90 seconds at 9 am: A different world?

90 seconds at 9 am: NZ:US fx rate lower; interest rates rising; equities hold at record levels; oil up, gold down; NZ$1 = US$0.816 TWI = 77.3

20th Dec 13, 7:17am by David Chaston

Here's my summary of the key news overnight in 90 seconds at 9 am, including news of a changing landscape.

Welcome to the last morning video update for 2013 - and the world is a little different today following the Fed's start to tapering.

Firstly, our exchange rate with the US dollar is sharply lower this morning, meaning many of our exports will be worth more. It has fallen 70 bps overnight, and more than 140 bps in a little over a week.

Secondly, interest rates are starting to rise. Not only have UST 10 yr benchmark bonds risen to 2.94% today, local swap rates are up 10 bps in the past week, half of that yesterday.

Thirdly, equities are surging higher. The Dow and the S&P500 are up in record territory holding on to big gains yesterday despite some disappointing US jobless data out overnight.

Also out overnight, American existing home sales volumes fell although median prices rose, in a very similar pattern to what happened in New Zealand in November.

The price of oil is up sharply, but the price of gold has fallen and is now down below US$1,200/oz.

Yesterday's strong economic growth may be the first of many such reports in 2014 - and the consequence may be higher inflation and capacity constraints. More economists are now picking a steady stream of OCR hikes in 2014, starting in March. By the end of 2014, we may well have much higher interest rates - good news for savers, and a tighter situation for borrowers.

The NZ dollar starts today at 81.6 USc, 92.2 AUc, and the TWI is unchanged at 77.3.

The easiest place to stay up with today's event risk is by following our Economic Calendar here »

If today is your last day at work for the year, best wishes from the whole crew here at interest.co.nz. Enjoy your holiday break. Check in with us when you can - we will be running every day except the public holidays and keeping you up with the latest financial news that affects New Zealand.

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24 Comments

by Kate | 20th Dec 13, 10:05am 1387487142

Just as you posted yesterday as well, Hugh.

by SK | 20th Dec 13, 10:49am 1387489768

The Jews are apparently gods chosen race - hopefully with her help they could solve their inflation issue.

by 2 Tooth Bora | 20th Dec 13, 9:24am 1387484696

Good to see the folks down at interest.co are getting into the christmas spirit; good on ya David (aka father christmas:)

by Stephen Hulme | 20th Dec 13, 9:25am 1387484739

Yesterday's strong economic growth may be the first of many such reports in 2014

Hmmmm - Rebounding dairy production drove a 1.4 percent increase in gross domestic product (GDP) for the September 2013 Read more

How much found a buyer?

Indeed, so much milk poured into Fonterra in the peak season between September and November that the co-op could not process it all and has dumped large quantities in smelly buttermilk lakes or at sea. Read more

As Stats NZ noted;

Goods imports increasing by more than goods exports also drove the increase in New Zealand's annual current account deficit. The deficit increased from $8.2 billion (3.9 percent of GDP) in the June 2013 year to $8.8 billion (4.1 percent of GDP) in the September 2013 year. Read more

by Kate | 20th Dec 13, 10:33am 1387488824

From this article;

http://www.stuff.co.nz/business/industries/9536155/China-now-NZs-top-ex…

For the November year, exports to China jumped more than 41 per cent to $9.4b.

Over the same period, exports to Australia fell 8 per cent to $9.2b.

Imports from China also dominate New Zealand, worth $8.2b in the past November year, almost $2b more than New Zealand bought from Australia.

Seems hard to believe that we exported $9.4 billion to China, a country with a population of 7 billion, and during the same period our tiny 4 million folks managed to import $8.2 billion dollars from them in return.

Surely not? If so, we are stuffed.

by brilliman | 20th Dec 13, 12:27pm 1387495676

Always enjoy reading your posts/comments. Thanks.

But sorry this time Kate, China is still a long way away from 7 billion population mark.

Merry Xmas & Happy New Year.

by Kate | 20th Dec 13, 12:53pm 1387497235

Ooops - that was the world at 7b - thanks for the correction!

Okay, China with it's 1,300,000,000 billion to us with our 4,000,000 million.

Must admit I was so taken aback wondering what in the world (well actually in China) we had spent all that dosh with them on - I got a bit carried away!

by Stephen Hulme | 20th Dec 13, 11:02am 1387490528

Cheers ostrich. I wish you the same and thank you for sharing your unique insight.

by Alter Ego | 20th Dec 13, 11:21am 1387491662

Ironically Stats are actaully laying off staff.

Wonder why?.

by Stephen Hulme | 20th Dec 13, 11:23am 1387491826

Try ideology of crony capitalism - read more

by Henry_Tull | 20th Dec 13, 11:44am 1387493053

business solutions .... theres gold in them thar hills

An IBM sales executive on a salary of $295,000 is suing the company because it paid her a bonus of $543,000 – half a million dollars less than she believes is owed to her.

