Here's my summary of the key news overnight in 90 seconds at 9 am, including news indications that a pro-reform centre-left government may win the Italian general election boosted risk assets today, though there remains considerable scope for volatility, especially if Berlusconi wins the Senate.
Early exit polls signalled that the centre-left coalition led by Bersani’s Democratic Party is set to emerge as the largest party in the lower house of parliament, with Berlusconi’s centre-right coalition trailing in second place.
Bersani is broadly supportive of Mario Monti’s reform programme, which is why his apparently strong showing is positive for the markets. Monti himself appears to have done poorly, but the most favourable outcome – a Bersani/Monti coalition government – is still possible.
But watch that Senate outcome. Markets are nervous and euro stability is at risk.
In China, a key gauge of momentum in the manufacturing sector fell unexpectedly in February, raising concerns about the strength of their economy.
HSBC said its "flash" index of purchasing managers' sentiment fell to 50.4 in February from January's final reading of 52.3, indicating China may be shifting to slower growth, although the timing of the Lunar New Year holiday may also be a reason.
In the US, Congressional leaders are quietly considering a deal to avert a government shutdown next month - but at the cost of prolonging across-the-board spending cuts.
The President may have miscalculated Republican acceptance that defence spending may need to be sacrificed to get the spending cuts they want.
And finally, the push by Australian banks to fund the 'food bowl of China' strategy is getting another boost with NAB, BNZ's owner, stumping up for their share of what they see as lucrative business. To date, ANZ has been the most vocal exponent.
The kiwi dollar starts today inching higher at 83.8 USc, 81.5 AUc, and the TWI is at 76.6 mainly because of the falling euro.
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15 Comments
Unusual US consumer indicator (which is flashing red):
Thanks for the cool link, for interesting ones you get some good ones....
"
"The index tends to run in a range," he explained. "In September, October, November in 2007, it popped out of its range for the first time… And, for the first time since then, we are seeing a tripping out of the range," said Boal, a former Wall Street executive.
Boal considers coupons a leading indicator because you don't need months of data to see consumer behavior patterns emerge. He said he expects the payroll tax hikes, rising food and gas prices are squeezing household budgets."
NB. Now petrol is $2.20 here I notice this year Ive not sat once on the morning train...
regards
I have been banging the drum about US petrol prices for weeks but no-one seems to be paying any attention. In successive weeks US petrol has hit records for this time of year:
http://www.eia.gov/petroleum/gasdiesel/
Its a real shame all that fracked oil the US is producing is having bo diddly squat effect on domestic petrol prices. Must be something to do with the fact that its global, not domestic oil production that counts (and its global production and demand that sets the price).
Indeed,
"EIA's projection, as of February 12, 2013, for the average retail price of regular-grade gasoline for February through December 2013 is $3.57 per gallon. The projection for the average retail price in 2014 is $3.39 per gallon"
and the price is $4.40 right now....so if that continues for 6 months, it has to drop to $2.50 for the last 6, yeah right.
http://www.eia.gov/tools/faqs/faq.cfm?id=287&t=10
It also thinks 2014's price will be lower...the only way I could see that is if the present oil price collapses, and that means a major global recession this year....taking oil to $50 again....i odnt think we want go there though.
Some crystal ball gazing that is....
I wonder how their old projections compare to reality....probably awful.
regards
andyh - I assume that the shale oil is not having any effect on the price of US gasoline because of the high cost of extraction and refinement. Andrewj says the price of US gasoline is US$4.40 per gallon, which is equivalent to NZ$1.40 per litre. I think there is only one direction for US gasoline prices and that is up.
The US companies involved in tight oil (the more correct term) production keep a fairly close lid on what each barrel costs - but I have seen estimates of $60-80 per barrel. Indeed what most people dont some to realise is that the various tight oil deposits have been known about for decades ie the Bakken (in the same way that there is nothing new about fracking - the first well was fracked over 50 years ago, and modern day fracking started in the 1990's). The only reason this tight oil is now being produced is because the oil price is so high - if for example the price of oil fell below $60 these would be wholesale shut downs in tight oil production. Of course the drillers have all gone for the sweet spots first and given that fracked wells deplete at up to 80% in 24 months the extraction costs of tight oil have only one way to go as production efficiencies decline. The cost of US petrol has much more to do with what the refiners are having to pay - those on the West and East coasts (where most of the population are) are paying prices marked off Brent - and that is priced off global supply - and that (if you forgive the pun) is actually tight and getting tighter.
Yes, especially the US, here though it seems its biting, at least if the numbers on the train and indeed the roads around my station is an indication...
Interest.co.nz.
I wonder if there is anyway to get monthly pass train ticket numbers per month? also 10 trips...I see a lot of those now, might be what ppl are getting it they are 2 weekly paid rather than monthly, then graph that v petrol prices.
regards
not much good economic news internationally or domestically, and NZ is in a drought.
Yet the govt keeps twiddling its thumbs, doing nothing, believing the rubbish from most economists about the economy turning around (6% unemployment by end of 2013 - yeah right!!!)
And I see today that Auckland Council declined two large housing proposals, just when we need more housing and jobs. Unbelievable, quite frankly.
What is wrong with NZ????
Unbelievable complacency.
On the Aukland housing front, we were up in the big smoke and driving through south east Auckland with mates - we passed a big development of large new brick built houses on tiny plots built right up to the road. We were told that these had been built by an Asian property company using Chinese workers who are brought in on 3 month visas and who work 24/7 on these houses (for not very much I guess) before being shunted back to China. Lo and behold as we passed one under construction there was a Chinese crew working on it (this was 3pm Sunday afternoon). Is this for real? Chinese workers on 3 month visas?
andyh - That's a very interesting story. I'm surprised that there has been nothing in the MSM about it. Is NZ becoming the Dubai of the Pacific by using temporary immgrant labour for construction? I wonder how long these buildings will last? I was also in South East Auckland recently and was unimpressed by the types of development being undertaken. I'm certainly glad that I don't have to live there.
Is this going to be the future for NZ, cheap temporary migrant labour in order to keep new housing affordable? It seems to me that the present NZ Gov't will do anything to ensure this outcome. It's interesting to note that in another article on interest.co.nz today, Gareth Morgan ihighlights the youth unemployment rate at 31%. How many of them would jump at the chance to find employment in the construction industry. Did nobody in Gov't think about this when they issued the temporary work visas?
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