Here's my summary of the key news overnight in 90 seconds at 9 am, including signs financial markets are gearing up for the US Federal Reserve to announce another easing of monetary policy later this week.
The Dow closed up 0.8% at a one month high and European stocks rose for a third day on hopes the Greek crisis may be calming down and that Europe will have to come to the aid of Spain, which is groaning under the weight of heavy debts and high bond yields.
See more from Bloomberg here on the rise in US stocks and the rise in European stocks.
The US Federal Reserve's Open Markets Committee, which sets monetary policy, is set to release its decision from its two day meeting at 6 am Thursday New Zealand time. Speculation is rife the Fed will announce either a third round of Quantitative Easing to buy government bonds or a new round of 'Operation Twist', where it sells short term bonds to buy long term bonds. Both moves are designed to lower long term interest rates and encourage more borrowing and economic activity.
Elsewhere, European officials floated the prospect of an easing of the terms of Greece's current second bailout and austerity package. This came as the centre-right pro-bailout coalition of parties moved to form a government in Greece. However, German Chancellor Angela Merkel said she remained opposed to any easing of the terms of the package.
Spain remains in a world of pain as it auctioned 12 month bills and 18 month bills at yields more than 200 basis points higher than they were a month ago. The main buyers were Spanish banks who are drawing down on 3 year loans from the European Central Bank and lending to their own government. See more here at Reuters.
All this hope for monetary stimulus on stock markets boosted appetites for riskier assets such as the New Zealand dollar, which rose to 79.8 USc in morning trade.
Also, Fonterra's GlobalDairyTrade auction platform announced milk powder prices fell 0.5% in its latest fortnightly auction. The previous auction saw prices bounce a surprising 12.5%, but they remain down more than a third from a year ago.
Meanwhile, Canada looks set to join Mexico in joining the discussions about being part of the Trans Pacific Partnership trade agreement, which would include Australia and New Zealand. However, Canada was quick to say its protected dairy industry would be exempted from any such trade deal.
No chart with that title exists.
45 Comments
Ive arrived in North California, there is a big fire down the road so lunch has been interrupted by helicopters water bombers and the like, its 38c so fire is a risk. We dont have an evacuation plan yet, thinking about it.
The wine is cheap $3 for a half decent Shiraz, Grants Whiskey is $12 a liter, the 12yr single malts start at $28. Electricity, water, rates, rubish combined is $180 a month, Nissan maxima takes $60 to fill from empty. Just got a Mac book pro 13" for my daughter, $899 Us. We are in the land of the consumer, not much has changed from my last trip, great place to live just keep your job. Housing market still weak, plenty of houses around here, which is a nice area for $120-140k. Lake is great, going to head up after lunch.
Hope all you lot are Ok. Aj,
and thanks for keeping the $ so high for me,much appreciated.
we need a Five Star movement
http://globaleconomicanalysis.blogspot.com/2012/06/six-reasons-why-ital…
"All this hope for monetary stimulus on stock markets boosted appetites for riskier assets such as the New Zealand dollar, which rose to 79.8 USc in morning trade."
Is it just the 'risk-on' trade or might the $NZ strength also be explained by the expectation of QE and a weaker $US?
As a follow up to the Fairfax story , which Scoop Reporter Gummster brought to you several days ago ( unpaywalled ) ......
.... Gina Reinhart has requested 3 seats on the Fairfax board of directors ( she has piled on the kilos , hasn't she ) ..... but as she refused to sign the form of editorial independence , has been refused a single seat ... ... she currently owns nearly 19 % of the company's common stock ...
The share price of FXJ has collapsed back to 59.5 cents Oz , where it was prior to Monday's notice of restructuring .... the unions are fighting a battle on two fronts , one with Reinhart & her dream of manipulating editorial content , and one with the company for planning to stop the business going completely bankrupt .......
..... at a market cap. of several $A billion , Gina Reinhart could ( if she wanted to ) buy the entire firm , and then do whatever she wanted ...
One Roger Corbett , still prominent on the board , slammed a report handed to the board in the mid 1990's , which suggested that Fairfax needed to embrace the internet , and couple an online news and advertising site with the daily newsprint papers ...... one hopes that the fair Gina sits upon his seat ..... whilst he's still in it !
Kermit ...... that missive from PDK is why I'd never bother to set up a web-site : Doom sells ! ....... folks don't want realistic pragmatism , they want hickeysterical gloomsterisationalysing .... as my friend above , amply demonstrates again , and again ...... and a-fecking-gain....
But good on you Kermie : May the Muppets rule forever ( actually , looking at the NZ Labour Party & the Jolly Kid Nats. ... I reckon that little wish has come true already )
Actually no, the advertisers like to see comments all is well and its time to buy....buy.....buy....invest....invest.....invest......us doomsters say cash.....cash....cash.....
Anyway how is your blog going? anyone besides your kids visited? shove up a paywall and doc their pocket money!!!!
regards
Okay , so the NZ$ is at a 2 month high againt the US$ just on the rumour of more QE .
Watch what happens if the QE actually goes ahead .The strong NZ Dollar is going to make our exports more uncompetitive and will further gut any remanants of any manufacturing here in NZ .
FONTERRA COULD BE AFFECTED ON THE DOMESTIC MARKET
For example, we are not far from the point where NZ Dairy products will be so expensive on the domestic market , someone will be able to import IRISH Butter and Greek Yoghurt , ship it right around the planet , and still give Fonterra a good run for their money.