Fiona White is an account manager in IBM's business solutions area who, according to a statement of claim filed in the Federal Court, is suing the company for loss and damage.

Lawyers for Ms White said in her statement of claim that she was paid an annual salary of $295,000, and that she was entitled to earn commissions "depending on her exertions and work levels".

Having been set a target of $US900,000 ($A1 million) in sales, Ms White said she had achieved recognisable revenue of $US9.1 million.

http://www.smh.com.au/it-pro/business-it/highachieving-employee-sues-ib…

by Kate | 20th Dec 13, 11:49am 1387493375

Coupled with breath-taking incompetence;

http://www.scoop.co.nz/stories/BU1312/S00768/breath-taking-incompetence…

by Roger Witherspoon | 20th Dec 13, 12:13pm 1387494805

Incompetence or sabotage perhaps. Maybe the staff just don't like mining.

by Alter Ego | 20th Dec 13, 12:16pm 1387495017

Stephen, thanks for the link, I needed a laugh.

I used to work in "Change Management" many moons ago and watched as management wasted more on consultants, but never consulted the staff, as they 'The Management" knew best.

I would change that idea-oligy in a flash.

Miss management costs far more than this country can bear.

As for advising on a poodle to relieve stress at 340K per Consultant, gob smacked.

Though I had a laugh, it is actually very serious.

I particularly liked this simple solution in the link, hence my comments above.

Never ask the Management, that is why the world is in a mess..no bleedin idea.

"The simplest way to improve services – and run them more efficiently – is to ask staff about how things could be done better, and involve them fully in the process of change. The PSA is already scoring major successes by helping run this kind of process in hospitals".

I suppose it is a start.

Personally I would start at the top and work my way down.

Firing them that needs it and not paying huge payouts for stupidity, would end most of our problems.

Importing silly ideas and promoting them was the first problem.

by steven | 20th Dec 13, 1:02pm 1387497734

census finished?

regards

by Frostwind | 20th Dec 13, 10:35am 1387488944

David, Merry Christmas

You are very sexy wearing that Santa hat :)

Lots of love from your listener!

by notaneconomist | 20th Dec 13, 11:03am 1387490611

Pretty simple really - NZD gets driven lower = less purchasing power = inflation.

Higher NZD = more purchasing power = deflation.

Well the Pollies have done everything in NZ to try and alleviate deflation by increasing debt, Increasing GST etc and now they'll have less NZD to pay back with.

Who gets to make the most money out of interest rate increases? Overnight settlement with absolutely no limits.......and we pay the Government a dividend.....

by Boatman | 20th Dec 13, 12:28pm 1387495719

Re Isreali inflation vs NZ Inflation

The two are probably measured differently

Isreal will include the increasing costs associated with housing inflation in the CPI

In New Zealand our CPI basket is a standing Joke , we DO NOT include the costs of housing , but we have package tours to Fiji in the CPI Index

by Mike B | 20th Dec 13, 1:12pm 1387498320

Merry Xmas everyone and thanx for all the good articles and very good comments.

by notaneconomist | 20th Dec 13, 1:28pm 1387499326

Merry Xmas to everyone have a fantastic holiday season.

And don't put a blind fold on when choosing the Turkey.

http://www.youtube.com/embed/Lp2XV22FO4c

by Alter Ego | 20th Dec 13, 1:53pm 1387500803

Grinch .....Hugh. How about a True Kiwi Christmas. > > > Twas the Night before Xmas and all through the bach > Not even a weta was making a scratch > Woolly socks were hung by the pot belly with care > In the hopes that Santa soon would be there > The children were snoozing in a light summer's breeze > Whilst dreaming of spongy pud and lime green cream freeze > And dad in his walk shorts and me in my jandals > Had just settled down for a couple of handles > When out on the lawn I heard such a ruckus > I sprang from my Lazy Boy to see what the fuss was > I ran to the sliding door, gasping and wheezing > Threw open the curtains and upped the venetians > The moon on the sand and the Trailer tarp > Lit the beach up just like Eden Park > But still when I saw, I thought I was asleep > A miniature Kingswood, pulled by eight tiny sheep > With a little old driver, sipping a Fanta > I knew in a moment, it had to be Santa > Faster than Phar Lap on steroids they came > And he coo-eed and shouted and called them by name > Now, Kevin! now, Sharlene! now, Rangi and Beck! > On, Darryl! On Shazza! on, Bilbo and Shrek! > To the top of the Pagoda, to the top of the wall > Get in behind, Get in behind, Get in behind, All! > As sandflies around a bar-b-que fly > When they sniff the sizzlers and take to the sky > So up to the top of the bach they flew > With a boot full of toys and Santa Claus too > With a handbrake stop, they arrived on the roof > Four Goodyear tyres and 32 hoofs > And as I quickly turned and ran to the lounge > Out from the chimney Santa came with a bound > He was wearing boardshorts, and gumboots on foot > And his Mambos were covered in six-month-old soot > A bundle of toys he had on his back > As if on OE with a brand new Macpac > He looked like he'd come from the beauty parlour > With rosy red cheeks like pohutakawa > A gorgeous big grin and white as white hair > With wee little tufts growing out of his ears > He had a broad chest and a round beer gut > That shook when he laughed like Jabba the Hutt > He was chubby and plump, a right jolly hobbit > And I laughed when I saw him, I couldn't stop it > He gave me a wink and a bonza thumbs up > And I quickly realised he wasn't a nut > He went straight to the socks without saying a thing > And filled them with barbies and Shrek 2 keyrings > Then giving his nose a jolly good scratch > He flew up the chimney with an almighty flash > He jumped in the Kingswood and cranked the ignition > And then they took off, like some NASA mission > But I think I could hear, as he drove out of sight > "Merry Christmas to all, have a boozy good night!" Please note....disclaimer. I am not an Aussie. Apparently Kiwis may have flown the coop from Aussie, if truth be told. So all the above is superfluous. Apparantly DNA proves that our flightless KIWIS are descended from an Australian version.

