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90 seconds at 9 am: US Q3 growth revised higher; but November retail disappoints; UK big banks need much more capital; Russians buy AUD; Fonterra's new capital market launches; NZ$1 = US$0.822

90 seconds at 9 am: US Q3 growth revised higher; but November retail disappoints; UK big banks need much more capital; Russians buy AUD; Fonterra's new capital market launches; NZ$1 = US$0.822

Here's my summary of the key news overnight in 90 seconds at 9 am, including news the American economy grew at a substantially faster pace in the third quarter than first thought. In the second quarter, the US economy grew 1.3%. The US Commerce Department increased its third quarter estimate from a 2% to 2.7% annual rate, but economists do not see that level continuing. Weekly jobless claims fell, but the four-week average remained high.

Also not coming up to expectations were retail sales in November. Major chains including Macy’s, Nordstrom, Kohl’s and Target said their sales declined in November, which included the important Black Friday kickoff of the holiday shopping season.

In the UK, the outgoing Bank of England governor said British banks may be underestimating the risks facing them and should be urged to raise their reserves. Their big four banks could need £35bn of new capital and they could be forced to begin raising new capital soon.

The AFR is reporting the Russian central bank is increasing its $A buying by at least A$20 billion and could want up to 10%  its reserves in Australian currency assets, making it harder for the RBA to push down the currency. Like New Zealand, Australia is reviewing its official interest rates next week.

Today is a special day for the NZX and Fonterra as its new 'Farmers market' - the TAF - is launched. Bernard Hickey will be reporting in from Darfield where Fonterra is opening a big new dairy factory, and the senior Fonterra brass have gathered to celebrate the start of their new capital structure. The high level of offshore interest in Fonterra will no doubt keep upward pressure on the NZ dollar.

The NZ dollar end the month at 82.2 USc and 73.5 on the TWI. What is remarkable about these levels is that they are almost the same as at the end of October, and September. In fact they are close also to the levels at the end of March. The rate may be higher than some commodity manufacturers want, but rate volatility has been low for most of this year (apart from a six week period in May/June).

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9 Comments

I think the following sums it up for the Fonterra share circus about to open in the Big tent.
"Effectively you're asking people to have interest in an
illiquid investment, which is largely based on commodity trends.
It's a very different business (from Danone or Nestle).
Fonterra's really just on the supply chain."

http://articles.chicagotribune.com/2012-06-25/news/sns-rt-fonterra-fund-pix-graphic-update-1l3e8hp0xs-20120624_1_share-trading-scheme-share-trading-scheme-global-dairy

Remember when I told you that the A$ wads going to get a lot of heat from foreign wealth funds?

Yep I do , I remarked at the time the RBA would sooner or later see the catch 22 and get more than a little painted into the corner.
 Their posturings of late appearing now to be a vain attempt at intervention......the life oxymoronic.
 But I'd imagine you were in the "Go you good thing " camp....good for you..! 

http://www.odt.co.nz/news/dunedin/237195/dcc-concern-over-rising-sea-levels-houses-be-built-higher
 
This has to be the news of the day. It's good leadership, and supported by a lot of folk I would not have expected.
 
But - it ignores 5,400 houses which are in trouble, because it has no answers. That 'sand-dune protection' is in trouble now, it's a goner with higher seas, and the other wa in is up the harbour - no protection at all. Reading between the lines, that's the end of the flat area.
 
They acknowledge there are things to which they have no answers - how peak oil plays out against their need to triage using machinery, is the obvious one.
'
But Carter was simultaneously rabbiting on about LG and 'economic growth'. Where's the media on this? Triage is not growth.

PDK I think you dont get it, National et al isnt going to do a thing about Peak oil.  National are desperate to get to 2014 and be seen to have met their financial targets, such things as reality dont play a part.  Im sure in their eyes that if they do not, their chance of re-election are slim to say the least.  Even if they lose and I suspect they will, the replacements will do nothing.  Then whomever is in will be "shocked and surprised" that this has come upon them so fast and un-expectedly....then we'll see the likes of the IEA being slaughtered in the blame game.....We'll then have a long emergency where the present two parties join hands to stay in charge....aka Greece etc...then its grab your ankles time.
Sea rising - I expect the next stage will be National legislating that see rise wont happen and that the developers can carry on building on what will be worthless land, uh I mean sea bed.......aka in the USA.
 
regards

Hmmm, no mention of the $600 000 plus salary for the chief Sir Humphrey in the Foreign Office. Where is the outrage? Where is Wolly?
 
We are borrowing money hand over fist to pay plonkers in senior positions in government two to three times what they deserve or we can afford. This porks up the exchange rate so we have to sell the country. This is what messes up a country and produces a Greece or Argentina. People lose faith in the leadership of their society and either leave or start finding ways to pay less tax.
 
New Zealand is as corrupt as China in this regard. Just because control fraud is hidden behind a screen of "independent" remuneration consultants (who are actually chosen because they make the approved recommendations) and nice sounding policies like "paying at the upper quartile" does not make it less corrupt.

"The US Commerce Department increased its third quarter estimate from a 2% to 2.7% annual rate"
 
So a Gov't stimulus of approx.10% (of GDP) produces a rise in GDP of 2.7% (which no doubt will be revised significantly downwards later).   It is currently estimated that  every dollar of Gov't deficit spending produces an increase of 8 cents in GDP.  This must be the poster child for the law of diminishing returns.

Fonterra start trading at 6.66......now there's an omen for you..!

At the time of this post 14:28, 12 shares have been traded at a total value of $80.  Some market?

Days to the General Election: 20
See Party Policies here. Party Lists here.