90 seconds at 9 am: US growth 'moderate'; EU faces decade to recover; concerns about QE withdrawal; Yuan peg loosened; Dow down 1%; NZ$1 = US$0.843, TWI = 77.9

90 seconds at 9 am: US growth 'moderate'; EU faces decade to recover; concerns about QE withdrawal; Yuan peg loosened; Dow down 1%; NZ$1 = US$0.843, TWI = 77.9

Here's my summary of the key news overnight in 90 seconds at 9 am, including news world markets are taking a breather.

The US Fed said in today's Beige Book report that the American economic expansion remained 'moderate' amid gains in manufacturing, housing and autos that offset weakness in defense-related industries in some regions.

Meanwhile banking giant, Bank of America disappointed investors with a modest profit report. It said it will under perform its peers because it is pursuing a less risky strategy.

In Europe, Germany's top central banker warned the region's debt crisis will take as much as a decade to overcome, dismissing the view expressed by some political leaders that the worst of the crisis is over.

Austerity may not be working, but there are also growing concerns that QE may be sowing its own seeds of destruction. More attention is turning to the consequences and to the problems that may arise as QE is scaled back.

In Australia, there are calls to end their carbon trading system, the one based on the seriously failing EU scheme. And from the "I did not know that" file, apparently emissions of carbon dioxide into the atmosphere in the US have fallen back to 1995 levels after they peaked in 2007.

In China, their central bank has signaled that they are about to increase the Yuan currency peg band as they transition to a market oriented basis.

Overnight markets for commodities treaded water with little change, but the Dow is down 1% in mid-day trade.

Following yesterday's tame CPI data, the Kiwi dollar starts today lower at 84.3 USc, 81.9 AUc, and our TWI is at 77.9.

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18 Comments

"lost decade"...and the rest!
Keep an eye and ear out for the domino collapse of the banks and failed states and the euro currency...not much but BS and blatherlike bandaid hiding the open hole now.

Hey Wolly...I made some inquiry about your Knighthood  for services rendered...they said , they were full up with Sirs at the moment but had an opening for a Baroness...I said I'd get back to them . 

How awfully kind of you dear heart...

Think nothing of it Wooly....I'd deem your  good self for more worthy than most who govern the serfs....Why, I nominated Bernard last year......they said he was too tall and had socialist tendencies.

So China look to increase peg band again David...expecting a little offset to inflationary forces are they..?
Describing it as mutually benificial to both currencies ....deary me....best they watch "the cake and eat it too "syndrome....nothing worse than overeating to the point of illness.

As I keep saying to Steven, Wooly, it's all about captured money in various positions including hard assets in an attempt to disolve losses in the previous fiat meltdown.....(regard the QE print as the new fiat devalued).....those than can hold 
will see daylight.
 Now, as we haven't caught up yet (or insulated if you like) what do you suppose is the biggest single position to capture monies from in Australasia....?

Is that a trick question?
 
I'm guessing - dirt, bricks, mortar, cut down trees

Listen to the chatter
US exchanges are busy increasing their margins. Three notifications in the last week.
Usually a pre-cursor to some ugly times.
And also to tip trapped traders (trappees) out sooner rather than later
Or, the captured captives, as christov refers to them
Does not augur well

Business, as usual.
 
"In order for central banks to achieve their ultimate economic objective - which is growth and jobs - they have to push investors into taking more risk than is justified," is the somewhat chilling warning that PIMCO's Mohamed El-Erian gives in this excellent interview with the WSJ. "Central banks are operating through the wealth effect and animal spirits," El-Erian says peeling back the truth onion, as they prop up asset prices to "artificial levels, in virtually every market." Worries over the central bankers of the world withdrawing easy money policies too early are "unwarranted," he notes, adding that he suspects, "they will most likely stay too long and they will consciously make that mistake." Critically, though, he sends a message that appears to fit with many of our recent discussions (most recently here) that "if these levels aren’t validated by the fundamentals, then investors will get hurt."

The assumption Stephen H pre GFC was in every winning position there had to be a loser... post GFC...I see it as (in the broadest sense) losers and lesser losers ( Central Banks) seeking to defray losses to an acceptable Ground Zero...the new begining......culminating in the issuance of already devalued fiat currencies...
The flies in the ointment drag the process on including those that can hold a position, and so the whole thing staggers along for a lack of mutual loss or,economy to econopmy inequities.....( that, I believe, is the single biggest drag factor) i.e. Germany's  along with a couple of others position in the E.U. becomes a hinderance to an all encompassing ground zero.
 Look around us Globaly speaking ....for all the day to day Fonterra's there is a scorched earth policy in effect....
 A conspiracy..? i don't think so really , just all out of options. 

"This leads me to think that there must be some fundamental design failings in the systems and key elements of the building process,"
http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10878216
I think this was a comment from Rip Van Winkle!

Of course US emissions are down. Happens when you consume less. Which happens when you do less. Which means that claims of even moderate growth, are either off a low/short base, or are measuring the wrong thing.

The wrong conclusion is being drawn from the problems of the EU ETS.  What is it "failing" to do?
 
Answer: something which should never have been expected of it, which is simultaneously to (a) deliver substantial reductions in carbon emissions and (b) not cost anybody anything.
 
If you seriously want (b), then you should not expect to reduce carbon emissions.  If you seriously want (a) then you have to be prepared to take on some costs.   The EU tried to have the best of both worlds by dishing out far too many carbon allowances - and then wondered why the carbon price wasn't high enough to incentivise carbon emissions reductions.
 
A properly managed emissions trading scheme (ie not the way the EU did it) will deliver a given level of carbon emissions reduction at minimum cost (as opposed to a carbon tax, which will deliver an uncertain level of carbon emissions reduction at a given cost).  No system will deliver carbon emissions reduction at no cost.
 

"Over a third of Cantabrians were fed up with their cold, damp and small houses, even before the February 2011 earthquake exacerbated their problems."
http://www.stuff.co.nz/the-press/news/christchurch-earthquake-2011/8567293/Cantabs-suffer-cold-damp-houses-report"
So many ways to keep in the warmth...so many too useless or lazy to make the effort...
Under floor insulation....in wall insulation foam....attic batts...double glazing! can't afford it?..try a slab of polystyrene at night...Try a wall of straw bales up the exterior...

P&G looks to save $2B by delaying payments. Procter & Gamble (PG) is reportedly planning to save up to $2B by extending the time it takes to pay suppliers to 75 days from 45 days. P&G hopes to sweeten the pain by working on an arrangement in which banks would pay the suppliers, possibly early, and then receive the money from P&G later on. The suppliers would be charged a low interest rate until P&G pays up.
 
http://online.wsj.com/article/SB10001424127887324010704578418361635041842.html#articleTabs%3Darticle