Here's my summary of the key news overnight in 90 seconds at 9 am, including news that markets have seen a big bump in the road.
Global stocks tumbled the most since November and commodities fell as a report signaled the euro- area’s economy contracted more than forecast and concern grew that the US Federal Reserve may slow the pace of stimulus.
The euro weakened against the US dollar while German bunds rose with US Treasuries. US oil is down to US92.80/bbl, its average for the period since the beginning of 2011. Copper and aluminium fell about 1.5%. But gold gained almost US$20/oz although it is still well below the US$1,600 level.
In Europe, both services and manufacturing are shrinking in February at a faster pace than economists had forecast as their economies struggle to recover. Equities fell across the EU as well. France is said to be looking at direct government investments to prop up its uncompetitive industry. A full-blown crisis of confidence in France seems only months away.
An American regulator is in London trying to steel British authorities into more effective action in cleaning up the Libor rate setting process. He told the BBC that even today the rate setting process is "still not clean" and suggested it was often "completely made up".
China has told local authorities to "decisively" curb real estate speculation and take steps to rein in the property market after prices rose the most in two years last month.
China also took measures to rein in credit growth, draining cash from its banking system. The Chinese stock market also fell, the most in 14 months.
There is little local data being released today, but all eyes will be on how the Government handles the crisis at SOE Solid Energy. It seems that low prices for its high-grade coal have almost killed it.
The kiwi dollar is unchanged overnight at 83.6 USc, 81.5 AUc, and the TWI is at 76.3
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14 Comments
Well Wolly the fisco will continue until the people realise the effects of taxation on prices.
http://www.youtube.com/embed/WGHY8XpM6oI?hd=1
Solid Energy is a great reminder of why we shouldn't have State owned assets.
It has gone totally unremarked and unrecorded by the media but last month's average barrel price for Brent crude (now the de facto global oil benchmark) was $112.96. That was some $2 higher than the any previous average January price for Brent ($110.69 a previous record from 2012).
http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=rbrte&f=m
That came in a month in which the Eurozone, the UK and Japan, which make up close to 40% of global GDP were either in or effectively in recession.
Think about that.
very important Andy.
In the past recessions have seen big drops in crude. The lowered prices have then helped the recoveries.
This time we have several major economies in recession, but crude has not dropped away (China?). This causes real problems for the possible recovery of these countries.
We are living in interesting times indeed.
I dont think as yet we have really hit a 2nd (3rd?) recession....ie noticably worse than the poo we are in now. That's coming IMHO and if the numbers showing the EU is indeed going into a serious recession, oil should drop shortly and significantly.....
Interesting that chinese and indian demand for oil is still staying up, but will that also fall away when no one is buying their junk?
Oil price has been quietly rising for 4 months, shale plays are imploding...the myth of lots of cheap fossil fuel in the USA is looking like the fairy tale it is....
Wonder if GBH belived his own rubbish and bought in heavily....
It will be so funny (not really) when we see those plays peak this year and drop away...those that have not already....
So the Q is $2.50 a litre this year or $1.50.....
regards
Yes indeed Matt. On a related point I do find it bizarre that interest.co.nz continues to quote the US West Texas Interm. price when dealing with oil prices. This price has become so irrelevant to the global market that even '' the US Energy Information Administration in Washington dispensed with West Texas Intermediate for its price forecasts in its Annual Energy Outlook 2013 ""
http://www.bloomberg.com/news/2012-12-06/brent-favored-over-wti-by-u-s-…
From the article:
“This makes perfect sense as Brent is a better reflection of global oil demand and supply than WTI,” Gordon Kwan, the head of regional energy research for Mirae Assets Securities Ltd. in Hong Kong, said in a phone interview. “WTI has become a misleading price indicator for global economic growth and will become increasingly less relevant versus Brent oil.”
“Brent represents the Northwest Europe sweet market, but since it’s used as the benchmark for all West African and Mediterranean crude, and now for some Southeast Asia crudes, it’s directly linked to a larger global market,” Nunan said in a telephone interview. “It just became obvious to switch to another marker.”
Brent is closer to the prices of crudes from the Organization of Petroleum Exporting Countries than WTI, making it a more useful reference point at OPEC meetings. Ministers from the 12-member producer group are due to meet next week in Vienna.
