Here's my summary of the key issues over night that affect New Zealand, with news there is a 'deal' for Greece.
However, all signs are that the Greek government has caved in at the last minute. Although expected, it will not be easy getting this deal approved by their parliament. The EU got all it thought it needed. But some observers say it will be a disaster for Greece. It's a win for 'austerity' and the cost of being untrustworthy when negotiating. Ministers in their government are already resigning and to get the deal approved the Greek government will likely need the support of opposition, pro-Europe parties. There remain ugly details to resolved so don't be surprised if things come unstitched in the future.
In China, their share market is leading Asia higher, as Beijing’s efforts to reverse a massive selloff appeared to be holding up, though trading for hundreds of stocks remains halted.
In fact, China’s export and import data were better than expected in June, showing some signs of recovery in the world’s second largest economy.
In the US, a Fed survey found that Americans expected higher earnings and home-price growth last month, and also found little change in inflation expectations.
The US Federal government budget surplus came in slightly more than expected in June, setting up a smaller deficit in the current financial year than last year, one now expected to be about -2.5% of US GDP.
So with Greece turned down from boil to simmer and China stabilised, the US Fed is probably now set for a September rate hike.
On Wall Street, the UST 10yr yield benchmark has risen following confirmation of the market's bet that Greece would be resolved; it is currently up to 2.42%.
Oil markets are however holding their lower levels. The US benchmark price is now just above US$52/barrel, and Brent crude is just above US$58/barrel. We are still waiting for a US-Iran deal and that could drive down oil prices further.
The gold price is down, now at US$1,157/oz as risk fades away.
The main beneficiary of all this stabilisation is the US dollar. We are virtually unchanged against all other pairs. We start today lower at 66.9 US¢, unchanged at 90.4 AU¢, and marginally higher at 60.8 euro cents. The TWI-5 is still at 71.6.
If you want to catch up with all the local changes yesterday, we have an update here.
The easiest place to stay up with event risk today is by following our Economic Calendar here »
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40 Comments
The EU is doing the caving
http://uk.businessinsider.com/markets-chart-of-the-day-november-10-2014…
http://www.abc.net.au/news/2015-07-14/greek-pm-returns-to-face-parliame…
Explain please...
how about we go back to the future
http://www.telegraph.co.uk/finance/economics/11226828/Tim-Geithner-reve…
Hmmmm-
Varoufakis added: “This country must stop extending and pretending, we must stop taking on new loans pretending that we’ve solved the problem, when we haven’t; when we have made our debt even less sustainable on condition of further austerity that even further shrinks the economy; and shifts the burden further onto the have-nots, creating a humanitarian crisis.” Read more
Interesting. Seems I've been giving Tsipras too much credit.
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It's appalling, and, this article now confirms, illegal, what's been happening in Europe.
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A word to the wise: if the TPPA gets through, this is what you can expect in New Zealand. Except that it won't be a group of ministers trying to decide what's best for us, it'll be a bunch of corporations and their lawyers.
And we will be held to ransom, and the only thing which will count is foreign companies' profit.
Likewise, the US is using China as an excuse to ram through the TPPA
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http://www.ft.com/intl/cms/s/0/d0d6bc1a-fafa-11e4-9aed-00144feab7de.htm…
Interesting how Germanys trade surplus has quadrupled since the formation of the EMU.
http://www.tradingeconomics.com/germany/balance-of-trade
Greece is building stronger ties with Russia however. They have historic links & may be playing this card to strengthen negotiations with EU.
http://www.bloomberg.com/news/articles/2015-06-19/russia-clinches-greec…
We have already said – I have said it in public – that of course the Greeks can be blamed for everything but if they committed violations, where was the European Commission? Why did it not correct the activity of previous Greek governments? Why did they grant bonuses and loans? Why did they allow it to keep such a low profile on taxation in certain sectors of the economy? Why were there such big subsidies for the islands? And so on and so forth. Where were they earlier? So, there is something to discuss, and the Greek government has something to argue about.
http://www.zerohedge.com/news/2015-07-11/putins-latest-thoughts-greece-…
"Structural causes of the global debt crisis that are not limited to Greece. Many other countries are teetering on the same brink Greece is now falling from. When they fail, the ripple effect their debt defaults will debilitate their creditor nations, causing a massive shrinking of the world economy. "
http://charleshughsmith.blogspot.co.nz/
Tackling climate change will be cost benefit positive for nation states - major report from the London School of Economics:
http://www.theguardian.com/business/2015/jul/13/benefits-far-outweigh-c…
Why then are National fighting so hard to place NZ in the do-nothing camp? Or more correctly the obnoxious 'free ride' camp described in one of the source articles.
