Business confidence down everywhere except China (and NZ); Murray says banks have reputation problem; Russia bleeds; NZ$1 = 78.5 USc, TWI = 78.3

Here's my summary of the key news overnight with news of a startling comment from David Murray in Australia.

But first, global business confidence slipped to five-year low in October, according to a survey of 6,100 companies. Still, the number of firms that expect business activity to be higher in the year ahead exceeds those that expected a decline by about 28%. However that net balance was lower than 39% in June and the lowest since the  began in 2009.

For all the negative talk about China's slowing growth, their businesses seem remarkably optimistic still. In fact, Chinese company optimism is a bit of a standout among the major economies surveyed, and they are still reporting they expect to increase hiring over the next year.

However in stark contrast to that, China's leadership and central bank are reported to be ready to cut interest rates again and further loosen lending restrictions. The concern is that falling prices could trigger a surge in debt defaults, business failures and job losses.

US stocks are rising today with major indexes hitting fresh records on the back of multiple merger deals and hopes that China will take further accommodative monetary policy action.

The American services sector expanded in November but at a slower rate than the previous month as growth in new business slowed.

In Australia, the David Murray redesign of their financial system has all but gone to the printers and investors in banks are already "trading the capital structure" ahead of what could prove to be a major shake-up. Murray, a former CBA boss, says the industry has a big reputation problem stemming from a deficit of trust that won’t be restored by regulation. Rather, he says, it will require bank leaders to fix cultures.

At the same time the political problems of the ruling parties in Australia are about to get much worse. Australian police are investigating allegations about the misuse of A$12 mln in Chinese funds during the 2013 political campaign of mining magnate Clive Palmer, The Australian newspaper reported yesterday.

In Russia, their Finance Minister said overnight Russia stands to lose as much as US$140 billion a year as a result of lower oil prices and Western sanctions. Even Russia notices economic effects as strong as that.

Stocks might be rising in New York, but UST 10yr bond yields are range bound at 2.33%.

The oil price is also range bound. It is still just under US$77/barrel and the Brent price is now just below US$81/barrel.

Ditto the gold price which is now marginally under US$1,200/oz.

The NZ dollar starts today just a little weaker. We are currently at 78.5 USc, 91.2 AUc, and the TWI is at 78.3.

If you want to catch up with all the changes from 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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1 Comments

https://www.youtube.com/watch?v=E3yZ036QOUE

 

A pretty useful watch from Richard Duncan and apart from spruiking his business I think he has a good grasp on the current scenario. I never hear him talk about resources, but to a degree it is implied. If you recall I have said growth is about the consumption of resources and if the private sector won't consume them then government will have to pick up the slack.

 

 

So when he says more QE, well yes but expect a change to more direct stimulus or consumption a some stage.

 

 

One of his from earlier this year that is also useful, perhaps more useful for an overview

 

https://www.youtube.com/watch?v=8lIdHNqX71Y