Bernard Hickey details the key news overnight in 90 seconds at 9 am in association with Bank of New Zealand, including news the Dow hit fresh 3 year highs overnight after multi-national companies such as Ford, 3M and Fedex reported stronger than expected earnings, particularly from their international operations.
US multinationals have been able to boost profits by investing overseas in cheaper factories and by taking advantage of strong growth in these offshore markets and a weak US dollar.
However, these strong profits contrast with weak jobs growth in the US economy. There is also fresh talk the US Federal Reserve will unveil some form of third round of quantitative easing after its policy setting meeting tonight. This could include reinvesting interest payments on mortgage bonds in US Treasury bonds, essentially recycling printed money rather than withdrawing stimulus.
See more here at Bloomberg on the Dow's rise and a fall in US Treasury bill yields overnight on talk of fresh Federal Reserve easing.
Meanwhile, back in New Zealand, the NZ Debt Management Office, which manages the government's bond and Treasury bill auctions, held a tender yesterday where an auction for NZ$200 million worth of three month bills failed.
It only received NZ$135 million worth of bids and bids for the six month and 1 year Treasury bills was also weak. See the results here.
This may be because yesterday was a public holiday in Australia or there is some buyers fatigue after last week's record NZ$1 billion bond tender. See more here from Gareth Vaughan on that record borrowing and Bernard Hickey's piece on the implications of that borrowing.
Elsewhere, France's Lactalis, which owns the President brand of cheeses, has bid US$7 billion for Italy's Parmalat to create the world's biggest dairy processing and marketing group. Fonterra is unlikely enter the race. See more here at NYTimes.
Meanwhile, the New Zealand dollar rose to 80.7 USc overnight as investors sought riskier assets with higher interest rates. Prospects for continued very low interest rates in America is continuing to push money to the periphery looking for returns. See BNZ's currencies report here.
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9 Comments
Interesting comments on Greece...its off trying to shut up the financial markets it seems....
"In this particular case Citi London trader Paul Moss, who is being interrogated by Interpol because of a recap email indicating Greece may, gasp, restructure (or, as it is known in enlightened circles, conduct a "liability management exercise"). Yet when Greece reads the following note by Citi's Stefan Nedialkov, it will most likely issue a cease and desist order in perpetuity against Vikram Pandit's bank. Nedialkov's summary (released one day after Moss' April 20 note): "If a 42% haircut is taken in addition to these measures, we estimate Debt/GDP falls to below 90% in 2013 and below 60% in 2020."
The problem is that the market will likely give Greece at most a few months of breathing room in exchange for just a 90% debt/GDP reduction. If truly engaging in a liability exercise of some nature, Greece will likely pursue a permanently viable option. And as Nedialkov indicates, in order to achieve a far more credible 60% debt/GDP ratio, the country would need to take a 76% haircut now, or do nothing for five years, and eliminate a whopping 94% of its debt in 2015.
Since the market is already expecting roughly a 50% haircut it remains to be seen just how much further bond prices will plummet, and how much bigger the ultimate impairment on Citi debt, and European banks, Greek pension funds and local bond investors, will ultimately be. One thing is certain: with Greek 2012 debt/GDP expected to peak at 159.4%, the country will restructure, and a a vast swath of insolvent European banks are about to see the tide go out."
http://www.zerohedge.com/article/citi-expects-76-haircut-greek-debt-and…
Haaarrrr hahaha.... Goofy missed out....oh bugger....how sad....
"Mr Key today met the Queen at Windsor Castle....He said he had been given a warm welcome - which extended to a hand-licking from one of the royal corgis.
He and the Queen shared champagne and ate hollandaise eggs, beef, a "delicious" panna cotta dessert and cheese.
Mr Key said it was fulsome and delicious." herald
"The Christchurch city councillor wanting to use ratepayers' money to go to San Francisco to study earthquake recovery is adamant there is value to the trip.
Aaron Keown is organising an itinerary for the trip. He believes all the City Councillors should use their $4,000 training budget on the trip which would take place next month.
Mr Keown says there's huge value in going and meeting those who led San Francisco's recovery.
"Once you know them, you can ring them in six months time and go 'we're about to make a decision on this, this is a $100 million decision, what did you guys do?'," he told Newstalk ZB. "You can't do that if you don't know these people and have never met them."
http://www.newstalkzb.co.nz/newsdetail1.asp?storyID=195373
Utter Rubbish. Either Keown is IT illiterate or dead keen on a taxpayer paid junket.
The only "value" to the chch ratepayers would come from seeing the arse end of these parasites.
"The Government spends $191 million each year flying MPs and civil servants domestically and internationally and is looking to trim the bill. The ministry said it was seeking "innovative solutions" to help cut costs.." herald
Hey Gummy....got any ideas that might help! I reckon saying "NO" would be a good way to start...my bet is 50% of the trips are a complete waste of time and our money....perhaps JK and BE should promote some savings by offering cash prizes to civil servants who dob in those on 'junket trips'.....on the other hand they might collect more in perk appointments by staying mum. Wink wink.
"While Fletcher will not be constructing houses in Christchurch, it will be selling materials needed to build them, as well as bidding for some of the commercial and infrastructure work." 3news
Watch carefully now as the markups on the materials and labour and services rise and rise.
Already freight costs into Chch have jumped. Expect a 'quakecost' to be applied to labour and who will pay...at first it will seem as though the re insurance lot will fork out the markups...but in the end it will be you...mug Kiwi who gets screwed.
Building activity elsewhere in the South Island will be hit by the 'quakecost' markups...pay up or find another way to build...expect cement concrete steel timber plastics wiring labour engineering fees glass aluminium freight gst ......every sodding item will have a 'quakecost' slapped on top.
Put this another way....there is going to be no release of data showing the cost push..because to show such a thing would make rubbish of Bollard's 'low inflation' statements...and because there will be no data...expect no restraint...no action to prevent....say hello to the 'quakecost' hidden inflation factor.
Actually talking to a builder last night who is working for Fletchers in Christchurch, they are paying him 45$ per hour and charge him out at three times....plus he has a prefered list of supplies he must source for building materials.
His mate, also a builder, is doing assements for one of the large insurance companies and then wins the quotes for the rebuilds...
Its a rort alround.
You got it speckles....the thieving will have full govt support because they steal gst on top....only outcome will be a building downturn elsewhere and higher insurance premiums for those electing to continue to insure property as well as much higher reinsurance costs.
You paying attention to this Bill English or is it another matter to be ignored.
If Fletchers are charging $135 an hour for labour then this country is well stuffed.....utterly.
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