Here's my summary of the key news overnight in 90 seconds at 9 am, including news we are ending the month with the exchange rate at US$0.798, about 1 USc lower than a month ago, and the TWI at 71.9, also lower by about one whole point in a month. The latest local economic data indicates that modest growth in our economy is holding, and building consent levels are rising even if flattening out.
The end of August also indicates the end of the northern hemisphere summer vacation season. And that means that the European and American heavy-hitter policy elites will be back at work full-time soon.
Big decisions are pending, especially in Europe and September is often a month when things come to a head. It could be a rough few weeks as the Germans and ECB slug it out over the eurozone policy direction.
Certainly the Chinese are worried about the inability of the Europeans to sort themselves out.
The World Bank said overnight that international food prices jumped 10% in July; rapid shifts like this are often destabilising and provoke civil unrest.
Data overnight in North America was fairly optimistic however, with retailers reporting a positive August, and the July numbers for US consumer spending on the up.
But the markets are heading for a loss on euro concerns, the imminent failure of a huge mining merger between Glencore and Xtrata, and the widely anticipated Bernanke Jackson Hole speech.
In Australia, a number of issues threaten to explode in September. There is big labour trouble brewing in their construction industry, public servants are facing major job cuts, and their mining industry will need to react to the Chinese decisions to shut significant steel production.
Yes, hold on to your hats - as they say, September could be 'interesting'.
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22 Comments
It's all goody-goody here in Oz , David , dont'cha worry about us ........ all we gotta do is stop smoking / drinking & having a yak attack ...... and we have to work harder .....
......then , we're all millionaires ....... Woooooooooooo-Hooooooooo .......... and that's really gonna happpen , isn't it ! .....
As the fish & chippie said , " Thank God it's fry day . "
Gina Rinehart , bless her has saved me a small fortune in shares-trading software & Rich-Mastery seminars .... riches galore awaits moi .....
...... all I gotta do is follow her lead ..... stop smoking , drinking ....... and shut the feck up !
Nae problem for this wee Gummibar , nae problem at all ...
...........tum tum , de tum .............. boop boop boop ............ .................. frigging hell !
You Know GBH.......My wife and I were sitting on the Verandah last night as she sipped her
glass of wine, and I blathered on about the events of the day, and I heard her say.....
" I love you so much , I don't think I could ever live without you..!"
In my usual self defeating way I inquired of her if that was really her or the wine talking... She turned and responded to me..." no , It's me ,...talking to the wine.Did you mean me..? south paw.....? because if you did, that is most certainly not the case, as most here would attest to.....the only recent offering I can give you is the Paula Bennett thread on drug testing benificiaries....so no no fair there south paw.....I protest.
From today’s Guardian
Marc Faber, the Swiss investor and ultra bear, says there have been four mega bubbles in the past 40 years. In the 1970s it was gold; in the 1980s it was the Nikkei, and in the 1990s it was the Nasdaq. Bigger than all of them, though, has been the iron ore bubble, a tenfold increase in prices in less than a decade.
Iron ore is the raw material for steel, production of which has rocketed as a result of China's economic boom. Consider the following facts. In the past 15 years, China has built 90 million new homes – enough to house the populations of the UK, France and Germany combined. A quarter of global steel demand is for Chinese property and Chinese infrastructure.
Commodity-rich countries, like Australia, have never had it so good. China takes 25% of Australia's exports and iron ore accounts for 60% of all the goods Australia sells to China. One reason Australia avoided recession during the global downturn of 2008-09 was that it had a well-run banking system. A much bigger reason was that the country had become a giant pit from which China could extract the minerals it needed for its industrial expansion. Money flooded into the country from sovereign wealth funds and hedge funds looking for AAA investments. The Australian dollar has soared, as have property prices.
China's economy is now slowing, and although the economic data is not particularly reliable, it seems to be slowing fast. The country has two million unsold homes, with another 30 million under construction. There is a glut of iron ore and the price is falling. Where does that leave Australia? Horribly exposed, quite obviously. It has an over-valued currency, an over-valued property market, and its major customer is now desperately pulling every available policy lever in the hope of avoiding a hard landing. Whatever happens, the Australian dollar is a sell. Just how big a sell will depend on how successful Beijing is in reflating the Chinese economy.
