”. But all I see in this chart is the “air” under the current price.

 

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by  Andrewj  |  21st Mar 12, 9:14am 1332274454

 

IMF sees $160 oil risk despite Libyan boost

 

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/91560…

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by  steven  |  21st Mar 12, 9:55am 1332276938

A scenario played out in the USA some years back looked at what would happen if 4% dropped off the market....the result was huge as oil need is in-elastic...so $160 short term price sounds easy to get to, which is about the $147 of 2008 allowing for 2% inflation.....then of course the plunge in oil demand to $35.....

rinse and repeat...

We'll get it eventually.....probably about event 3 or 4....(this one is number 2).

regards

 

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by  Andrewj  |  21st Mar 12, 9:38am 1332275895

Obama raises eyebrows with executive order revising authority to nationalize resources for defense




http://www.foxnews.com/politics/2012/03/19/obama-signs-executive-order-…
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by  scarfie  |  21st Mar 12, 9:48am 1332276512

As I am working my way through "The Guns of August", that is most appropriate. 

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by  Andrewj  |  21st Mar 12, 9:59am 1332277148

scarfie, when you finish that hunt around for a copy of ' Diary of a man in despair, by Reck-Malleczewen'.

 
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by  Wolly  |  21st Mar 12, 9:58am 1332277081

No word yet from English on the suggestion he chop Treasury in half and slash the fat salaries...to raise funds to invest in teaching.

"Mr Makhlouf said it was not Treasury's position that class size did not matter. "But we are in a world where governments, like households, have to make trade-offs ..." herald

Treasury can start the ball rolling...right Mr Makhlouf...by getting rid of the dead wood from the top down and setting an example with salaries which are bloated to how many times that of an average teacher's pay.....

 

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by  Colin Riden  |  21st Mar 12, 10:25am 1332278725

Somewhat relevant especially if you consider the damage being done. William K. Black:

http://www.huffingtonpost.com/william-k-black/jobs-act_b_1366565.html?r…

 

Our system worked brilliantly. America prospered. American businesses and investors prospered. Unfortunately, economists decided to destroy what worked and to replace it with a fraud-friendly, deregulated world. Alan Greenspan was only the most prominent high priest of the following dogma: "a rule against fraud is not an essential or ... an important ingredient of securities markets" (Easterbrook & Fischel 1991). This faith-based economics had no basis in reality, but it led to aggressive anti-regulatory leaders whose policies were so criminogenic that they led to recurrent and ever-larger serious financial crises.

 

George Akerlof, Nobel Laureate in Economics (2001), and Paul Romer wrote the definitive economics article on financial fraud in 1993 (Looting: the Economic Underworld of Bankruptcy for Profit). They ended it with the following to emphasize a profound policy message.

 

"Neither the public nor economists foresaw that S&L deregulation was bound to produce looting. Therefore, they could not imagine how serious it would be. Thus the regulators in the field who understood what was happening from the beginning found lukewarm support, at best, for their cause. Now we know better. If we learn from experience, history need not repeat itself" (p. 60).

 

But economists, as a group, proved that they did not "know better" and that their problem was not that they were "unaware of the concept" of looting "control frauds" (frauds led by the leaders of seemingly legitimate entities). Economists, overwhelmingly, have ignored a Nobel Laureate in economics, white-collar criminologists and experts on public administration and regulation. They have compounded their mistakes and they have dominated financial policy in the U.S. and Europe -- the epicenters of the crises.

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by  steven  |  21st Mar 12, 10:46am 1332279984

I find W K Black a fasinatiing watch/read....

regards

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by  Les Rudd  |  21st Mar 12, 10:57am 1332280666

Yes, off with their heads. Some of them have caused as much misery, if not more, than various dictators. Plus watch, 'The Inside Job', on YouTube now I think. 

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by  andyh  |  21st Mar 12, 10:31am 1332279101

Yum yum.

Highest ever US petrol prices for a March month:

http://abcnews.go.com/blogs/business/2012/03/highest-gas-price-recorded…

 

Peakoil marches on.

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by  steven  |  21st Mar 12, 10:39am 1332279551

Gee the absolute rubbish they talk, Saudi can up its output to counter the loss of Iran....Iran is 4mbpd, Saudi getting to 12+ would be unprecidented. Now if I was getting $120US a barrel I'd be uping my output a bit to make money....

regards

 

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by  Andrewj  |  21st Mar 12, 10:48am 1332280133

 

In a first, gas and other fuels are top U.S. export

http://www.usatoday.com/money/industries/energy/story/2011-12-31/united…

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by  Christov  |  21st Mar 12, 11:03am 1332280980

Now  I think you may be missing the point here Steven..

