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90 seconds at 9 am: Milk powder prices up further 2.4%; US stocks down after FedEx profit warning; Calls grow for Spanish bailout as bonds rise over 6%; Chinese riots reignite

90 seconds at 9 am: Milk powder prices up further 2.4%; US stocks down after FedEx profit warning; Calls grow for Spanish bailout as bonds rise over 6%; Chinese riots reignite
19th Sep 12, 9:02am by Bernard Hickey

Here's my summary of the key news overnight in 90 seconds at 9 am, including news milk powder prices rose a further 2.4% overnight in Fonterra's fortnightly GlobalDairyTrade auction.

This takes the rebound in milk powder prices to 30% since they hit a trough in July, but they remain 16% below their June 2011 high, while the New Zealand dollar is at the same levels it was at in June 2011.

This fall in the New Zealand dollar price over the last year has prompted Fonterra to cut its payout forecast by around NZ$1/kg to around NZ$5.70/kg before retentions. See our previous article here on Fonterra's payout forecast cut.

However, the latest rise in US$ prices after the worst drought in 50 years in America cut dairy feed supplies has stabilised the outlook for the payout.

See full GlobalDairyTrade auction results here.

Meanwhile, the S&P 500, the broadest measure of US stocks, fell 0.2% after global trade bellwether FedEx cut its profit forecast and its shares fell 3%. See more here at Bloomberg.

Also, concerns about divisions within Europe and possible delays in a Spanish bailout are growing. Investors are worried Spain may try to avoid a bailout and the associated austerity, given a slide in its bond yields in recent weeks. However, Spain's 10 year bond yield rose back over 6% overnight as worries about the bailout grew.

Investors called on Spain to accelerate moves to ask the European Central Bank and European authorities for a bailout, given such a request is necessary to trigger the 'Big Bazooka' of the unlimited ECB bond buying. See more here from Bloomberg and more here from Reuters.

Elsewhere, anti-Japanese riots in China reignited yesterday on the 81st anniversary of Japan's invasion of Manchuria in 1931. Rioters have looted and burned Japanese shops and factories in China, causing many to be closed down. The trade connections between China and Japan -- crucial to the Asian trade New Zealand relies on -- is now worth US$365 billion.

(Updated with more detail, links)

See more here at Reuters.

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22 Comments

by  Gummy Bear Hero  |  19th Sep 12, 9:25am 1348003529

US stocks as represented by the narrow range of behemoths within the DOW Jones Index rose 0.09 % overnight , regardless of Fed Ex's profit downgrade ....

 

...... Apple closed above $US 700 per share for the first time , having risen 73 % over the past year , proven that the company is bigger than Steve Jobs ..... and bigger than Exxon Mobil now , too ..... Apple has a market capitalization of $US 658 billion .

 

2 million IPhone 5's were shipped on its debut day ....... tech geeks say it is a remarkable improvement on the previous model ...... and in Sydney ( Austrailer ) they're already queuing outside the Apple Store to get an IPhone 5 ...... which goes on sale in 48 hours , on Friday !

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by  prosperopink  |  19th Sep 12, 9:40am 1348004430

Oh so everything is alright then!

or is it?

The Fed is increasingly becoming the key player in the US property market, thus persisting in confusing the problems of liquidity and solvency. US households don’t have any more money to buy or build houses . Mortgage interest rates won’t change anything here. Only Wall Street, for a certain time, will be able to continue surfing on record levels until one “beautiful morning” everything collapses due to a sudden awareness that the real economy is sinking into depression. 



Indeed all the signals are already on red: employment isn’t moving up, the jobs created are paid very much less than those lost , poverty is exploding throughout the country , … and the US multinationals  have increased announcements of falling profits for the second half of 2012 and 2013, returning to the levels of 2008/009, typical of a recession period .

