Focus on earnings; US wages rise; huge banks settlements; Berlusconi deal; good dairy conditions; NZ$1 = US$0.83.6, TWI = 75.2

2012 starts off with great conditions for dairy farmers

Here's my quick summary of the key overnight news you need to start your day.

Firstly, the NZ$ opens at 83.6 USc, 79.7 AUc and the TWI is at 75.2 after a broad-based appreciation against most currencies. 

In New York, stocks fell as traders cashed in recent gains that had lifted the S&P 500 to a five-year high. Today marks the start of the fourth-quarter earnings season, and there are some concerns over what those earnings will show. However, there are reports that the slow but steady jobs growth in the US is resulting in wage rises. Not only are hourly rates rising again, but hours worked climbed as well. These are 'new' things for American workers.

Staying in the US, banks there agreed to pay a total of US$18.5 billion (NZ$22.1 billion) in separate deals on Monday involving troubled loans and foreclosure abuses, illustrating the extent of the banks’ role in the excesses of the credit boom.

And separately, Bank of America agreed to an additional US$11.7 billion (NZ$14 billion) settlement package designed to resolve most disputes with US-owned Fannie Mae over bad mortgages after a deal announced two years ago proved inadequate. It was a big day for US banking regulators; that NZ$35 billion in total. That BofA settlement will wipe-out its quarterly earnings.

In Italy, former Prime Minister Silvio Berlusconi renewed his campaign partnership with the Northern League party and reportedly agreed not be be prime minister again if they should win.

It is hot in Australia. But here, we will avoid the soaring temperatures and dry rivers in the first quarter, says NIWA, meaning minimal disruption to milk production, which generates a quarter of the nation’s exports.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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Banks Win 4-Year Delay as Basel Liquidity Rule Loosened

Banks won the delay to fully meet the so-called liquidity coverage ratio, or LCR, following a deal struck by regulatory chiefs meeting yesterday in Basel, Switzerland. They’ll be able to pick from a longer list of approved assets including equities and securitized mortgage debt as they seek to build up buffers of liquidity for use in a financial crisis.

The changes are “a very important and welcome development,” Jackson said. “The previous design of the rules threatened to limit banks capacity to lend because of the very large liquidity buffers which banks would have had to hold.

Hmmmm - the loss of those liquidity buffers will impact unsecured depositors more severely in the event of bank failure - it would seem RBNZ OBR is an untenable prospect as the underpinnings for depositor protection are further eroded in favour of bank dividends and employee bonuses - i.e. profits.

The RBNZ needs to speak up now.

I wonder if Mr Wheeler is at the beach, or in the office. Charts seem to suggest the NZD is trying to set new records against the USD, and that would seem a very bad start to the year. If Mr Key is remotely interested in long term useful employment, as he says he is, then at worst a stable dollar, and at best, one worth a few cents less than it currently is, would be a much better place to start from. Continual appreciation by 5-10% a year just sends a message to all exporters (or import substituters) outside prime agriculture, not to bother.


David do you have access to eftpos data for December? Also the same data going back say 10 years? In past years I have noted a significant amount of publicity(crowing?) around the volume of sales both pre and post xmas but this year reaction seems to have been very muted. However I haven't been paying as much attention and could have missed it.

December electronic card transaction data (eftpos + Credit card) comes out on Monday.

Paymark says it was muted for December, despite the flurry on Christmas Eve.