Here's my summary of the key news overnight in 90 seconds at 9 am, including news of conflicting signals in the global economy.
The US economy grew at a “modest to moderate” pace in 11 of 12 Federal Reserve districts, with broad-based gains ranging from business services to construction and manufacturing, the American central bank reported in its Beige Book review earlier today. This helped push the US dollar higher.
Also helping were reports of good job growth, especially in the service sector, in the widely watched ADP survey.
At the same time, the maverick Dallas Fed boss was saying he had actually been reducing his monthly asset purchase under the Fed QE program since the start of 2013. Bernanke had suggested the pull back hadn't started yet. Credit markets were nervous, mainly because they have grown rich off the program, although most everyone is now expecting a reduction at some time. Equities have fallen quite sharply on the news, down more than 1% in late trade in New York. The Dow is now below 15,000 for the first time in a month.
In Europe, the IMF has admitted errors in the way it and the EU handled the Greek fiscal crisis. It is now saying it should have forced bond-holder losses much earlier, rather than socialising them.
An ugly trade spat has erupted between the EU and China. Firstly, the EU slapped anti-dumping duties on Chinese-made solar panels (against the wishes of the Germans and the British) to protect its local manufacturers. And now China is retaliating with anti-dumping duties against French wine. France has reacted badly to the move.
Australia’s economy may be teetering on the brink of a domestic recession as the resources boom falters, consumers restrain spending and businesses cut investment plans. Yesterday's GDP data showed it grew at its slowest pace in two years in the March quarter.
Domestic demand shrank in the quarter, the weakest figure since the height of the global financial crisis. The economy expanded at less-than-expected 2.5% over the whole year. Its currency was lower as traders increased bets on further interest-rate cuts.
Meanwhile - and perhaps taking advantage of the exchange rate - there are reports that Air NZ has increased its stake in Virgin Australia again to become its largest single shareholder.
The NZ dollar starts today at 79.3 USc, its lowest level since July 2012 - the same as the euro - and we are at the lowest level against the British pound this year, 83.3 AUc. Our TWI is down to 74.5, also the low of 2013.
No chart with that title exists.
19 Comments
The IMF has yet to admit it's biggest error, of course.
That it's publicly-stated goal was unattainable/fatally-flawed, and that it's approach facilitate a wealth-transfer of increasing-proportions, which went on until it couldn't.
Must be some worried folk, thereabouts, and a lot of effort going into keeping the lid on things....
The problem in amongst that very useful article is that once you have tokens rather than barter then you have potential for dishonesty. The question that needs to be asked is "what does money need to be". Part of the answer is being protected from dishonesty.
Unearned income also requires the support of a token. (this is why opportunity cost, or deferred consumption is nonsense)
One thing that is actually quite black and white is the distinction between earned and unearned income.
Some would argue that essential services, (soldiers, or trainers of them in the article) grey this principle, but they don't. What you have is an acceptance for some people receiving unearned income and the decision by society, hopefully based the resources underpinning that society, on how many of those unearners it can support.
Its currency was lower as traders increased bets on further interest-rate cuts.
Looks more like an issue with Japan and the carry trade
The USD weakened as JPY was bid (and AUD sold hard) amid heavy carry unwinds. Volume was heavy today but the selling was very broad-based across the sectors (homebuilders remain worst on the week). The Dow ended with its biggest points drop in almost two months
http://www.zerohedge.com/news/2013-06-05/stocks-slammed-best-day-bonds-4-months
For all those technophiles out there (who believe technology will always save the day). In drug discovery the term eroom law (Moores law in reverse) has been coined to reflect the continued decline in drug discovery no matter how much money is thrown at the problem:
http://pipeline.corante.com/archives/2012/03/08/erooms_law.php
The concept that the low hanging fruit are picked first should be one economists dabbling in resource depletion should be forced to learn...........
By the way the vertical axis is a log scale so the problem is MUCH worse than at first glance.