Oh yes. I forgot. They are in the pockets of those who might lose.
Kotw better stock up on firewood!
"Sun cycle's cold facts say mini ice age on way"
http://www.nzherald.co.nz/environment/news/article.cfm?c_id=39&objectid…
Let's hope it's a Dalton minimum, and not a Maunder!!
Perhaps I can help you with interpreting that article as you seem unable to (as is usual our press has repeated it verbatim without bothering to even question it).
1. Firstly the source. The 'findings' were presented at a talk at a national meeting. Such talks are not peer reviewed science (as for example is a paper submitted to a recognised scientific journal with a high impact factor). They are simply oral presentations based on a submitted abstract. As it is a local meeting there might be, at best a couple of hundred on-lookers (so one wonders how this even got reported - but see below). We have no idea what their response was, but the acid test of whether a scientific observation has merit is the submission and acceptance of a peer reviewed paper. As it stands then the data presented can only be ranked as yet untested, low grade 'opinion'.
2. The scientist concerned holds a position at the less than prestigious University of Northumbria - which I daresay most people have never heard of. Not Oxford, not Cambridge, nor any of the top 20 UK universities, but Northumbria. She is originally a Ukrainian scientist, who's less than stellar scientific career just about justifies a position at a very small provincial UK university.
3. If it seems very strange how such a minor presentation should suddenly attain such prominence (see point 1 above), one perhaps need only realize that it was first 'revealed' by the UK's Daily Mail (subsequently picked up by the Daily Telegraph). Both publications pander to the virulent climate change denialism of the right wing. Both are prepared to run with anything they can lay their hands on in an attempt to prevent action against climate change.
4. As regards the 'ice age hypothesis'. Some will recall the often quoted claims(by the denialist camp) in the 1970's that 'scientist say ice age is coming' which is used to suggest that scientist change their mind about climate as often as people change underwear. In fact these claims refer to work by a handful of scientists at the time who were suggesting similar developments to our Northumbrian scientist quoted above. The vast majority of climate scientists in the 1970's held to the view that nothing of the sort was going to happen - just as 97% of climate scientists in the present support the view of man made climate change occurring as we speak.
There. Fixed it for you.
Oh I see King of the Whiners. Your brilliant demolition of the argument refers to 'denialism', and horrors upon "horrors' 'the right wing'. We bow to your incredible scientific process, understanding and interpretation.
(and just in case you have other trouble interpreting - and just to be clear - that was sarcasm)
Hope you were replying to the person I was replying to...and you weren't replying to me.
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I briefly read it in the European press yesterday, 11 year cycles and all that.
Admittedly, it was a very brief article, and they did mention it was hemisphere specific.....
which I find odd. But then, I'm no scientist.
http://www.climatedialogue.org/what-will-happen-during-a-new-maunder-mi…
Beautiful Whiner! Can you apply your own critique to the "LSE" report?
1. Firstly the source. Not just the lefty LSE but no less than the green spin machine Grantham Research Institute on Climate Change and the Environment. I guess Science and Nature wouldn't go near this report, not Oxford or Cambridge. Remember for a scientific observation to have merit is the submission and acceptance of a peer reviewed paper. As it stands then the "data" presented can only be ranked as yet untested, low grade 'opinion'.
2. The "scientist" concerned...
Written by a lawyer with MSc in Philosophy and Public policy. As opposed to the PhD in Astrophysics that you slagged off as not good enough.
3. If it seems very strange how such a minor presentation should suddenly attain such prominence (see point 1 above), one perhaps need only realize that it was first 'revealed' by the UK's Guardian. A publication that panders to the virulent climate change chicken little-ism of our age. With such robust stories 2008's "The Final Countdown: 100 months to save the World"
http://www.theguardian.com/environment/2008/aug/01/climatechange.carbon…
4. What makes this report "major"? Seems more like pre-Paris spin.
There. Fixed it for you.
Furthermore I see the Solar Activity paper in question was published in Vol 795 of The Astrophysical Journal so I take that it did pass the peer review process.
