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90 seconds at 9 am: G7 currency wars confusion; Dow above 14,000; Mixed signals from Barclays; Aussie mortgage market stalls; NZ$1 = US$0.843, TWI = 76.4

90 seconds at 9 am: G7 currency wars confusion; Dow above 14,000; Mixed signals from Barclays; Aussie mortgage market stalls; NZ$1 = US$0.843, TWI = 76.4
13th Feb 13, 8:44am by David Chaston

Here's my summary of the key news overnight in 90 seconds at 9 am, including confusing news from the G7 summit. Firstly they issued a statement saying they are happy to let the market decide currency values which was interpreted as Japan-friendly.

Then they backtracked, saying markets misinterpreted their stance - and they really are concerned about excess moves in the Japanese yen.

This saw quite big moves in currencies overnight, the upshot for us being that the NZ dollar has risen to near its highest post-float level ever. The TWI now sits at 76.4 and exceeding levels earlier in the month. We rose overnight against all currencies except the yen.

Equity markets are in a bouyant mood ahead of the US President's State of the Union speech. In mid-day trade the Dow has pushed up over the 14,000 level again and seem set to go higher. Oil was up earlier in the session, but gold has fallen below US$1,650/oz.

In Britain, Barclays has announced 3,700 job cuts following a loss, and says it is embarking on a new 'overhaul'. But at the same time it has paid bonuses averaging about NZ$100,000 to its investment bankers.

In Australia, there are building expectations that banks there may cut mortgage rates even if the RBA leaves their official rates on hold.

The Aussie mortgage market is weakening quite quickly, exposing the home loan market to a zero-sum game. There has been a steep plunge in the first home buyer market.

But wholesale money costs have shifted there to the point where securitising residential mortgages could be back in favour, a move that would help ease the pain of a low growth market, and enable mortgage offer rates to fall.

In our market, no other bank has responded yet to the aggressive Westpac mortgage pricing, but we will have that news as soon as it is announced.

The kiwi dollar starts the day at 84.3 USc, 81.7 AUc, and the TWI is at 76.4.

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4 Comments

by  Stephen Hulme  |  13th Feb 13, 10:09am 1360703384

But wholesale money costs have shifted there to the point where securitising residential mortgages could be back in favour, a move that would help ease the pain of a low growth market, and enable mortgage offer rates to fall.

 

But raises the ugly spectre of re-hypothecation -whereby a single asset supports mutiple claims - that is deposits a la the shadow banking crisis - the only destination for QE liquidity/funding.

 

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by  Gareth Vaughan  |  13th Feb 13, 2:43pm 1360719829

Here's the latest from Peter Dunne on multi-national corporates tax dodging:

Dunne welcomes beginning of OECD multinationals tax work

Revenue Minister Peter Dunne today welcomed the release of an OECD report which calls upon member countries, including New Zealand, to develop a shared response to the question of taxing large multinational companies.

“The issue of large multinationals shifting their profits to countries in order to gain the most favourable tax result is of huge importance to OECD member states who are concerned about how this practice can distort and erode their respective tax bases,” Mr Dunne said.

“The OECD’s report is a good starting point for member states to confront the matter and develop a shared view of ways to deal with it,” he said.

The next steps will be for OECD states to develop an action plan to tackle the issue of base erosion and profit shifting.

“New Zealand has always been a very active participant in this area and our representatives will continue to be deeply involved because we are committed to developing and being part of a strong global response,” Mr Dunne said.

He said that co-operating internationally on base erosion and profit-shifting issues would also help New Zealand to improve its domestic rules.

“We already use a range of tools to counter the problem, including information exchange agreements with other countries, withholding taxes, transfer pricing rules, thin capitalisation rules and in certain cases, our general anti-avoidance rule.

“The OECD work will help New Zealand and other countries to identify weaknesses in their rules and to ensure that international tax frameworks keep pace with new business models.

“It is not going to be an overnight remedy – that is simply not possible. But with nations co-operating in this way, we will develop a sound set of tax policies which will mean that the days of large multinationals escaping taxation will be numbered,” Mr Dunne said.

The full OECD report is available at www.oecd.org/newsroom/oecd-urges-stronger-international-co-operation-on-....

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by  Wolly  |  14th Feb 13, 5:08am 1360771716

"Contact Energy plans to cut more than 100 jobs as part of a $40 million cost saving drive.

Jobs would be across board at the business, New Zealand's biggest listed electricity company, majority owned by Australia's Origin Energy."

"Across the board" means not at the top where it should take place.....way up there it means a fatter salary plus bonus.

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by  Wolly  |  14th Feb 13, 5:26am 1360772765

"Clean up"...def: sweap under carpet..whitewash..hide..create BS..shift blame..delay..

"Steve Joyce has ridden into town with the Government chequebook in a belated attempt to clean-up the Government's Novopay nightmare. He's chucking $5 million at Novopay bug fixes, the call centre and data processing." Herald

 

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