90 seconds at 9 am: Reality check coming?

US housing in surprise fall; US stocks fall; UST 10yr yields down; oil falls further; silver at 4yr low, gold down; AU dollar slides; NZ$1 = US$0.811, TWI = 78.6

23rd Sep 14, 7:26am by David Chaston

Here's my summary of the key news overnight in 90 seconds at 9 am, including news of another stumble in US economic data.

After four consecutive months of gains, existing-home sales slipped -1.8% in August as investors stepped away from the market. Sales increases in the Northeast and Midwest were outweighed by declines in the South and West.

Equity markets did not like those American house sale numbers, and the more they thought about yesterdays G-20 statement from China's finance minister pouring cold water on more stimulus, they liked that even less. Stocks tumbled..

In New York, the UST 10yr benchmark bond yields are down another -3 bps at 2.55% in late afternoon trade.

The price of oil just keeps falling. The US oil price is now under US$92/barrel and the Brent benchmark is just under $97/barrel. Gold continued its fall and is now at US$1,213/oz. Yesterday silver hit a four year low although has bounced up a little today. The trends for precious metals however don't look too flash. Gold is also close to its four year low point.

We start today with our currency slightly lower again and now just on 81.1 USc, higher against the Aussie at 91.5 AUc, and the TWI is unchanged at 78.6. The 50 bps election rally has now disappeared.

The Australian dollar slid to a seven-month low against the greenback after Nouriel Roubini's firm predicted a steep drop in the currency on the waning health of the Chinese economy. His firm sees a 20% devaluation for the Aussie dollar and interest rate cuts in the 'lucky country's' future.

New Zealand seems like islands of prosperity and optimism. Can we sustain it in a globalised world? Perhaps a reality check will come as early as tomorrow following Fonterra's updates.

If you want to catch up with all the changes yesterday we have an update here.

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

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9 Comments

by Andrewj | 23rd Sep 14, 8:03am 1411416187

BABA

http://davidstockmanscontracorner.com/they-do-ring-a-bell-at-the-top-al…

by Henry_Tull | 23rd Sep 14, 8:35am 1411418147

and yet the competitive advantage may include:

http://www.nytimes.com/2014/09/22/business/international/china-clamps-down-on-web-pinching-companies-like-google.html

HONG KONG — Google’s problems in China just got worse.

As part of a broad campaign to tighten internal security, the Chinese government has draped a darker shroud over Internet communications in recent weeks, a situation that has made it more difficult for Google and its customers to do business.

Chinese exporters have struggled to place Google ads that appeal to overseas buyers. Biotechnology researchers in Beijing had trouble recalibrating a costly microscope this summer because they could not locate the online instructions to do so. And international companies have had difficulty exchanging Gmail messages among far-flung offices and setting up meetings on applications like Google Calendar.

by Andrewj | 23rd Sep 14, 8:45am 1411418758

trying to make a forecast for my farm is getting harder than predicting the weather.

Year-to-date, exports from Brazil to Arab countries amounted to US$ 8.51 billion, down 3.47% from the same period of last year. Exports increased for frozen beef, by 2.2%, fresh beef, by 20.5%, soy, by 73.7%, dairy, by 181% and livestock, by 11.5%.

http://www.brazzil.com/info/138-september-2014/23889-brazil-doubles-imp… https://agrihq.co.nz/article/arla-foods-strengthens-partnership-in-braz… http://www.companiesandmarkets.com/News/Food-and-Drink/India-s-dairy-ma…

by Henry_Tull | 23rd Sep 14, 8:48am 1411418902

how bizarre.... v

Things That Make You Go Hmmmm.

http://www.theaustralian.com.au/business/strange-moves-in-last-months-of-van-eyk-make-for-bizarre-saga/story-e6frg8zx-1227064612769

Ultimately the unravelling of the Van Eyk series of funds can be traced to the strange case of $31m that was invested in London by the Blueprint International Shares Fund. This investment caused the fund to be declared “illiquid’’ last month.

That in turn caused Macquarie Investment Management, which had a contingent right to a payment from Blueprint if Blueprint was sold, and was the responsible entity for most of the 14 funds in the Blueprint series, to wind up no fewer than 13 of them in very short order — within the last month — despite the fact that only four of the funds had been directly affected by the illiquid investment.

An even odder part of this saga is that the $31m was actually redeemed to cash in September of 2013, in Britain, according to a contract note obtained by The Weekend Australian.

This redeemption came a year after it was originally sent to London by New Zealand-owned Van Eyk to a hedge fund, Artefact partners, owned by another New Zealander, Richard Boon.

However, there then occurred what could at the least be described as a misunderstanding, because instead of being sent back to Blueprint investors in Australia, the $31m was partly invested in more than 100 local newspapers in Britain.

It was done in the form of a parcel of discounted ex-Babcock and Brown debt that a former owner of Van Eyk, Kiwi investor George Kerr, had bought.

Kerr then arranged a loan of about $NZ18m ($16m) from a trustee company that his Pyne Gould group owned, to help pay for $200m worth of debt owed to Bank of Scotland International.

But the Financial Markets Authority in New Zealand stepped in and ordered Kerr to repay the money to the trustee company in mid-2012.

What is attracting almost as much attention from regulators is the fact that when Kerr offered for sale in January or February a parcel of 6.22 million shares in Van Eyk, Thomas calculated that he only needed to buy around 5.5 million of them to be able to outvote Australiasian Wealth Investors and keep his board seat.

by Henry_Tull | 28th Sep 14, 11:00pm 1411898415

Investors in a secretive private equity partnership are rebelling against its manager, enigmatic Kiwi businessman George Kerr, as scandal threatens to engulf the $240m fund.

http://www.stuff.co.nz/business/industries/10553642/Kerr-under-pressure-in-fund-revolt

Amid regulatory probes into Van Eyk on both sides of the Tasman, the Torchlight general partner is under increasing pressure over its handling of Torchlight.

by profile | 23rd Sep 14, 10:57am 1411426643

Global gas prices heading down too.

http://www.timera-energy.com/uk-gas/this-is-no-ordinary-fall-in-global-…

It is our view that the global market is now entering its next phase, potentially one of transition to a period of significant oversupply. This may have profound implications for the evolution of both gas and power markets

by Kate | 23rd Sep 14, 12:32pm 1411432324

Reality check coming is a great heading, for sure.

by waymad | 23rd Sep 14, 1:03pm 1411434200

Re US RE (almost a palindrome, but certainly nicely recursive):

No-one who has kept up with the US housing scene should be 'surprised' by the stumble in sales.

Keeping in mind the fact that the US is 50-some markets, and that many cities are markets unto themselves, there are still the following factors, as neatly laid out by Doctor Housing Bubble:

Investors pulling back
Middle class shrinking
Renter class rising
Higher education bubble and the accompanying student debt
Long-term tax treatments of housing (e.g. deductability of interest)
Boomer retirements (cash-it-up and SKI)

To which I'd add the static U6 numbers (caution: Gubmint "data" alert), static real wages, and not to mention the household/consumer stress pointed to by analysts like MOM.

Doesn't augur well for a good US winter....

by Kate | 23rd Sep 14, 1:28pm 1411435729

All sounds very familiar to here.