90 seconds at 9 am: Fed talks the money printing talk but doesn't walk the walk; Global factory output contracting; Dow falls; NZ$ solid at 80.8 USc after milk powder prices rise 3.5%

Here's my summary of the key news overnight in 90 seconds at 9 am, including news the US Federal Reserve said it was prepared to act to boost flagging growth in the world's largest economy, but held back from actually pulling the trigger.

Most economists had expected the Fed to hold off on announcing a third round of quantitative easing known as QE III until September 13, but the lack of concrete action was disconcerting for markets expecting something more definite after months of weak jobs data and signs the US economy was losing momentum. Here's the full Federal Reserve statement after the two day meeting of its Federal Open Markets Committee.

See more here at Bloomberg.

The Dow closed down 0.2% and the yield on the 10 year Treasury bond rose to 1.52% from 1.47%.

Market attention now swings to the European Central Bank's monetary policy decision later tonight, where it is expected to make some sort of announcement about buying Italian and Spanish bonds to ease stress in Euro-zone financial markets. See more here at Reuters.

The Fed's inaction came after a fresh round of factory output data showing the activity contracting or slowing in synchronised fashion around the world. The Purchasing Manager Indices (PMI) released for July are watched closely as an early indicator of economic activity, given they include detail on factory orders, export orders, investment intentions and employment intentions.

US manufacturing activity as measured by the Institute of Supply Management index unexpectedly contracted in July for the second month running. See more here at Bloomberg.

UK manufacturing shank the most in 3 years in July as export orders slumped. See more here at Bloomberg.

Chinese manufacturing was close to contracting in July as the PMI there unexpectedly fell to its weakest level in 9 months of 50.1 in July from 50.2 in June. Anything above 50 indicates expansion, while below 50 indicates contraction. See more here at Bloomberg.

Meanwhile, Euro-zone industrial output slumped for the 11th straight month, including in Germany and France, which had been the strongest parts of the Euro-zone. See more here at Reuters.

Despite the signs of a synchronised global slowdown and the Dow's slight fall, the New Zealand dollar was solid around 80.8 USc and near record highs vs the euro of 66.1 euro cents.

It was helped by good news from the fortnightly auction of milk powder on Fonterra's online auction platform Globaldairytrade. Prices rose 3.5% for the first time in two months. News of the worst drought in 50 years in America and the subseqent spike in dairy cattle feed prices there is thought to be a factor. See the Globaldairytrade results here  and BNZ's currencies report on our site here.

(Updated with more detail, video)

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The Fed have created themselves a Poisoned Chalice.

A worthwhile watch from Richard Duncan. Duncan describes the link to an explosion is credit back to the 1920's, watch Glen Beck as he appears stunned at times. A useful part is near the end where Duncan describes the four possible outcomes for the GFC.
Then a critique of Duncan's book here at the financial times for balance.

Good interview on Nat Radio at the moment. Started 10.05 ish.
Ryan doesn't really get it, but this is the closest she's got. The fellow is on to it. In spades.

Thanks for that PDK. Well he slipped in population growth as a driver. He didn't enlarge upon the fact population growth is slowing. 

Its a very good backstop as to why Govns dont mention the word depression despite taking actions that will help if not directly cause it.
He's pretty much annunciates as I see it, that very bad group of scenarios.
"He is as unequivocal as any Keynesian in saying: “Austerity means collapse.”"
He also sounds like Minski and Steve Keen the theme, too much credit and its ever expansion is the root cause...
The FT piece I think just doesnt understand........or maybe want to because it takes you back to the outcomes...

So eh....? no print from Benny and the basement boys.......I'm not big on I told ya so's , but I'll afford myself one given I've got the last four + announcements spot on.
 Maybe Bernard a piece on the reasons why not running to the presses by the Fed shows a little more thought by Bernake and a little less pandering to whining "Markets" who appear part of the problem rather than part of the solution.

Benny and the (ink) jets   ?
Most economists reckon it's only a 1 month delay.
I agree it's the same old extend and pretend, print and inflate strategy.
But it hasn't worked well in versions 2 and twist. There's just too much debt and deleveraging. Unless they want to wait Japanese-style for another decade or two, there will have to be some sort of debt restructuring.

Here's what Goldman Sachs are saying the FOMC's Sept 13 meeting.
Our interpretation of the forward-looking language in today’s statement – especially the phrase “will provide additional accommodation as needed” – is that some form of monetary easing at the September 12-13 FOMC meeting is the current baseline. Although easing is by no means a foregone conclusion, we suspect that the incoming information needs to improve materially in order to forestall it. Under our own forecast of a only a slight improvement in output and employment growth, we believe a small easing step – most plausibly a lengthening of the forward rate guidance – is the most likely outcome for September 13, with asset purchases financed by renewed balance sheet expansion following in late 2012/early 2013.