I dont know whether Mr Chaston is wilfilly attempting to mislead his readers as to the real state of the global oil market, but constantly quoting the WTI price is not doing this website any favours.
Re LIBOR - the 'I' being 'interbank' should immediately put one on guard. The words Cartel, Secretive, Undisclosed, and Fixing, all spring to mind. But as something like 10% of the UK's net income emerges from the City, this 'ancient stew' is not gonna go away soon.
MoM has some useful comments and FOMC minutes extracts. Plus a prediction on when the QE Acrow prop gets kicked out from under the US stock markets....
ASIC nails kiwi ponzi schemer:
The man described as the ‘mastermind’ behind more than a dozen unregistered offshore managed investment funds, including a $30 million Ponzi scheme, was today ordered to pay a record penalty of $500,000, and was permanently banned from managing companies and providing financial services.
The penalty order of $500,000 is the largest awarded in ASIC’s history.
David Hobbs of Nelson, New Zealand, was one of 13 people, including his wife, Jacqueline Hobbs, who operated the unlicensed funds, which targeted Australian investors and self-managed superannuation funds.
More than $55 million was invested in 14 individual investment funds in countries including New Zealand, the United States, Hong Kong, Vanuatu, the Bahamas, Anguilla, and the Turks and Caicos Islands.
In a decision in November 2012, the Supreme Court of NSW found that together the funds were one large scheme and that Mr Hobbs either ‘personally chose’ or ‘implicitly approved’ the other individuals who operated the scheme with him (refer: 12-266MR).
At the Supreme Court of NSW, Justice Julie Ward today imposed the following penalties:
On 11 February 2013 Brian Wood, of Davistown, Jimmy Truong of St John’s Park, and Con Koutsoukos of Wiley Park, were sentenced to jail for the role they played in operating one of the funds called the Integrity Plus Fund (refer: 13-025MR). The Court found the three knew the fund they were operating was a scam with no prospect of legitimate return, and that the ‘salary’ they were drawing for themselves came from investors’ money.
In handing down her decision today, Justice Ward said the Hobbs scheme could be characterised as ‘one presented to unsophisticated investors as a ‘get rich quick’ scheme with no risk of loss of capital and a huge upside on the profits by reason of their investment’.
She found Mr Hobbs’ conduct, in directing the payment of moneys out of investment schemes for his own personal benefit, as well as the giving by him of directions as to the payment of returns at a fixed percentage irrespective of the existence of profits (as in a Ponzi scheme), was serious and reflected a disregard for the interests of investors. Justice Ward said this, along with other factors such as the fact superannuation money was targeted, justified the imposition of significant penalties.
Justice Ward also found Mr Hobbs ‘deliberately sought to put in place and have implemented a structure that was intended to avoid regulatory supervision (and hence would deprive investors of that safeguard)’.
ASIC Commissioner Greg Tanzer condemned Mr Hobbs’ illegal behaviour.
‘The whole scheme was designed to avoid compliance with Australian financial services laws,’ Mr Tanzer said.
‘Mr Hobbs’ conduct involved a gross breach of investors’ trust. His actions were very serious and have left his victims in difficult financial positions.
‘Today’s outcome should send a strong message that ASIC will act to ensure those who deliberately deceive investors or misuse investors’ money for their own personal benefit are brought to account.
‘The experience of the investors in this matter should serve as a timely reminder to investors to beware of returns that sound too good to be true. Before you invest in any scheme, you should do independent checks to see if it has an Australian financial services licence and how the returns are really going to be made. Don’t just trust the word of the person selling you the scheme,’ Mr Tanzer added.
More information about ponzi schemes and investment funds can be found on ASIC’s MoneySmart website.
The Court also ordered the winding up of the scheme and appointed Mr Barry Taylor and Mr Andrew Needham of HLB Mann Judd as liquidators. Mr Taylor and Mr Needham will determine the return of funds to investors and the Court has ordered they hold a meeting of investors on or before 13 June 2013. They can be contacted on (02) 9020 4000.
China has told local authorities to "decisively" curb real estate speculation and take steps to rein in the property market after prices rose the most in two years last month.
Maybe China should extend their advice to their countrymen investing in the Auckland housing market as well. After all we are constantly being told we are living in a global village.
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