90 seconds at 9 am: US stocks fall

90 seconds at 9 am: US stocks fall 0.3% to end winning streak; Japanese GDP growth much weaker than forecast; NZ$ under 81 USc; StanChart in settlement talks

14th Aug 12, 9:02am by Bernard Hickey

Here's my summary of the key news overnight in 90 seconds at 9 am, including news the US stock market fell 0.3% overnight to end a 7 day winning streak, it's longest run of gains in 20 months.

Nagging concerns about a synchronised slowdown in global economic growth across Europe, Asia and the United States returned to drag on confidence. See more here at Bloomberg.

Annualised Japanese GDP growth of 1.4% in the June quarter was much weaker than the 2.3% expected by economists. Consumer spending stalled as earlier government incentives after the Tsunami faded and the economy slowed in line with weaker demand from China. See more here at Bloomberg.

Emphasising the weakness in the construction-based Chinese economy, prices for iron ore imports slumped this week to their lowest levels in 2 and a half years, Reuters reported. Our largest trading partner, Australia, is a major exporter of iron ore to China.

Meanwhile in Europe, the Greek economy contracted 6.2% in the June quarter from a year earlier, which was better than the 7% fall economists had expected. But the result reinforced the debt spiral Greece is in, whereby austerity reduces spending and the size of the economy, thus increasing the relative weight of the same debt pressing down on a smaller economy. See more here at Bloomberg.

Elsewhere, Reuters reported Standard Chartered is in settlement talks with the US regulator that accused the global bank of covering up US$250 billion of money laundering by Iran. The settlement talks came after Standard Chartered initially denied any wrongdoing and accused the regulator of being over-zealous and out of step with other regulators.

The New Zealand dollar fell to 80.9 USc overnight from over 81 USc yesterday as investors took some of their riskier assets off the table. Investors remain in Northern Hemisphere Summer mode with light volumes. Traders will be watching local retail trade data later this morning and Euro-zone GDP data later tonight.

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6 Comments

by powerdownkiwi | 14th Aug 12, 9:45am 1344894325

http://www.mcclatchydc.com/2012/08/12/160935/will-high-oil-costs-permanently.html

Annual global expenditures on raw energy have climbed to an estimated $8 trillion to $9 trillion, exceeding 10 percent of the $70 trillion world gross domestic product. Those figures, however, omit the succession of price up-charges along the manufacturing, marketing and delivery chain for energy-related components of goods and services.

“I don’t think the economy is ever going to grow again . . . not on a sustained basis,” Hall said in an interview.

by steven | 14th Aug 12, 11:16am 1344899819

Austerity doesnt work when you are up against the zero bound and staring a Greater Depression in the face, as they are proving.

My take is that a Govn has to be counter-cyclical....so in the boom times, yes Govn austerity and indeed making sure the tax take is big enough to save for the downturn...In the downturn the Govn should be releasing its savings to help keep the economy from a serious nose dive....At no point should a Govn need to borrow....Of course the Pollies like to give handouts so they get re-elected and the punters like to re-elect those taht give them handouts....fools a=one and all.

Germany after ww2 had huge amounts of US money poured into it.....definately not austerity.

"The Marshall Plan (officially the European Recovery Program, ERP) was the large-scale American program to aid Europe where the United States gave monetary support to help rebuild European economies after the end of World War II in order to prevent the spread of Soviet communism.^[1] The plan was in operation for four years beginning in April 1948. The goals of the United States were to rebuild a war-devastated region, remove trade barriers, modernize industry, and make Europe prosperous again.["

regards

by Kate | 14th Aug 12, 12:29pm 1344904163

Wow - here's one for the Top 10 from the IMF dated 1 August 2012;

http://www.imf.org/external/pubs/cat/longres.aspx?sk=26178.0

Although just a working paper - but at least they're 'working' on it :-).

Thanks to PositiveMoney for pointing it out (even though their headline is a poor choice, or wishful thinking, or both);

http://www.positivemoney.org.uk/2012/08/imf-backs-full-reserve-banking/

by Christov | 14th Aug 12, 12:45pm 1344905157

Hate to pour water on the parade there Kate, but the IMF two years back had working papers on the expansion of interventionalist tools to be used by Central Banks, citing at that time the NZD was considerably overvalued and easily affected by currency speculative movements. The working paper even included a favorable rethink on FTT's as a means cotroling or at least slowing the volatility of swings.......................but ah well eh...?

It's really mostly lip service in print byenlarge......! so you know , uh don't hold your breath on it.

by Kunst | 14th Aug 12, 12:57pm 1344905844

Who will stop the megalomaniac’s in this country ?

by Kate | 14th Aug 12, 1:50pm 1344909012

This is an interesting observation from Charles Hugh Smith;

.. the steady erosion of faith in the U.S. stock market is striking: as noted last week, 80% of the trading is either invisible, officially sanctioned manipulation or computers trading.

If the U.S. legal system weren't hopelessly compromised, the U.S. stock markets would be shuttered as corrupted beyond redemption.

http://www.oftwominds.com/blogaug12/credibility-expectations8-12.html

Interesting stat but then I could never figure out the fascination with pokie machines either.