Fonterra has often stated it does want the domestic market , so no worries there then.
Our inaction in the currency wars is going to come back to haunt our little economy.
Our inaction in the currency wars is going to come back to haunt our little economy.
The NZD/USD rate is not called a currency pair out of courtesy to whom knows who?
But the guy on the USD side has the bazooka - we are the miniscule pop gun derivative.
Actions to degrade the currency by central bank dilution will blow interest rates through the roof - game over for the banks and their serfs masquerading as clients. - next IMF inside? - and really expensive butter.
Hmmmm dunno about that Mist42nz.....you'd think on that basis 250k ought to show as an observable spike...........nope.
What you mean your dabblins anyhoo...?....your not paying the pairs are you..? keep some asbestos gloves handy in the shorts draw and some salve in the longs.
Good luck stay well.!
Mist: can you de-mystify your comment?. What market are you trading? The cash market? CFD's? The NZD.USD book is currently plenty liquid with $35 mil both sides over 5 levels of depth. Plenty for a 10k minnow. (a minnow anything under $250k) You do realise minnows get exposed, looked at, tested, teased, then stranded and run over. What do you mean by timing? Are you a congregant of the charismatic church of the squiggly line?
The NZD.USD is news sensitive. Examine what happened today when the Current Account was released. Watch what happens tomorrow when the GDP is announced. Watch what happens tomorrow morning at 6:00 am when the FED FOMC makes it's announcement. Then there are the news events from AU and China. That's when you get the spikes. If you are in the market at those times you are guessing.
That could well be the case when outright capital is involved, but in this debt fueled system that banks and government are pretty much underwriting landlords to ensure they are the price maker. But I can see that contrary to the views of property bulls, the situation could reverse quite soon.
Unbelivable as it is I hear that Tony Ryall says that NZ buyers of ex-SOE shares will not sell them into overseas ownership and quotes that Port of Tauranga shares are being bought back into NZ ownership.
Has he not heard of the "free market"?
If the overseas buyers see a bargain they will buy. If they have made their killing they will sell them back to NZ suckers.
This guy is a cabinet minister. Perhaps he should ask his boss how markets work
Either way being paid over $200k a year for this stuff is a bad bargain for the voters.
Glad to you see you commit heresy in public view.
The number of people receiving a salary/contract payment in this range and higher that are paid out from what is in effect government borrowing astounds me.
Equally, it is expected more should join this elite, but growing minority.
How do we pay?
ANZ had this to say in response to the latest current account balance blow out.
Either we continue on the deleveraging path voluntarily, or the adjustment is forced upon us by impatient overseas creditors.
You heard right. This is fraud, or at least theft. The taxpayer can't support that, the 'money' beig 'borrowed' doesn't even exist (it's spun debt) and the expectation is that we will get interest paid?
This is a slow-motion train-wreck that is unstoppable. Being well away from the tracks is the only valid strategy. English has to go.
.... how about we place a caveat on that $ 4 billion : We'll pass it over on the day that the countries in the Eurozone all drop the subsidies to their farmers ....... 100 % no subsidies , it's high time for their austerity , no free-loading off the European taxpayers .....
I reckon that'd be $ 4 billion well spent .......
The thing is Wolly, it wouldn't be so bad if it was enough to fix the problem (it's not of course) so 'bail them out' maybe a bit too optimistic a term to use,... that's the thing really - just throwing good money after bad... English justifies it by saying other nations are doing it and giving more (of course those nations are richer than NZ, which English leaves out that little point)....
That is correct and probably justthe start.....and not just the piigs....Im not aware there is any limit on how much the IMF can ask for? I think NZ is expected to pay a % based on our economy of the amount needed.
4 Billion injected into our economy woulkd have been decent amount....
regards
Correctamondo Ostrich.....although I don't think Fonterra are in a position to put hedging aside.
The largest price fall was seen in skim milk powder, which fell 4.8 percent across all contracts, while cheddar prices also slipped. A further slide in overall prices was limited by a rise in whole milk powder and butter milk powder.
The index has fallen around 30 percent since hitting a near four-year peak in March last year as global commodity prices have retreated.
As I said last week or two Ostrich...It'll be Twist with a twist.....injection will be selective and criteria based rather than print and pump......QE did not work over the medium to longer haul...it does not work....it will not work....I'm sure Bernake is under pressure from both camps....but at least won't be wanting to confirm the definition of "Stupid" therefore will be selective where using the policy.
Job stimulus is the only kind of stimulus that matters...short ...medium...long...term...as to whose responsibility that is ,or what kind of partnership between Govt ...Fed...Enterprise to create the right environment before adding directional stimulus .
Scoop-Reporter Gummster here : Stop the presses Ed. ........
..... Newscorp have just announced the restructuring of their Australian print media . Most notably the 19 divisions on the eastern seaboard of ausralia will be pared down to 5 ....
The sackings ( ummm , I meant to say , their need to allow staff to permanently pursue other ventures beyond the firm ) , is less than at their newspaper rival , Fairfax .....
.... of note , Kim Williams told the staff of his intentions for their firm , a full 30 minutes before the news was released to the general public .... unlike Fairfax..... ahem !
Haha...."Frontline police staff will not have their pay cut in talks due to resume this week, but are facing a pay freeze because of a tight policing budget" herald....
Fools..they should have joined Treasury where the pay rises every year...and FAT salaries are the norm....and nobody ever faces a freeze on the FAT salaries.
Aint that right Mr Key!
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.