Summary linked from the Royal Astronomical Society if the Telegraph/NZ Herald is too low brow/right wing.
http://www.ras.org.uk/news-and-press/2680-irregular-heartbeat-of-the-su…
And here's what an Irishman says about the bankers and others!!
https://www.facebook.com/LarsHalvorsen19/videos/10151554913397745/?fref…
Good video. I saw it a number of years ago. You can trust an Irishman to say how it is. A traditional response to political and economic crisis has been a large scale exodus of the young and able and I have seen since the global financial crisis many representatives of the latest Irish diaspora.
Latvia is in a similar predicament and have responded in a similar way. One of my workmates is Latvian and he is a little more philosophical about it, after all his people suffered under the ravages of the despotic Soviet Union. They are accustomed to enduring hardship.
With odds of 70 to 1, how do yous like them apples.
Hidden within the first authoritative regulatory analysis of Australian bank capital is a flashing red light about the risks inherent in the residential mortgage market.
http://www.afr.com/brand/chanticleer/what-apras-capital-call-says-about…
Banking is a highly leveraged business and there are few things more leveraged than lending money on an Australian residential mortgage. It is generally accepted that the big four banks can turn $1 of capital into $70 of home lending. That enormous leverage is possible because of the risk weighting that is applied to mortgage assets.
While some still excite at the great demand for housing and infrastructure describing it as a sign of all is well, the actions of the Home/HQ regulators (soothing words aside) are a kick in the midriff. If things were are well as the words could be described, then no action would be regulator required.
"Northern Rock's leverage ratio, before it exploded, was more than £50 for every pound of common equity." So at 70:1 the Australian banks ( that's OUR banks by and large!) are 40% more leveraged than a big UK lender that went totally broke. Food for thought, as you suggest.....
The Greeks have had such a banking regime forced upon it, while New Zealand willingly embraced it, because Bill English want to have it appear he was a prudent manager of the government books.
" Banks in New Zealand "strongly rejected" earlier attempts by the Reserve Bank to bring in a new policy that would mean a "haircut" or partial loss on all deposits if a bank failed, an industry source says.
The source says former Reserve Bank governor Alan Bollard was the driving force in the move to get "Open Bank Resolution" brought in during his time at the central bank but was earlier turned back by the big banks.
The policy had only been "crystallised" in the past year or so and is due to come into force at the end of June.
The Reserve Bank had pushed ahead because of the fear the Government could bear the huge cost of a bailout if a bank failed, though that is seen as a remote chance."
http://www.stuff.co.nz/business/money/8452121/Banks-in-NZ-strongly-reje…
"One of the preconditions imposed on Greece for a deal is that it signs into law European rules that would put euro zone authorities at the ECB and in Brussels, rather than Athens, in charge of identifying and closing or breaking up sick banks.
This in turn could lead to a shake-up of the sector that could see some banks close, with losses pushed onto bondholders and possibly even large depositors. In such circumstances, there would be little that Athens could do to prevent this."
http://www.stuff.co.nz/business/money/8452121/Banks-in-NZ-strongly-reje…
Hmm yes and no, what they appear to want to do is transfer what looks more like a load of conflicting demands/expectations that the bank wont be able to meet. So for me its moe like they are setting up the whipping boy for a good beating when really it shows is an inability to govern themselves and make hard choices.
"Most perplexing — especially for those on summer hiatus in which time seems to be suspended — is the fact that the rescue package will take weeks, perhaps months, to gin up while Greece is right now so utterly paralyzed in bankruptcy that no goods can move, no bills can be paid, and the economy cannot deliver the necessities of daily life. The old refrain, “your check is in the mail” may not be so reassuring to folks who haven’t eaten for three days. Personally, I would expect the gasoline bombs to be flying around Syntagma Square before the middle of the week."
Kunstler, gee he's an entertaining read.
Yes ever since Syriza's capitulation, which I have been predicting for some time, I foresaw Athens will be up in flames once a deal is struck with Brussels.
Greece still has a thriving anti-authoritarian, anarchist movement who have been rather quiet since Syriza came to power, but they will not stand for the imposition of a Brussels imposed dictatorship, whether or not the Greek parliament are prepared to be the local, subordinate elites.
Agree it has to be areal risk. 60% said no to the old offer, yet the new offer looks little if any better. About all it does do is look vague and wishy washy. Reads more like a 'devil in the detail" slight of hand on the Greek ppl and somehow I cant see that 60% keeling over. Interesting I thought Syriza would be more resolute and take Greece out just I mean how much more worse can it be than no food and molotovs already in the wings? I dont see / understand what he has to lose?
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