Maybe that is why they turned flightless, until recently, they were all imprisoned here, after escaping there.

Even the Brits sent their convicts there first.

Before discovering Godszone.

Now we import our own. And build PPP prisons to house em all.

I do like to stir the melting pot.

Merry Christmas from one of the Santas little helpers.

PS.

And a Happy New Year to all you "Dear Leaders"

Too expensive by half, so half of you have to go.

(I wish.!!)

It would be the most economic thing to do.

That would be my true Christmas...present.

That and to make Hugh happy.

HA ha, de ha.

by Christov | 20th Dec 13, 2:54pm 1387504476

Artnoon David resplendent in red hat wit ermine trim , I would like to wish you a Merry Christmas and a prosperous New Year.... my best also to Gareth, David, Alex( if he's around the pooter in Blighty) Bruce the whole team there.....never forgetting Bernard the big H , hoping for his sake Boomers and Gen XY can whilte flag their differences for the festive frollicks.

Anyhoo.....as it is Christmas, a shoppers story amid the mad season....!

A couple were Christmas shopping. The shopping center was packed , and as the wife walked through one of the malls she was surprised when she looked around to find that her husband was nowhere to be seen.. She was quite upset because they had a lot to do and hence, she became so worried that she called him on her mobile phone to ask him where he was. In a quiet voice he said, "Do you remember the jewelers we went into about five years ago where you fell in love with that diamond necklace that we couldn't afford, and I told you that I would get it for you one day?" The wife choked up and started to cry and said, "Yes, I do remember that shop." He replied, "Well, I'm in the pub next door." My very best to you all , I shall pop over to Big B's thread for one least Friday Yay...!

by Alter Ego | 20th Dec 13, 8:02pm 1387522935

My felicitations to all concerned, mostly absent friends. Some gone for good.

(Some, I wish they had).

This is the last effort of the day.

Primarily aimed at my wife, however, it may tickle your fancy...too.

How to make a woman happy this Christmas, in fact, anytime..

It's not difficult to make a woman happy. A man only needs to be: 1. a friend 2. a companion 3. a lover 4. a brother 5. a father 6. a master 7. a chef 8. an electrician 9. a carpenter 10. a plumber 11. a mechanic 12. a decorator 13. a stylist 14. a sexologist 15. a gynaecologist 16. a psychologist 17. a pest exterminator 18. a psychiatrist 19. a healer 20. a good listener 21. an organizer 22. a good father 23. very clean 24. sympathetic 25. athletic 26. warm 27. attentive 28. gallant 29. intelligent 30. funny 31. creative 32. tender 33. strong 34. understanding 35. tolerant 36. prudent 37. ambitious 38. capable 39. courageous 40. determined 41. true 42. dependable 43. passionate 44. compassionate WITHOUT FORGETTING TO: 45. give her compliments regularly 46. love that shopping 47. be honest, does my butt look big in this. No dear. (If ya wanna keep living). 48. be very rich 49. not stress her out 50. not look at other girls AND AT THE SAME TIME, YOU MUST ALSO: 51. give her lots of attention, but expect little yourself 52. give her lots of time, especially time for herself 53. give her lots of space, never worrying about where she goes IT IS VERY IMPORTANT: 54. Never to forget: Those special occaisions, *Christmas * birthdays * anniversaries * arrangements she makes 55...last but not least Never forget presents...Gold, Diamonds, clothes, bath the kids, put up with her Ma visiting. In fact the list is endless. HOW TO MAKE A MAN HAPPY THIS CHRISTMAS EVE....(Me) 1. Show up naked and willing with mistletoe.. 2. Also bring drink and nibbles. Cannot wait for Tuesday. I have waited all year....weep.

by Grant A | 20th Dec 13, 8:21pm 1387524078

Boatman - don't quote me, but I think the cost of housing is in the CPI, but not house prices