Here's my summary of the key news overnight in 90 seconds at 9 am, including news Swiss voters have overwhelmingly backed proposals to impose some of the world's strictest controls on executive pay, final referendum results show.
Nearly 68% of the voters supported plans to give shareholders a veto on compensation and ban big payouts for new and departing managers.
Business groups argued the proposals would damage Swiss competitiveness.
The eurozone jobless rate hit 11.9% in January, while inflation was only 1.8% in February according to data out over the weekend. The highest unemployment rate was in Greece at 27%, the lowest in Austria at 4.9%.
The ECB reviews its interest rates on Friday and there is a chance they could reduce it then, but analysts said the high unemployment and low figure for inflation would make it more likely that the ECB would cut its interest rates later in the year from the current rate of 0.75%.
Beppe Grillo, the comedian who holds the balance of power in Italy, has suggested the country may have to abandon the euro and return to the lire.
In an interview with a German magazine published on Saturday, Grillo said that if conditions do not change Italy will want to leave the euro and return to its former national currency. Grillo also said Italy needs to renegotiate its €2 trillion debt.
In the US rates aren't rising anytime soon. Fed boss Ben Bernanke said attempting to raise borrowing costs too soon could choke off the economic expansion as he pushed back against criticism that low rates are hurting people on fixed incomes and encouraging excessive risk-taking by investors.
US 10 year Treasury yields slid to 1.84% following a fall in February, which reversed the rises in December and January. The rush to equities hasn't happened yet.
In China, data released Sunday showed that China's non-manufacturing purchasing managers' index stood at 54.5, down from January's 56.2 and the slowest pace of growth since September 2012. Although a five-month low, the PMI reading indicates that the services sector is still experiencing good growth.
This follows slowing manufacturing growth, and China may hold off tightening monetary policy when Premier Wen Jiabao outlines economic policies at the start of the National People’s Congress in Beijing later this week.
The kiwi dollar starts the week a touch lower at 82.5 USc, 80.9 AUc, and the TWI is a touch higher at 75.9 due to a rise in the yen.
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10 Comments
News Corp to sell its 44% stake in Sky TV, according to The Australian.
"NEWS Corporation will tomorrow announce the $660 million sale of its 44 per cent stake in New Zealand's biggest subscription TV business, Sky Network Television.
It is understood the stake, which is held through the Australian arm News Limited, will be sold to institutional investors through a placement run by Deutsche Bank and the New Zealand advisory group Craigs Investment Partners.
The price is expected to be about $NZ4.80 a share - a 7 per cent discount to Friday's closing price of $NZ5.17. At $NZ4.80, the stake would be worth about $NZ815 million ($657m)."
Interesting article in The telegraph on QE.
http://www.telegraph.co.uk/finance/comment/liamhalligan/9904562/Negativ…
Liam,
If we consider that the increase in the stock of money through QE has increased by 26% and that current GDP growth rates are at best 1%, then, without consideration of the velocity of money, this government should not need to increase the supply of money for another 26 years - ceteris paribus - in order to bring the domestic purchasing power of the pound back to where it is today in 26 years time.
This will of course not happen as the welfare state continues to drive the need for QE funding of fiscal deficits. As you rightly point out most of this "funny money" goes into buying gilts, in effect handing it over to the Treasury.
And the Treasury spends it on pensions whose payments far exceeds contributions, horrendously uneconomic and inefficient spending in the NHS, education, the EU, and foreign aid, the list goes on.
And so the infernal wealth destroying machinery of the grossly misnamed "welfare state" needs feeding with ever increasing amounts of QE, leading ultimately to the destruction of the pound on the foreign exchange markets and the crushing of its domestic purchasing power.
But what event is the tipping point where the destruction of the pound exponentially accelerates?
Zimbabwe is the much used example of QE unleashed in financing fiscal deficits, which deserves a little more attention in determining the tipping point for the UK pound.