As the linked post notes, drug companies have to compete with now entrenched treatments that work good enough. Arguably this is why the past few decades have been spent keeping up profits by coming up with new formulations of existing drugs to keep them under patent, funding lobbying campaigns for the in patent medicines, and regulatory lobbying to capture markets.
An informative recent Australasian story in this vein is the Avastin/ Lucentis issue. New Zealand features because some of our doctors pioneered the Avastin use, despite pushback from the drug companies.
http://www.theglobalmail.org/feature/australias-billion-dollar-blind-sp…
That said, the drug companies have had a lot of success in New Zealand with Tamiflu, so swings and roundabouts for them.
http://www.guardian.co.uk/science/2012/nov/12/bmj-roche-tamiflu-data
Erm - maybe it was the introduction of discovery-stifling FDA procedures.
Ten years and a coupla billion $ to bring a new drug to market.
Incentives always matter.....and so do Disincentives, as Obamacare is finding out...welcome to the 29.999 hour part time week, workers....
Meanwhile - and perhaps taking advantage of the exchange rate - there are reports that Air NZ has increased its stake in Virgin Australia again to become its largest single shareholder.
Are we about to get into an extremely inadvisable bidding war with Singapore Airlines - which meanwhile bails out Richard Branson's long suffering bankers - New Zealand taxpayers cannot keep shelling out money for lost causes - MRP is already inflicting enough damage at the moment.
Phone call ..
ring, ring .. ring, ring ..
Hello, MacQuarry and Goldmine here ..
Heavy breathing
Johnson here.
What the heck are you dirt-bags doing, I want that price back above $2.50 pronto
And I want it up tomorrow. Don't care what it costs you. But get it up.
click
LOL - This bloke added little to the mix other than to further knock market confidence in an industry, which I think is not fit for purpose and hence public ownership.
Dr Brent Layton, chairman of the Electricity Authority, yesterday published a paper The Economics of Electricity, in which he attacked critics of the present system.
The paper names three vocal campaigners - electricity campaigner Molly Melhuish, industry consultant Bryan Leyland and Victoria University academic Geoff Bertram - and attacks the single-buyer model recently proposed by Labour and the Greens.
The paper also defended the electricity system against a number of attacks from the Opposition.
Layton said the authority had the power to replace the present wholesale market with a single state-controlled buyer, but would not do so as it "does not believe they will promote the long-term benefit of consumers".
But on a serious note - matters in Japan have to evolve into an agreeable outcome -ongoing turmoil in this market remains a significant impediment to local stock market advances. Read on
The Bank of Japan is divided over whether to authorize a measure designed to quell bond-market volatility, with some officials concerned it would return the BOJ to a pattern of incremental steps that failed in the past, according to people familiar with the discussions.
Here's the lead story in the AFR today;
Australian miners are burning through so much cash that they may be forced to merge with rivals, sell assets cheaply and raise money at discounted rates, a new study says.
New analysis from corporate accounting firm Ernst & Young shows that a sample of 354 listed base metals and coal companies with a market capitalisation of $500 million or less have, on average, just under two years left of spending at the current rate. Some risk collapse, the firm says.
http://www.afr.com/p/business/companies/small_miners_burn_up_cash_uvfqA…
Meantime in Mongolia - mega mine set to transform country:
http://www.aljazeera.com/indepth/features/2013/06/20136411194013777.html
Interesting to read the comments.
Gertraud's reminds me of the hype round the mega discovery off the Brazilian coast, or was it the.....? Nothing scales to underwrite doubling-doubling-doubling time.
Australia has the real wealth, but at a certain rate of extraction (what is it the diggers use again?) they can't 'double' either.
The ones who track the proxy (bet on which deck-chair slides least) pontificate that NZ will go where the sunburnt country goes, but most of our bushels are in the food basket, and food is not a discretionary spend.
Ergophobia makes the common mistake - or is the common smear? - of equating Lightoller with the collision. Actually, doesn't matter who is in charge, it's tha same outcome: an attempted growth within a finite system.
Yep, the Dow will continue up - for a while. One of the too-few games in town, now. Along with real estate.
It's all quite interesting, this interest in the lack of underwrite for interest.
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