GEAB (google it...weighty but great analysis)

 

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by  Kunst  |  19th Sep 12, 9:45am 1348004714

 An economic war with worldwide implications : What’s at Stake in China-Japan Spat: $345 Billion to Start




http://blogs.wsj.com/chinarealtime/2012/09/17/whats-at-stake-in-china-japan-spat-345-billion-to-start/


 

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by  Basel Brush III  |  19th Sep 12, 9:47am 1348004835

I just heard some kraut economist ,Oliver Hartwich (?) from NZ Initiative being interviewed on RadioNZ

Perfect example of the ostrich that believes we should keep doing the same thing and expect a different result. Either that or I imagine we all end up as economic serfs.

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by  vavau.to  |  19th Sep 12, 9:49am 1348004964

GBH

chinese phones are now just as good as apple and a third of the price. business cycle 101 sell apple quickly.

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by  Gummy Bear Hero  |  19th Sep 12, 9:54am 1348005288

Given the 58 % profit margin on Apple's IPhone 5 , Gummy won't be buying one , the geeks around here reckon the Samsung Gallopsy 3 is the way to go .

 

..... a brother gave me his old Apple Mac once , we couldn't work the damn thing out ......

 

Thus endeth the Gummster's flirt with Apple products ...

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by  Andrewj  |  19th Sep 12, 9:55am 1348005337
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by  Andrewj  |  19th Sep 12, 9:56am 1348005413

 

The head of Germany’s Bundesbank has raised eyebrows across Europe after he appeared to compare Mario Draghi’s bond buying programme with the "devil’s work".

 

http://www.telegraph.co.uk/finance/financialcrisis/9551348/Debt-crisis-…

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by  Stephen Hulme  |  19th Sep 12, 10:10am 1348006253

Andrewj - bond troubles brewing everywhere - Japan/China issues may spillover into bond wars - USA vulnerable to stress sales by both parties.

 

Whatever, newspapers will not be keeping us informed for much longer as advertising revenues collapse stateside.

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by  Andrewj  |  19th Sep 12, 10:14am 1348006479

The Forbes article tells an interesting story.

 

 And Murdoch is back in trouble

http://hat4uk.wordpress.com/2012/09/18/hackgate-day-616-murder-trail-co…

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by  notaneconomist  |  19th Sep 12, 11:40am 1348011656

Andrewj - many thanks again, three good articles.  It doesn't matter where in the World you go someones always got a hidden agenda.  Corruption, fraud, coercion, colluision, blackmail etc mainly go undetected and remain buried.  Depressing stuff !

 

 

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by  Kate  |  19th Sep 12, 1:35pm 1348018535

Very interesting article on the bond wars.  Interesting in relation to the concept of "repatriotisation" by citizens of the likes of the 'Japanese housewives' phenomena. 

 

Surely if the BOJ were faced with "...  as creditor after creditor proceeds to sell into a market in which the BOJ is the buyer of only resort in the best case, and into a bidless market in the worst." .. its citizens would take up the defence of the nation by repatriotising their funds?  How 'big' are they?

 

Certainly fascinating for those of us who haven't a clue just how big and significant this is to try and second guess what a bond war 'looks like'.

 

 

 

 

 

 

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by  Wolly  |  19th Sep 12, 10:51am 1348008669

And now for a lesson in how to boost sales...!

"Fears that a wave of anger in the Islamic world could spread to Europe mounted as it emerged a French magazine was planning to publish cartoons caricaturing the Prophet Mohammed."

http://www.nzherald.co.nz/world/news/article.cfm?c_id=2&objectid=10835018

 

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by  Poission  |  19th Sep 12, 10:51am 1348008674

The interesting trend in the last week or so,is that a greater number of commentators are saying that there neds to be a review ( or at least debate) of macroeconomic policy such as the RBNZ amendment act etc.

The refusal to engage by the kitchen cabinet ,is telling that they have little understanding of the underlying problems,and hence cannot provide sensible solutions,and the defense of quaint and primitive policies is ideologically driven as opposed to reality driven.

