Here's my summary of the key news overnight in 90 seconds at 9 am, including news that disappointing economic data from China led to risk assets starting the week on the back foot.
Growth in the world’s second-biggest economy slowed to 7.7% in the first-quarter, down from 7.9% in the previous quarter and well below the 8% consensus estimate.
The Chinese government warned this is unlikely to be a blip and that the double-digit growth rates seen over the last 30 years are probably a thing of the past. If true, this will have an impact on developed and emerging economies.
The worst performing currency overnight was the Australian dollar with our currency not far behind.
And gold continued its terrible price fall. It closed in London at US$1,395/oz and is trading in New York currently at just US$1,350/oz - that's NZ$1,600/oz and another 8% drop in just one day. It's a full blown rout. Silver's no better, losing almost 20% in a week. The Dow is down in midday trade, shedding more than 1.8%.
Copper fell to its lowest level in 18 months, and aluminium fell to a three and a half year low. Oil was weak too.
Meanwhile in Europe, Greece has finally clinched a deal with its troika of lenders. Apparently 15,000 civil servants will be laid off by the end of next year, to be replaced by an equivalent number of 'young people'. It is a bold move to refresh a dysfunctional system.
Locally, the Mighty River Power share offer is now open.
The Kiwi dollar starts today at 84.3 USc down almost a cent and a half on the day, 81.5 AUc, the Japanese yen has risen to 82, and our TWI is at 77.6.
No chart with that title exists.
8 Comments
Food bowl to Asia story window dressing at best:
http://adf.farmonline.com.au/news/nationalrural/agribusiness/general-ne…
THE impending vote to wind up PrimeAg Australia, and a spate of profit downgrades, underline the problems of a listed agricultural sector facing a capital shortfall of up to $850 billion. Especially if the sector is to meet its potential as the "food bowl of Asia".
Window dressing by bankers who have other wise
lend too much,
to too few
in the wrong place - located in the wrong part of the "supply chain". In OHO.
The point of difference we have is the bilateral trade agreement with China.
Telecom staff are oing to get screwed, if this guy is a meglomanic then he is going to do whatever it takes,hopefully he is not.
http://www.stuff.co.nz/dominion-post/business/8550421/Blunt-message-to-Telecom-staff
Moutter pointed out the company had already downgraded its profit forecast in February and told staff "the reality is this year isn't going to be a high-performing year for us". Moutter is on an annual package of up to $4.7 million, comprising a $1.35m salary and maximum $3.35m in incentive payments
http://gregpytel.blogspot.com/
The readers of this blog may also remember an article "Curbing City pay will give it competitive advantage" published on 14 August 2009: : "Indeed it looks that big pay packets in finance attract the top talent: but not the one that banking really needs. It is a talent to use greed, skills in company politics, arrogance, posturing to cover monumental incompetence in climbing a corporate ladder. This ilk of people has hijacked the financial industry."
Memos sent to staff by chief technology officer David Havercroft said Telecom was proposing to split into "two distinct parts" currently dubbed "Servco" and "Netco".
Well if it ain't Titantic chair re-arrangement management skills at play, what is it?
Forsyth Barr analyst Blair Galpin has forecast job losses would climb to about 1750 following a second round of cuts in about a year. But Curran said her information was that additional cuts to more senior staff ranked at "tier four" and above were planned for September.
And Johnny come lately is worried about the Auckland housing market, we should be more worried about failed mortgage payments negatively impacting our banks and the prospect of our government having to bail them out.
Some one has taken a big bet thinking as much - who was the fool institution that wrote the premium - hope we don't have to rescue them as the Fed did for Goldman Sachs. Read Zero Hedge SCDS article
"we should be more worried about failed mortgage payments negatively impacting our banks"
Which has been us pessimists view for 4 years....not just housing though, dairy seems a classic over-indebted gambling on high payouts play thats also in the running for blowing things up.
regards
Hmm that SCDS chart is an awkward looking one. Does it mean that NZ is effectively rated B not AA .? Interested in what you make of it.
While you're at it, any thoughts on what's causing the gold price capitulation? I assume it's margin calls on JGB related stuff but this is way out of my league. It looks to me like a rather large repricing of worldwide assets has probably just got started. Should be an interesting few months coming up. Interesting as in "may you live in interesting times".
Traders have apparently taken a significant bet (bought insurance) that NZ sovereign debt will fail, but many magnitudes greater than the outstanding debt level.
The worry is which institution(s) wrote the insurance and why? Are it/they capable of paying or are they big enough to stop it happening and are scalping the market because they can?
Reminds me of the time when Bankers Trust trader, Andrew Kreiger wrote OTC currency option premium against the NZD many times larger than the then outstanding levels. - the US Federal Reserve closed him and his institution down - he was fired and BT folded into Deutsche Bank.
This all begs the question WTF is the IMF doing not challenging this trade - remember Goldman Sachs had to be bailed out by the Fed following a previous OTC instrument scandal (CDO/CDS you name it, it fitted the bill).
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