In 1980 Zimbabwean annual inflation was 7% with a USD to ZD10 exchange rate. By 2001, 20 years later, the annual inflation rate was 11.2% with a USD to ZD100 exchange rate. By 2008, 7 years later, the Zimbabwean annual inflation rate (the last time it was officially reported before they abandoned the ZD) was 471,000,000% with a USD to ZD10 to the power of 9 exchange rate.
The acceleration point in the destruction of the ZD was, of course, the destruction of commercial farming in Zimbabwe, thereby radically reducing economic output for the quantity of money in circulation. Nevertheless the groundwork for such currency destruction had been set by the practice of QE to fund fiscal deficits.
So where is the pound along in this trajectory?
On a like for like basis the pound is now in a position that would only require another severe economic shock in the UK economy, equivalent to the destruction of commercial farming in Zimbabwe, to exponentially accelerate both inflation and the collapse of the foreign exchange value of the pound.
May I suggest that the implosion of the British financial industry would be the equivalent of the destruction of commercial farming in Zimbabwe.
For this reason it is important to recognize that those who are on a "UK bankster bashing" high or agree with the Brussels dictatorship on the "curbing" of British banks trading, are helping to kick away the key economic prop that will unleash the final destruction of the British pound. If this describes your position with regards to the UK's financial industry, then the Brussels apparatchiks are delighted with your "useful idiot" support in helping the UK fall helplessly into EMU and the continental dictatorship that is the EU.
Jonathan
Personally, I believe the 'tipping point' for the UK is the significant exodus of highly skilled people and entrepreneurs and their replacement with (mostly) low skilled immigrants.
For over ten years, net immigration to the UK has been about 300,000 p.a. but this masks the fact that 500,000 came in and 200,000 left (all figures approximate). Instead of reporting 'net immigration' we should be concerned about 'churn' because a change of population amounting to 700,000 annually for ten years means that there has been a 'change' in the makeup of the population of around 10% of the population.
Add into the immigration 'churn' is the change resulting from births (>10% of the population in ten years) and deaths (>10% of the population in ten years) , and we have a turnover of the population approaching 25% in a decade.
If this situation continues, then by 2020, (i.e. after two decades of this trend) there will have been approaching 50% of the population of 1990 replaced.
This isn't an anti-immigration rant, simply an attempt to point to demographic change which is even more damaging to the UK economy that the ageing homogenous population in Japan.
Exactly, Andrewj - It would seem Murdoch has seen the possibility of the same in NZ and got away.
Also corporate cronyism supported by state dependency is well and alive here and leads to waste we can no longer sustain with our meagre incomes. Read Stuff article
Delloitte acted as the strategic adviser to Housing New Zealand Corporation over a $92 million technology overhaul and then tried to prevent the public finding out it had picked up a subcontract to implement part of the new system, a Fairfax investigation has found.
Deloitte and Housing NZ maintain Deloitte had no role in selecting the supplier, Oracle, which later subcontracted the consulting firm, so there was never any conflict of interest.
The consulting firm acted as the strategic adviser and "stage one procurement adviser" to Housing NZ on its controversial Enterprise Transformation (ETP) project, which was completed $20 million over-budget last year, before then working for Oracle to implement the system.
Andrew
The basic theme i get from this is that the UK was 'better' when the peasents were 'our' peasents and knew their station in life. Unfortunately the truth is that the UK abandoned manufacturing (which employed the peasents) for financial services, which as we all know is a rent taking activity which was great when there were great gobs of rent to be had and an easily manipulateable/fixable bench mark, so who were they taking rent from? as long as it wasn't internal to uk that was fine but they are now paddling into a headwind, firstly with globalisation who needs an english banker? you can deal direct and secondly who needs a corrupt english banker, I think the damage of the LIBOR scandal has yet to be felt.
Davis, sorry to be a nit picker because you do a good job - but
"while inflation was only 1.8% in February"
1.8% in one month?
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