 The U.S. and it's underwriters (shalom) do not want to allow a hostile religious zealot ( Ahaventhadmedinnerdad) to fully develop a Nuclear weapon within reasonable proximity to the underwriters and a willingsness by his own admission to use said weapon .

"Israel should be wiped from the face of the Earth"

 So the bulls$%t will continue,just as the provocation will continue untill there is "just"( in the loosest possible meaning) cause to strike a pre-emptive blow in the name of Mickey Mouse and his underwriters.

 Now the Saudi's are becoming understandably nervous at the thought of loud bangs in their back yard and are doing what they can to reassure the Underwriters Champion that they will take up the slack where oil is the requirement.

Although very gracious of the Saudi's this becomes rather awkward for the Democracy propoganda machine...because "Weapons of mass Destruction" has already been used as a major campaign slogan and was found wanting.

 So where are we...?  is it to be about God.....is it to be about oppressed Iranians.... or is it going to be about something a little closer to the truth.

I'm scared of that...I'm going to kill it before it can harm me.

 Now if we can find a nice dress for that as a slogan ..it just might work.

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by  steven  |  21st Mar 12, 11:25am 1332282316

Hmm no I see this.....however consider if you were a small nation and threatened by the biggest bully ever and his mates who needed your oil and gas and were not prepared to negoitiate at all, but could develop a playing field leveler ie nukes, would you not do so to guarantee your own safety? Could the threat to Israel be nothing more than a signal to the USA....invade us and we attack the US and friends with nukes?

MAD comes to mind.

This is a dangerous "game" IMHO....the US is playing with getting itself burned.....either from a direct counterstrike, or economic collapse, it cant survive $160US a barrel....let alone anything more IMHO.

NB I see nothing to indicate that Saudi can take up that much slack....and for a sustained period.

"Oppressed", yeah right....lots of oppressed ppl throughout the world....the ones that get "help" though are the ones with oil. 

From what I see the Iranian military is good enough to shutoff 17mbpd...in about 2mins.....now how long can they keep that up? that is a big Q......in say a week they would seem to have enough surface to surface and anti-ship missiles to cripple the land based oil delivery systems and ships and rigs. Sink a few supertankers and there would be no owner willing to send their ships in there...no insurance...in a war zone or for an act of war....

Obama's latest reg is interesting....so lets say he takes over the supertankers in such an emergency and military? crews sail them in.....OK that works, but for the rest of us?

"scared" yes me too.....if there is a war/battle in that straight, bye bye "lifestyle"...

regards

 

 

 

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by  Christov  |  21st Mar 12, 11:49am 1332283765

small nation and threatened by the biggest bully ever 

You illustrate my point Steven...I am many times the size of a white tail spider......yet I kill in aprehension of it's potential..rather than any real or present danger. 

 Could the threat to Israel be nothing more than a signal to the USA....invade us and we attack the US and friends with nukes?

No..! freinds underwriters yes..! U.S. no. 

"Oppressed", yeah right....lots of oppressed ppl throughout the world....the ones that get "help" though are the ones with oil. 

I was being tongue in cheek there Steven or even sarcastic if you like

Obama's latest reg is interesting....so lets say he takes over the supertankers in such an emergency and military? crews sail them in.....OK that works, but for the rest of us?

 

 Steven this is not just about oil n gas..While your hypothesizing there Steven, let's not rule out Obama wanting a supertanker or two sunk...for the old "just gimme a reason" Steven this is not just about oil n gas or the control of future energies....for the U.S. perhaps a bonus for the dirty work.

It is about the Isralies living in what they percieve as real and present danger.....even though you may have to return to my first point  to grasp the sliding scale.

 

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by  scarfie  |  21st Mar 12, 12:22pm 1332285775

"Bye bye lifestyle" Exactly, did you think peace would last forever? For Americans also, wait until they bring back conscription, that might upset a few peoples plans. Madmen... I quite agree, what have they done to convince you they are anything but? Sometimes it pays to be dispassionate and look beyond what should happen to what will happen.

 

Think of it this way. We live in a world where the pace of change has exceeded the ability of most to keep up. Events are starting to overtake us. In the history of civilisation periods of peace have rarely been long, so in this period where everything is compressed then why should sustained peace be achievable? 

