90 seconds at 9 am: ANZ cocks up

Key US sectors moderate; euro banks mostly pass stress tests; ANZ shares in trading halt; UST 10yr 2.26%; oil price falls; NZ$1 = US$0.79.0, TWI = 76.7

28th Oct 14, 7:26am by David Chaston

Here's my summary of the key news over the long weekend in 90 seconds at 9 am, including news of an embarrassing ANZ glitch.

But first, data out for the American services sector activity dipped to a six-month low in October from very high levels, while manufacturing output in Texas also dipped slightly, pointing to some moderation in US economic growth early in the fourth quarter.

Across the Atlantic, the European Central Bank said yesterday that roughly one in five of the euro zone's top lenders failed landmark health checks at the end of last year but most have since repaired their finances.

Europe's banking health check have shown countries and lenders are implementing global capital rules at vastly different speeds, and 36 firms would have failed if new capital rules were fully applied. Still, these tests show that most euro banks are healthy, including all in Germany, France and Spain.

There were two key elections decided over the weekend. In Brazil, the incumbent president won re-election. Brazil's stock market fell sharply. In the Ukraine, pro-European parties are headed for a decisive win.

In Australia, ANZ has accidentally released detailed information on its website ahead of its full-year profit results, in an embarrassing glitch that forced the lender to halt trading in its shares. The data shows that its second half profit rose +3%, ahead of analyst forecasts. However, New Zealand earnings dropped by -4%.

In New York, UST 10yr bond yields slipped slightly in trade today and are now at 2.26%.

The oil price is also fell and is now just under US$81/barrel with the Brent price now under US$86/barrel. The US price actually slipped below $80 over the weekend. In a sign of more pressure on oil-rich Venezuela, it has called off a planned sale of about US$10 bln in American refineries as surging North American crude output pushes down energy prices and profit margins.

The gold price is basically unchanged from where we left it last week at US$1,229/oz.

This week will be a big week for central bank announcements with both the US Fed and our own RBNZ announcing rate and monetary policy reviews on Thursday.

We start today with our currency a little higher. The NZD is at 79.0 USc which is nearly ¾c higher than where we left it on Friday, at 89.7 AUc which is also higher, and the TWI is at 76.7.

If you want to catch up with all the changes on Friday 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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13 Comments

by King of the whiners | 28th Oct 14, 9:21am 1414441296

China goes poo-shaped?

http://www.telegraph.co.uk/finance/markets/questor/11187002/Stock-marke…

by steven | 28th Oct 14, 10:12am 1414444363

I seem to recall Ambrose P? (and quite a few others) was very upbeat on China, I wonder what's going through his mind now...

So chinese electricity consumption down, global oil demand seems to be down if the price collapse is any indication.

but taht's Ok all is well as the cheaper oil will gaive a 1trillion dollar boost to things.....hmmm.

regards.

by ngakonui gold | 28th Oct 14, 11:09am 1414447793

Steve Cortes ofVeracruz Investments and also a guest on CNBC wrote a book around 2110 called AGAINST THE HERD.

6 contrarian investment stratagies you should follow.

In it he gives reason after reason not to investment in China.

Well worth a read.

by Gummy Bear Hero | 28th Oct 14, 11:12am 1414447977

Cortes is way ahead of his time in his strategies ..... 2110 ?

by ngakonui gold | 28th Oct 14, 1:11pm 1414455115

After a night on the turps i feel and look as i have aged considerably myself.

by Gummy Bear Hero | 28th Oct 14, 2:49pm 1414460996

... try this early morning reviver ....

http://www.youtube.com/watch?v=0ojEUkEFK2M

... thank me if you manage to find your eyeballs and pop them back into their sockets !

by Basel Brush III | 28th Oct 14, 10:22am 1414444942

Perhaps many of those who have been suckered into investing in non-performing real estate now have a cashflow problem that holds back consumer spend.

We could get something similar here if interest rates begin to suck dry the already low cash returns on predominantly Auckland housing investments.

Bring it on if it gets the RBNZ off the hook of catering for Auckland and stuffing up the rest of the country.

by steven | 28th Oct 14, 11:16am 1414448207

If you mean chinese property investment its a bit wierd. For instance employees can get "given" accomodation as part of the job/wage deal.

"interest rates" what petrifies me is a collapse of NZ economy as rising rates cripple the FHB which in turn dont spend. Then house prices tumble and we face an OBR situation. Not so sure im for "bring it on" by a long way.

"holds back consumer spend" I also think we have this situation already by the way, 6 years of it. With CPI flat or even dropping just what other conclusion can you make?

regards

by Henry_Tull | 28th Oct 14, 10:26am 1414445184

polish it all you like its still brown.

we have been watching commodity/industrial markets growth tank and now we hear the voice of the consumer ad the answer to the WMP question. not over buying, but a failure of demand

looking at pricing, here are Nestle half year result published Aug_14.

http://www.nestle.com/asset-library/Documents/Library/Presentations/Sales_and_Results/2014-hy-confcall.pdf

see page 11. and the impact of record high dairy costs to Nestle:

TOP margin -20 bps: currency and higher dairy costs (TOP being 18.9%).

could we suggest that the cost/price of dairy to these folk can be rounded to zero in results they report..... and in the full yr accounts expect no effect.

by steven | 28th Oct 14, 9:42am 1414442541

Notes on Easy Money and Inequality. "the empirical evidence points toward monetary policy actions affecting inequality in the direction opposite to the one suggested by Ron Paul and the Austrian economists."

Interesting comment/snippets in it more than anything,

http://krugman.blogs.nytimes.com/2014/10/25/notes-on-easy-money-and-ine…

While its US data it leaves me wondering as it seems to suggest overall NZ might well be similar, except our housing hasnt popped, yet.

Oh and,

"The main response to a depressed economy should have been fiscal; the case for a large infrastructure program remains overwhelming."

Oh say Green tech?...

ho hum.

regards

by steven | 28th Oct 14, 9:47am 1414442874

double negative?

"New Zealand earnings dropped by -4%."

by David Chaston | 28th Oct 14, 4:54pm 1414468452

Yes, I accept that not everyone likes the way I show falls/declines/reductions - a combo of the word plus the visual '-' before the number. It's not normal (but perhaps explains me), but I think it is clearer about what the direction is. Mathemeticians and accountants shudder though, I am sure.

by jr19 | 28th Oct 14, 4:05pm 1414465512

So we are seeing a pattern following other economic zones re CPI and a few other wobbly wheels. If we take one scenario of the housingbubble in Auckland popping, what happens? Do we see a lot of bankruptcy cases from the PI camp, will it have an effect on already levereaged small business owners (i.e. when lending rates are up for re-negotiation)? What about the FHB's who have beenwaiting in the wings? On a layman's (me) level of understanding I wonder if will that bouy dmeand and reduce the potential avg/median price floor?

As an aside I'm actively contributing to the slide in CPI, having bought a house at the bleeding edge of affordability we are cutting corners like theres no tomorrow (prophetic words?)