Here's my summary of the key overnight news in 90 seconds at 9 am, including news of post-debt-limit cleanup.
With a deal done, even a temporary one, eyes are now on the impact of the shutdown in the US and the consumer reaction.
Early signs are that American consumers are likely to breathe easier during the holiday shopping season, boosting retail sales. There is also an expectation that the crisis will delay the Fed's tapering plans until the effects settle.
Along with a fall in US jobless claims last week, and a rise in a big regional factory index, US equity markets have exploded out of the gate positively, with the S&P500 likely to end todays session in record territory.
The oil price has fallen sharply overnight, with the benchmark US price down to US$100/barrel at one point, although it has recovered slightly since then. The Brent benchmark is at US$110/barrel. These price levels are similar to what they have been for the past three years.
Positive these things may be, but outside the US, people are reassessing what went on, and worried these short-term responses are habitual.
Gold has snapped back up, to well above US$1,300/oz. And the US dollar exchange rate is tumbling, pushing our currency up over 85 USc, moving with the European currencies and the Yuan.
The Chinese official media is making a big deal about a reassessment of how it holds it foreign reserves. They may be trapped now because US Treasuries are the only instrument with enough capacity to hold their wealth, but they are actively looking for an alternative. They have few choices to hold US$3 trillion.
US Treasury 10 yr bond yields have fallen back to 2.60%.
We are only in October, but the Australian fire season is well underway, with events that are 'as bad as it gets'. This coming summer will be a real test of Australia's ability to cope with extreme heat, and that response will likely have a lasting impact on New Zealand.
The NZ dollar starts today higher yet again at 85.1 USc, 88.3 AUc, and the TWI is at 78.3.
The easiest place to stay up with today's event risk is by following our Economic Calendar here »
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7 Comments
We may be the smartest species on the planet, but listening to Morning Report, you have to come to the conclusion that we're pretty dumb.
The weighting given to the pathetic slug-fest between those who would take down John Banks and those who would take down Len Brown (neither promote sustainability - though perhaps Brown is a smidgin closer - while the bushfire season
is early. Where was the questioning of continued Aussie coal export, or the failure of our RMA re the Denniston Plateau?
Relativity. There's not a lot of it about.
I have just read Golem Andrew and that is a ripper of an article. Works for me since I have been chastising all the stupid people that think their vote makes a difference.
So the move he mentions at the end is perhaps towards fascism?
Couple of other things as well.
The switching of debt from public to private doesn't actually improve the ability for the interest on that debt to be paid, which is one of the roots of the system. Sooner or later is falls over when someone isn't able to collect their investment. Although printing more money (hyperinflation coming) will probably be the solution when that happens again.
What Golem doesn't say in this article, but I suspect he knows, is that it is really oil that underpins the system. It is oil that has provided the growth. Give oil has likely peaked then the growth oil provided is being replaced by money printing, subterfuge really. I do wonder if enough people will figure that out and oil and gold will go to the moon. Of course we don't have sovereignty unless we have energy indepedendence. I keep telling Iain Parker that we can simply move to a public money supply because we need the debt based reserve currence to pay for the oil we import.
Beats you average BS property discussion. Will get to those other links this weekend.
US Treasury 10 yr bond yields have fallen back to 2.60%.
Can we now send Roger J Kerr to gardening duty - his bold, but factless assertions offer sparse gain to hapless followers and are pointedly biased for a hardly observed growth prognosis.
Borrowers who have missed all the opportunities to fix interest rates to date would have to be questioning their risk management disciplines or where the instructions/information is coming from not to fix.
Perversely, a resolution to the US fiscal problem should result in higher 10-year Treasury Bond yields as the markets return to focusing on the economic outlook and conclude that US economic growth and inflation will be increasing, thus unwinding of the monetary stimulus will be occurring in 2014.
The downward correction in US bond yields appears to be already over. Read more
Furthermore, the following assertion all but guarantees the supply of debt to further the Federal Reserve's QEternity odyssey without reserve.
As part of the bargain codified in HR 2775 (which President Obama signed into law), the Treasury Department is authorized to SUSPEND the debt ceiling. In other words, for all intents and purposes, there is now NO LIMIT government borrowing.
This limitless borrowing authority will expire on February 7, 2014. But it sets the precedent that dismissing the debt ceiling is a perfectly viable course of action.
Congress has effectively removed their handcuffs… so you can almost assuredly bet down the road that this provision will be extended, and ultimately become permanent. Read more
XERO has closed the week at $ 27 .... up 50 % from just one week ago ...
.. remember our Lord & Master , the Great Wise Warren of Omaha : " Be fearful when others are greedy : Be greedy whe others are fearful . " ...
If it's push into the USA proves successful , the current share price of Xero will seem like a bargain .....
.. " IF " .... don't say you weren't warned !!!
LOL - makes a mockery of that business called employment - glad I shunned it early in favour of other pastimes- pointless earning pennies when others bath in billions. Let's hope all the brain surgeons amongst us don't take offence and exercise copycat early retirement plans.
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