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90 seconds at 9 am: US and China factories slow; car sales rise; currency drama; RBA review today; NZ$1 = US$0.810, TWI = 75.7

90 seconds at 9 am: US and China factories slow; car sales rise; currency drama; RBA review today; NZ$1 = US$0.810, TWI = 75.7
4th Jun 13, 8:36am by David Chaston

Here's my summary of the key news overnight in 90 seconds at 9 am, including news of wild swings in the currency markets.

Manufacturing in America unexpectedly declined in May, the biggest slowdown in four years, reflecting falls in business and government spending. However, US car and truck sales were up, beating expectations.

In China, their official PMI rose faster than markets were expecting, but the HSBC PMI, which measures smaller enterprises was not so strong.

In Europe, they are not measuring growth but the pace of decline. And the latest indicators show that the pace of decline is slowing. The locals are taking that as 'progress'.

From thoses data signals, the kiwi dollar has been on a wild ride. On Saturday, (Friday New York time), it was marked down heavily, dropping more than a cent and a half against the US dollar to end at just 79.4 USc. Basically the Kiwi got thrashed against most other currencies with the TWI falling to 74.9, its lowest since the first week of January.

But overnight that data out in the US has disappointed markets and the US dollar is the one that has been falling, and the kiwi has recovered much of its previous session losses. In fact it has risen two and a half cents against the US dollar, reversing the downward trend for the past week or so.

Gold and oil were on the same yo-yo ride as the US dollar, but gold is having to deal with Indian moves to curb imports.

Later today, the RBA reviews its official cash rate target and analysts no longer seem as certain they will keep cutting. One more cut and the Aussie rate will be the same as the RBNZ's OCR.

The NZ dollar starts today at 81.0 USc, 82.9 AUc, and our TWI is down to 75.7 just slightly below where it was before we left work for the Queens Birthday weekend.

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7 Comments

by  Andrewj  |  4th Jun 13, 9:19am 1370294365

Hypertiger

Well yield rates have been dropping for 30 years. Meaning that the productive sector of the economy has been producing less and less yield while the non productive sector has been consuming more and more debt to make up the difference with volume. Now that the minimum potential yield volume ratio is being hit. It's becoming harder and harder to live beyond the means of the productive sector of the economy. There are just too many people being sustained on borrowed time.

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by  Rudderless  |  4th Jun 13, 9:55am 1370296503

Thank you Andrew

 

The sub-text of every second word in this piece means that it really does cover the whole situation.

 

The middle-class as we have known it is doomed. But 99% of us will only realise that when the bank says "no" to more debt.

 

From here on - just a matter of timing.

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by  Stephen Hulme  |  4th Jun 13, 10:08am 1370297301

Which begs the question why do we continue to pay taxes to service the collective debts (deficit spending) of the government? Others want answers too

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by  Andrewj  |  4th Jun 13, 10:11am 1370297480
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by  powerdownkiwi  |  4th Jun 13, 9:49am 1370296190
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by  Rudderless  |  4th Jun 13, 10:34am 1370298891

Readers should urgently Google 'Darwin and the machines'.

 

The upper Rangitata River run-holder Samual Butler could forsee the future even at a time when Darwin was not fully embraced - and Babbage was considered a crank.

 

In an 1863 letter to the editor of the Christchurch Press Samuel Butler forecast this possiblity.

 

Full employment will never return because the jobs are increasingly done by machines

 

When he returned to England Butler wrote the book Erewhon.  This book should be compulsary reading because it predicted a world where the machines became so clever they took over completely.

 

Grab a copy of Erewhon. Free on your IPad.

 

Find out how the Erewhonians dealt with the problem!

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by  Wolly  |  4th Jun 13, 10:36am 1370299014

"Officers confronted by 29 rioting inmates at the Spring Hill prison would have been overwhelmed if they tried to use pepper spray, a prison boss says." herald

Who needs pepper spray when the prison designers incorporated a multitude of high pressure water spray outlets hooked up to abundant water kept at 2 degrees ready for the off....oh crap...they didn't design for riot control...fools.

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