 

But I suspect you are prepared regardless of what transpires:)

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by  steven  |  21st Mar 12, 12:50pm 1332287432

prepared, not really as Im "stuck" I have no options I can see. I think of myself as a possum in the head lights, the difference between myself and the guy next door is my eyes are open and dazzled, his eyes are squeezed shut...if there is a gliimer of light for him, he squeezes tighter.  PDK on the other hand has crossed the road...

regards

 

 

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by  Christov  |  21st Mar 12, 12:57pm 1332287838

Nicely thought out scarfie........While the Iraq/Afganistan conflicts have been called Wars, it has been more on the level of high collateral skirmish.....

 For more reasons than just removing the threat to Israel...the U.S. and other interested parties may wish an opportunity to take something to a level of just sub -Apocolyptic ..and write down some of the debt from the Books which Know no Balance.

 I don't completely disagree with Steven that the U.S. has become the "Bully" ( Enforcer )but  someone or some others are giving away their lunch to ensure the status quo is kept on the playground or indeed improved in their favor.

While the U.S. are happy to be seen as the Global Sherriff...I suspect the town Council picking up the tab while directing the duties would prefer a little less of the limelight.

Whatever the case ,any escalation in the middle east will have dire consequences for all involved directly or otherwise on both human cost and financial.

 The Americans need to look home...refocus their  drive inwardly....stop playing at peacemaker to curry favor with those who truly pull the strings.......their campaign records overall don't make for good reading.....but on home turf they fare better.....and so ,one hopes, The bloated bully one day... says ...Nah don't want to...I'm off home. 

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by  steven  |  21st Mar 12, 1:24pm 1332289441

I dont think they play peace maker for an alteristic reason....I think they do it because they want the oil....without it, inwardly they would collapse....

I always think back to "The American way of life is not up for negoitiation"  so with a shrinking pie and already having 25% of it the Americans will do everything in their considerable power to stay at the same amount.....if the pie shrinks 75% and its all then going to America, so be it....from their perspective.

 

regards

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by  Christov  |  21st Mar 12, 1:36pm 1332290169

Steven in the sentence ...playing at peacemaker...playing was the operative word. 

Intent is often disguised by altruistic play-acting......from the playground to the boardrooms to Capitol Hill...nothing changes , we just get more sophistiocated at disguising it....or not as the case may be.

 

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by  powerdownkiwi  |  21st Mar 12, 6:10pm 1332306651

Christov - Empires always reach outwards, sucking in resources. When the supply-line gets too long/tenuous, they die.The USA is on the way down, China on the way up, but there aren't enough resources left for her to eclipes the dying lion. First time that's happened.

 

Rome went further and further for wood, eventually the energy gotten from the wood no longer outpaced the energy it took to cart it home. Call it Peak Wood, call it an EROEI of less than 1:1.  Same thing.

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by  Christov  |  22nd Mar 12, 10:05am 1332363910

The is no doubt in what you are saying there PDK...but the USA like Rome has become diseased with it's own gluttony ....their focus should move to the inward health of the Nation through innovation and reform rather than feeding the pigs the last of the slops in order to remain the biggest super pig on show.

China I am sure will face a similar fate ...from nimble to sloth albeit at an accelerated rate.

Though while reading quite a number of threads ...quotes from Bernake and varied massagers of the truth...you never hear or read one say  there are just too many of us to be sustainable.....

 It is the inevitable....inescapable..truth.....burn the witchsmeller...for citing ourselves as the witch.

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by  steven  |  21st Mar 12, 1:08pm 1332288515

Well now, no....pre 2006 I never considered it....Of course I dont now, but Im what? a few % of the ppl who see it ending? v the rest who dont see or dont want to see and will fight tooth and nail not for it to end...

Im not sure what conscription achieves? I mean it gives you men you have to move and feed, where does the energy come from to do that?  So what the USA can invade alberta?  ie they can walk there....cant swim the pacific and indian oceans....but lets say they get there, then what? how do they hold down the oil fields and keep them pumping and get the oil back?  What sort of economy will be there for that? I cant see it being anything like today...

"Pace of change", yep I encounter that most days .....trouble is those that cant keep up but dont know it are the ones in charge and they think they are doing just fine......

 

regards

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by  scarfie  |  21st Mar 12, 1:19pm 1332289144

the ones in charge and they think they are doing just fine...... That about sums it up.

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by  Christov  |  21st Mar 12, 10:35am 1332279316

Well said Colin......that said, your average economist is like an aspiring meterologist...untill he learns to stick his finger in the air ,....he's not even gonna get it right half the time.

