David Chaston standing in for Bernard Hickey, with Ninety at Nine, brought to you in association with the Bank of New Zealand.
The new week starts with the currency at 81.4 US cents, high because of a weak US dollar and a weakening US economy. Economic growth there is with little job growth, it seems. And the stand-off over their debt-ceiling law is getting serious. The Dow is down another half percent.
Last week S&P warned that commodities face an uncertain price future, but that warning seemed to exclude food commodities. Fonterra’s latest auction was strong. But oil and gold prices are not going anywhere at present in currencies other than the US dollar.
Much depends on how China responds to its inflationary pressures. Their exchange rate policies are making their problems worse but they need high growth to keep their people employed. The longer they delay making adjustments, the bigger the impact of change.
The immediate Greek crisis has been averted by Germany stumping up with more bailout funds. And, perhaps we are seeing a takeover of sovereign budgets by the ECB – there was a report over the weekend that this is a goal of ECB chairman Trichet – who is feaful that debt restructuring being pushed by governments will fall on their huge holdings and key German and French banks. However, that just means that when a meaningful adjustment in Europe occurs, it could well lead to an international crisis, and not just a European one. The Europeans are just kicking the can down the road.
Watching all this with concern will be Alan Bollard, who reports on our monetary policy settings on Thursday when he reviews the OCR.
We also get house price data later this week – QV and REINZ - and if the Barfoot announcements last week were any indication, May will not be testing any limits, up or down.
No chart with that title exists.
6 Comments
the bombshell comes via Colin Riden again, with yet another ponzi scheme uncovered,
by Colin Riden | 07 Jun 11, 8:42am
Friday Market Update is suggesting Fonterra, CRA International (the auction manager), and perhaps NZX, should sort out what happened.
The results for SMP should raise a question about whether they really reflect current supply and demand for that product. They are actual prices, which is one requirement of New Zealand’s commodities exchange, NZX, for using them to cash-settle futures contracts and options that were established as risk management tools to help industry participants manage price volatility. Because the prices are published they also satisfy the transparency objective. But the small amount of total SMP volume available for purchase, and the related futures securities, makes one mindful of concerns about the thinness of CME’s spot markets, and complaints about their vulnerability to price manipulation. Just one month ago, on May 4th, NZX reported all settlement prices for WMP from May through August to be higher than those of SMP, about in line with the auction’s winning prices for those products. Today, NZX reports all settlement prices for WMP from June through next February to be lower than those for SMP.
The pattern of winning prices for AMF and WMP seem to reflect consensus views on current and future international supply and demand. Because they are so contrary to industry data, for SMP’s winning prices to be considered a reflection of fair value for international buyers and sellers it’s almost needed to assume the only SMP supply source for the winning bidders is the auction – or to chalk it up to a huge speculative move. The winning average price for SMP on May 17th was $.038 per lb lower than the winning price two weeks earlier. Two weeks later something made some bidders for SMP to keep their bid volumes in play much longer than usual. It is up to Fonterra, CRA International (the auction manager), and perhaps NZX, to sort out what happened.
Meanwhile, NZX continues spinning this line:
The average price of milk powder rose 4.5 per cent to US$4,306 per metric tonne in Fonterra Cooperative Group's latest online auction. That comes after the ANZ Commodity Price Index showed New Zealand commodity prices edged up to a new record in May.
I particularly like this principle from the Hudson article.
For the first time since the 1920s (as far as I know), Iceland made the capacity-to-pay principle the explicit legal basis for international debt service.
Imagine that being applied to our residential property.
Well that's buggered National mps plans to celebrate the RWC by dressing up as players and turning up in Lockwood's domain...funny as to see him toss a Labour mp out because she had a "sports" top on....not the done thing you see to be seen undressed like that..err I mean not dressed like a proper businesswoman should be...
Give up while you're ahead Lockwood...stipulate that every member be dressed in the same clowns gown coloured in party shades and allowed one dot for each fellow party mp...all gowns to be made in China to help JK with his plans for closer buddy buddy stuff.
http://www.independent.co.uk/news/uk/crime/judge-arrested-after-dog-attacks-passerby-for-third-time-in-a-year-2293862.html...harrrrrrrrrrrrrrhahahahaaaa.....what did the judge say ?
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