Here's my summary of the key news overnight in 90 seconds at 9 am, including news about growing turmoil in emerging markets.
US Treasury yields rose to 2.85%, their highest level for over two years, as the markets feel more certain that the US Fed will tighten policy in September.
Talk that Larry Summers could succeed Ben Bernanke as Fed chairman may also have contributed to rising yields. Summers is perceived as more hawkish than Bernanke or Janet Yellen, the other contender for the post.
Higher US yields are rarely good news for emerging markets.
Thailand reported negative growth in the June quarter, and is now in recession because that is two quarters in a row of falling growth.
Indonesian stocks and their currency fell sharply yesterday as foreign investors took their money home amid signs the country's strong growth is ending..
And the Indian rupee hit an all-time low against the US dollar overnight. The falls there are very sharp as investors lose confidence in the management of the Indian economy.
Brazil and South Africa are not faring well either.
Across the ditch, there was an unusual Aussie Federal bond auction yesterday. One mystery buyer snapped up everything - all AU1.6 billion on offer.
Speculation is that it was a foreign central bank or wealth fund, possibly European. It helps explain why the AU dollar was stronger on the day.
Confidence in the NZ economy will get a test tomorrow morning when the latest results from the Fonterra globaldairytrade auction are announced.
The NZ dollar starts today at 80.7 USc, 88.5 AUc, and the TWI is at 75.9.
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Amidst all the bluster over the CBA’s bumper profit, The Australian’s Adam Creighton has come out todayquestioning the long-term safety and stability of the banking system given the low level of shareholder’s capital held by Australia’s banks:
http://www.macrobusiness.com.au/2013/08/banks-long-term-safety-questioned/
Renowned professors of economics and finance at Stanford University and the Massachusetts Institute of Technology say very large banks with levels of shareholders’ equity around 3c in every dollar of assets are “ludicrously” and “outrageously” undercapitalised.
Only 4.8 per cent of the $2.83 trillion in total assets of Westpac, CBA, National Australia Bank and ANZ is shareholders’ equity, according to Macquarie Bank, up from 4.1 per cent before the global financial crisis. The rest is debt.
Anat Admati, professor of finance at Stanford, is calling for large banks to stop paying out dividends until their capital ratios exceed 20 per cent.
“A highly indebted bank is like an unstable, shoddily constructed building,” she said…
Simon Johnson, professor of global economics at MIT, said Australia should not be too confident it would never have a financial crisis given its exposure to China and resource prices.
Thanks Hugh
Anat Admati, author of The Bankers' New Clothes, joins Heather Stewart to discuss the state of financial regulation five years on from the banking crisis
http://www.theguardian.com/politics/audio/2013/aug/15/politics-weekly-podcast-anat-admati
You probably need the detail here »
Well, the last poll was National 51, Labour 29, Greens 14 (that one attracted a lot more publicity).
Keeping in mind the tendancy for polls to overestimate National support compared to actual election results, I would say the long-term trend is National unable to govern without the support of added support of a party it does not currently have support from.
So maybe, just maybe, the electorate is catching on to this style of bullshit politics - note there is not a mention of the previous GCSB spying indiscretions that this new legislation is just papering over without a single investigation, other than that undertaken by the private actions of Dotcom.
All increasing in 'value' of existing items, is a 'bubble'.
So I agree with Hughey that this is one.
But sometimes these bubbles can go on for longer than a lifetime, and be assumed to be 'normal'. In that case, you look for the 'driver' which enabled the continuance.
Lotta folk seen to baulk at that point.
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