AndrewJ
Thanks for the above report. I disagree that iron ore is the worst bubble that mankind will have to deal with in the next five years.
The world is literally awash with highly qualified people. All that they have to show for their effort and training debt is a piece of paper. And over 95% will find zero work in their chosen vocation - ever...........
The bubble is people..............Trained people.........Trained unemployable people.
Universities, and every other educational 'provider' are churning out the degrees and other 'Paper'. These will shortly be as much use as 1987 Chase and Equitycorp share certificates. Good fire starters.
This never before experienced situation, is at its outer edges a student-debt-fuelled ponzi scheme. The 'providers' are always focused on keeping their 'numbers up'. Beyond that - who cares?
Higher education for all started about 50 years ago. Honestly - answer this question yourself - has all of this learned knowledge improved our world? I personally think the mass issuance of 'paper' was just a shabby ponzi.
The world has improved due to the brilliance of a few. But far too many 'paper' holders would have been better off to leave school and take a job.
The dregs of the mass 'paper' holders obtain jobs in central and local government. Bring back liberal doses of Common Sense.
Mark my words. We are facing a huge bubble - that has yet to blow.
"Brilliance of a few"
I was refering to
Medical science and those who apply it every day.
The designers of the technology that makes our lives easier
Engineers who make better things cheaper
And the rest of the cream graduates - who for the past 50 years - have made a daily difference to mankind.
At the other end of the spectrum is the Marketing Graduate who becomes a 'Telemarketer'. $45,000 debt and cold-calling people whilst they have their evening meal...............
Ponzi........
Maybe Hugh should consider just what happens when you get a free for all in building as a subsitute for real economic growth....I'd be surprised in china has any land restrictions btw.
"China's economy is now slowing, and although the economic data is not particularly reliable, it seems to be slowing fast. The country has two million unsold homes, with another 30 million under construction"
I think I read that this is enough homes til 2030....Hugh should take note.....all prices will collapse to liquidity levels and then no one will build.
regards
Rio Tinto...hammered..! there forecast peak being a little off by a coupla hundred million tons.......deary me..$48...and....?
Wayne Swan gobsmacked Treasury got it so wrong as volumes tumble...? deary me....Wayne it would appear Treasury need to be more dovish on forecasting.....leaving less egg on the face....to have to wipe off that is.
Yes David, a big month coming up for sure, as to the RBA pledging to underwrite the big four, well ...I mean well, there's an excuse to do the Helicopter Ben if I ever heard one.
If Australasia start the "crumble pattern" through reliance on an economy that was growing too fast....and as a consequence will have to take measures to slow growth , then rather than the race to the bottom begining in ernest, it will be nearing it's end...ground zero unilateral, except for those pesky Germans of course, the bloody fly in the ointment.
On a lighter note on this beautiful day around the City of Snails, anyone leaping on Air N.Z. stocks off the back of their new forecast to double profits, you have been warned, you may well be down troughed.....
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10830584 Lift-off for Air NZ outlook
The only risk is if for some unforeseen reason the fuel price goes even higher and China instead of slowing from 7 per cent to 6 per cent goes to negative, but they're low-probability issues," Fyfe said.
Overall trends pointed to fuel prices stabilising or falling and efficiency gains were locked in.
Also in the Herald business section today is an article from Ambrose-Evans that the only way is up for oil prices and yet I can't find the online version.
Sounds like Mr Fyfe is viewing China's economy as being impervious to exterior shock influences meh.....not to mention, his echoing of the "put all your eggs in one basket " commentary we get from Key all the way down.
It was at best or (least deliberately misleading) a naive and extremely bullish statement to make.......there's a lot of it about , ask Wayne Swan.......or perhaps designed to justify the Kiwi Savers portfolio Managers actions post the report.
how does it go...? One swallow does not a spring make.....?
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