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by  scarfie  |  21st Mar 12, 12:24pm 1332285864

I thought the finger in the air was a banker thing, middle finger that is.

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by  andyh  |  21st Mar 12, 10:37am 1332279437
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by  Wolly  |  21st Mar 12, 11:11am 1332281472

Guess that's the end of channel 90...it'll be all Gillard blathering garbage for the duration now. Where the aussie prices go..we follow.

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by  Kunst  |  21st Mar 12, 10:45am 1332279912

My hero today: Mr. Nick Smith frontbencher, strongly supporting other people - struggling.

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by  Christov  |  21st Mar 12, 11:04am 1332281066

good one Walter...! he's quite a guy ain't he though.

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by  Kunst  |  21st Mar 12, 11:53am 1332284003

Ohh Christov – there are so many heroic frontbenders in our parliament - almost daily.

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by  Christov  |  21st Mar 12, 12:09pm 1332284942

Well you know the politispeak around Parliment for that Walter...

 Better to have a man that'll bend over forwards for you than backwards...!

 I think Smithy's in a real spot of bother here .....don't think it's going away either.

 John will have to be swift...decisive...take action...just like Goffy did with Darren...uh no wait bad example..

 Hey while I'm on that ..whats the bloody go on the Labour offices getting me charged with threats to kill..

 I said " They needed a bomb under their ass"..... not ..." I put a bomb under their ass"

 Talk about taking liberties with a quote.

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by  Andrewj  |  21st Mar 12, 11:25am 1332282359

“There was a story out in a German newspaper this morning talking about a trillion euros, supposedly, unconfimed. of losses hidden in German Banks.”

 

http://www.golemxiv.co.uk/2012/03/a-rumour-concerning-e1-trillion-in-ge…

 

 

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by  powerdownkiwi  |  21st Mar 12, 6:01pm 1332306071

Foss mentions a quadrillion, all-up.

 

No hope we pull out of that, the 'economic recession' was just the wee saddle next to the peak. Hope you have skis, the next part is steeper and faster.

 

It's what I've been saying here since I was sure of it - there's not the underwrite for all the expectation to 'buy', and when the music stops, there wont be enough chairs. The factor we're short by, globally, is that about 99 chairs of every hundred expected, aren't there.

 

It'll be a rout. There'll be a top-down reach for the remaining chairs (this is what the selling of 'State Assets' is really all about) and a screaming from below. Mostly, there will be a screaming from a very disillusioned, articulate, pissed-off ex-middle-class.

 

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by  Andrewj  |  21st Mar 12, 11:26am 1332282417
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by  steven  |  21st Mar 12, 11:49am 1332283754

Not just Greece.....look at Ireland.......looking at Iceland and Greece, and next Portugal.....how long can a Govn stay in power when the ppl decide its vote for default?

regards

 

 

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by  Andrewj  |  21st Mar 12, 11:27am 1332282456

Wall of Supertankers Heads For US

 

http://globaleconomicanalysis.blogspot.co.nz/

 

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by  steven  |  21st Mar 12, 11:50am 1332283840

Single aim to bring down the price of oil, or give a 40 day strategic reserve?

regards...

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by  Rob of the North  |  21st Mar 12, 12:17pm 1332285432

now look here you lot..haven't you got jobs to go ot, houses to clean, banks to rob?

haven't been on here for ages and you lot are all still here perched like shags on a rock looking for the occasional sprat...i see wolly is still here so he could stand -in as a prat maybe?

g'day, chri-stove ,me ole mate....i've bought 50% of an FM station down in sunny Hawkes Bay so have moved down there and am back on-air again tormenting the natives...but mores the point...who's manipulating the gold price for their own ends, huh,huh, huh?

tight lines and good ranting one and all...most entertianing...better than going to the library really :-)

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by  Christov  |  21st Mar 12, 12:28pm 1332286128

Great to see you  abeit in print there Robo...just got back myself from a lenghty spell away...so doing the catch up thingy myself.

Great to see you involved again ...media is good ...you can use it for propoganda and music too if your that way inclined.

 Hey give up the frequency ...I'll see if I can't tune in next trip....maybe dial up as misinformed economist or something...

 Stay well Robo.......enjoy.

P.S. send me a pic of your weather girl.....she's just bound to be ...uh  well..you know.

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by  Rob of the North  |  21st Mar 12, 5:45pm 1332305103

:-) :-0

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