, there will have to be some sort of debt restructuring.
Now your talking Bernard and for what it's worth I think he gets it, selling the idea is the hard part because there has to be an admission of defeat which in itself exposes the Mantle as corroded and valueless.
The talk over last few sessions from Bernake has been leading to the U.S. facing the inescapable reality, face saving excercises are no longer an option, and I believe he is ready to tell it like it is ......time to suck up the pain to get any gains period.
 If  there is to be injection, I firmly believe it will only be targeted injection not QE wholesale as has been the pretend and extend cycle.
 In a nutshell some interests say "can't we just go on bullsh%ting indefinatley..?"
I think it's at a stage of "No we can't " ...not to be confused with" Yes we can"

Cheers Bernard...just read Goldinmahsachs " interpretation" ha in a word ambiguous.
Said a lot ...said nothing.....it's the old tactic of influence by inference on the part of $achs....with a hint of desperation thrown in.

It seems clear to me that the problem with The Fed is that they don't meet often enough to discuss the issues. I mean surely we could iron out some of the volatility and uncertainty if the Fed met every fortnight.

The problem with the whole world is that the Fed still exists !
........ Jim Rogers is correct : Ban the Fed ! ....... we're Fed up ........being  Fed BS daily .......

Is Jim Rogers related to Buck...GBH...?
Ban the Fed..hmmmmm yes good idea.....return it to the people ...? not so good ask Kennedy...um...when you get there...er..... if there is a there...and tell me ...when I um ahh....no no, Ban the Fed ...........Ban The Fed .
 P.S. while we are solving world problems Ban The IMF....and Panamanians

Ban the IMF by all means , Count ...... but not the Panamanian ;  they're still the absolute spiffiness of headwear ........
...... even when butchering the central bankers & their ilk , one must uphold standards , and remain sartorially elegant .......

I think National have a policy to sell you GBH. Surplus in 2014/15, NZ debt paid off about 2050 by government own projections. Vote National end the RBNZ, well you can believe it if you choose.

The last time that National got a tick from me was 2005 ....... I can't see me-gummy-self voting for them anytime soon ......
...... they're spending more money than Labour ever did ......
And National are still propping up Labour's seriously dopey middleclass welfare policies .......

You didn't tell anybody you were on welfare Gummy. That's terrible news, everyone here assumed you had a job, hope you find some decent work soon.

Sadly , Gummy has always been too thick to find his way to the WINZ office , and never received a single penny of welfare .....
...... currently gainfully employed in the conservation industry ......
Hard , but very satisfying work .  And the renumeration is sufficient for my needs .
..... life is good my friends , very good .

So you dont live in NZ or I assume pay any nz tax or actually contibute in any shape of form to NZ but still vote here....

And that is why you are not " tribe less " ..... you restict your thinking to one tiny locale within a big wide wonderful world .....
....... dream big , steven , go on , think outside the of box you've placed around yourself , and become one of the whole planet ....... not just a solitary tofu sucking mud-hut dweller in New Zealand ...

2050? ouch....

I agree with Jim Sinclair. The Fed won't act until they're left with no choice.
Many of you are so lost in the Fed soap opera that you have lost your focus entirely. The longer the Fed waits, the greater the amount of QE they will have to do.
As in the Skier illustration, done for you years ago, the second drop in the US economy is going directly through the floor. Markets will push the Fed to act on a random day, not on a predetermined Fed meeting of the FOMC.
Where did you all get the crazy idea that Fed moves come on schedule? That implies preplanning – something that has never occurred.

Interestig to listen to The Panel yesterday.
Nobody batted an eyelid when Len Brown stated that Auckland was growing at 10% pa.
That's a doubling in 7 years.
Made the rest of the comversation - Quax bleating and the talk of rail cost - rather pointless.
Doubling the rate-base in 7 years, eh?  And the collectively -held debt? Will be paid back by?
Good opportunity missed.

Im not convinced its as good as a coma.....and yes its going to be an interesting xmas.....we have a bunch of fruity loops in Congress and a President who has either proved he has no balls (Obama) or is a lap dog (Romney) depending on which one is unfortunate in winning....
I hope its Romney myself....Obama will keep this farce staggering on for some years, Romney will on the other hand end it....not nicely mind.....but I think it will take a lot to get through many americans delusions, a Great Depression would do it.

" Why Norway is a BS argument for higher taxes ! "
...... a very funny dig at Norway today , by Simon Black over at Sovereign Man ...
Enjoy !

" Olympic Badminton Farce Shows How Capitalism Beats Socialism . "
...... over at Money Morning , Kris Sayce entertains with thoughts of how in socialism  , one achieves more by losing .