The ideology is in effect reducing their customer base such as exporters,and entraining significant feedbacks to the economy.

 

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by  Christov  |  19th Sep 12, 12:03pm 1348013013

Think you could safely say Romney's a gonner.......http://hat4uk.wordpress.com/2012/09/18/romney-gifts-the-election-to-obama-and-unwittingly-highlights-the-western-economic-dilemma/

Although...moron he be.....for having the conversation (down low)....the dilema is , even in our economy the Entitlement  Mentality  is indeed ,..a conversation ..in need.... of having.

 I guess at least he could argue God made him do it.  

Obama must be grinning like a cheshire cat about now.

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by  Gummy Bear Hero  |  19th Sep 12, 1:20pm 1348017630

Have a care there , Sore-loser , Hickey goes off his tits if we use the word " mormoron " ...

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by  SK  |  19th Sep 12, 1:54pm 1348019643

They do believe in magic underwear though dont they.

And Jesus comes from the planet Zarcon or similar?

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by  Gummy Bear Hero  |  19th Sep 12, 2:53pm 1348023239

It's all explained here , in the 7'th book of Southpark , chapter 12 .....

 

 www.southparkstudios.com/clips/104253/joseph-smith-part-1

 

..... and here , in the Holy book of YouTube ...

 

 www.youtube.com/watch?v=2Gm6JYFdnD8

 

.... dumb dumb dumb dumb dumb dumb dumb .... sing along if you know the harmony , brethren .....

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by  JB  |  19th Sep 12, 1:10pm 1348017057

Grant, like everyone else - there are only two ways to decrease a deficit now that interest rates are near zero Higher taxes and or Lower Government spending.

These two options are very unpopular with voters consequently nothing happens and we borrow to prolong the tough decisions which will eventually be forced upon us by our lenders.

Beholden to the kindness of strangers is not a good space to be!

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by  Christov  |  19th Sep 12, 1:14pm 1348017293

Yes Grant S , they are going to administer Austerity measures, such as, forbidding people to eat more pizza in a week than they currently weigh....just one of the top ten ideas floated at the Whitehouse think tank last week.

 The favoured idea oddly enough, was injected by Romney's running mate Paul Ryan...It was to bomb the lenders and confiscate their oil stockpiles as compensation for the inconvenience.  

Another mild fav was to annex any uninhabited islands in dispute and gift (swap)them to a major lender in lieu of. 

One of the least favoured was getting people back to work on lowered wages, ceasing imports of Chinese junk, banning day time television talk shows, looking for innovative productive solutions to a sluggish internal economy.......just toooo hard.

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by  Gummy Bear Hero  |  19th Sep 12, 1:25pm 1348017931

Tax exemptions and subsidies add up to $US 1 trillion per year now ..........

 

........ America  could cut them out !

 

And the lobbyists would then have full employment for the next century , gradually bribing congressmen to reinstate it all ......

 

Win / Win !

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by  Poission  |  19th Sep 12, 2:33pm 1348022002

Can anyone explain to me how USA are going to reduce their deficit..???

tax payers perhaps..?? and/or FED with tied hands..!

 

Quite easily depreciate your dollar,which  makes imports more expensive and onshore substitution more viable such as high quality steel ,machinery,technology etc.

Secondly decrease energy reliance on overseas markets,by substitution such as shale gas where there are positive feedbacks,decrease in coal fired generation (ghg emissions), less disruptive supply chain etc.

For this reason the US current ac deficit in the June 1/4 is down from the peaks of the GFC.The increase in exports is also a positive feedback,maybe Key does not understand the FEDS diction (lost in translation)

http://www.nytimes.com/2012/09/19/business/trade-deficit-narrows.html

http://www.bloomberg.com/news/2012-08-23/u-s-oil-imports-to-seen-hittin…

 

 

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