90 seconds at 9 am: Merry Christmas

90 seconds at 9 am: Australia abandons surplus goal; NZ to follow?; US growth expands, manufacturing up, house sales rise; gold takes tumble; NZ$1 = US$0.833

21st Dec 12, 8:42am by David Chaston

Here's my summary of the key news overnight in 90 seconds at 9 am, including news that Australia’s government said it’s unlikely to deliver a pledged budget surplus this fiscal year as weaker growth and a strong local currency reduce tax receipts.

This is a setback for Prime Minister Julia Gillard before an election that is due in late-2013.

As you will know by now, New Zealand's Q3 growth was way below expectations, and a target surplus here is looking unlikely as well.

However, growth in the US was higher than originally reported. Revised data out overnight shows that the American economy expanded by 3.1% to September, up from an expected 2.8% growth.

Supporting this expansion were reports out from the Philly Fed that manufacturing in their region grew more than expected. And US home sales have hit a three year high.

There is nothing to report on the fiscal cliff negotiations; they seem to have stalled for now.

Equity markets are ending the year on a stable note. Commodities are generally rising with oil up. Dairy prices were up marginally in the last Fonterra auction, but down a fraction in today's USDA report.

But gold has taken another tumble, now down to US$1,640/oz.

The NZ$ starts today pretty much unchanged at 83.3 USc, 79.6 AUc and the TWI is at 74.4.

This is our final 9am update for 2012. Merry Christmas from all of us at interest.co.nz, and we hope you have a fun holiday break. We return on Monday, January 14, 2013.

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26 Comments

by Gummy Bear Hero | 21st Dec 12, 8:57am 1356033454

We're ending the year on a high note , David ..... with the economy puddling along quite nicely ..... and with the knowledge that even if the politicians are granted their 1.8 % pay rise ( back-dated to July ) , Novopay will probably screw it up , any way .....

....... happy times , friend ..... Merry Christmas to one & all .....

Gummy .

by Christov | 21st Dec 12, 10:20am 1356038417

GBH..the very best of food ,wine, family, and friends intentions upon you this Christmas.

Thanks for the humour, the positivity. the balance you brought as the occassion arose during the year .

Stay Well...I'll raise a glass to you Xmas eve, and look forward to seeing you around the trap in the New Year.

Cheers Mon Ami.

David, Gareth, Amanda, Alex, Bernard, Bruce, and others thanks for some great reads during the year , some insightful opinions, some good banter. Your tolerance also has been appreciated where topics may blur into comedy and so forth.

A most excellent Christmas to you all, look forward to seeing you , or not as the case may be when the New year fog rolls in.

To the usual suspects...Wooly, Walter Kunst, PDK, Steven, OMG,Scarfie, Iconoclast , A.J.,Omnologo , Notaneco, Stanley G, Ralph,Chris J,SoreL,Stephen H,Stephen L, Kermit , Mike B, Plan B, Cas Observer, S.K. Big Daddy, Dukey, Vanderlei L, Waymad,Colin Ridden, plutocracy, Anarkist, Ostrich, WTF,MIA, Chairman Moa, Kin, Elley, ex agent, Snippy, Midget Kiwi , Kiwi Dave,speckles, Nakonui G,HGW,Hugh P, Phill B, Ergophobia Chris M..............oh crikey, I know i'm missing stacks but you get the idea...! You have all made enjoyable reading on many occassions

My best wishes to you and thanks , we had the odd laugh , and that's gotta be good for us.

I'll try to get back for one last Friday Yay, if you hear a bang and feel a little scorched , I may not get to it.

All the very best upon you , enjoy your family, and all that we find little time for during the year.

by Gareth Vaughan | 21st Dec 12, 11:00am 1356040814

And wishing you Christov, and everyone else out there, a great Christmas and Merry New Year too!

by Gummy Bear Hero | 21st Dec 12, 12:26pm 1356045985

Are you guys still putting up some fresh articles and 90 @ 9's over the Xmas-New Year period , Gareth ? ....

..... some of us don't have anywhere else to go ...... this is " home " ....

Merry Xmas : Gareth / Amanda / David / Alex , and of course , how could we ever forget the big guy , Merry Xmas to Brendon ..... ? ..... ooops , Bernard !

by David Chaston | 21st Dec 12, 12:39pm 1356046780

Yes, we plan to keep the updates coming. Should be a Top 10 every business day. Full service resumes January 14.

by Gareth Vaughan | 21st Dec 12, 2:07pm 1356052047

Have a good one Gummy, and watch out for fiscal cliffs.

by Amanda Morrall | 21st Dec 12, 2:10pm 1356052215

All the best Gumster. Thanks for making us laugh, repeatedly. Joyeux Noel.

by Andrewj | 21st Dec 12, 4:01pm 1356058868

My highlight was his mioos and boon dairy farmer,

He seized her , in his strong manly arms ..... Clarabell felt a flush upon her cheeks , and a quiver of expectant excitement rippled through her udder as he raising the cups to her fulsome teats ..... she knew she could not hold back , she must offer up her milk , all of it , to this strong irresistable masculine force .....

..... ah , the romance of the 5 a.m. milking !

...... she was spent , fully exhausted .... she had given her all , and knew that she had satisfied her man like no other could ...... she pressed her blood engorged ruby red lips up against his ear , and whispered " moooo ! "

Moos & Boon : The Dairy Chronicles .

Have a great Xmas and New Year all, Im off to the UK for a few weeks. Thanks for all the great comments and the education.

by OMG | 21st Dec 12, 3:29pm 1356056992

All the very best to you and yours, Count, and to all other posters - and not forgetting Interest.co, which is a refreshing venue for views which would be subject to pc censorship pretty much anywhere else.

Next year is going to be interesting ;-)

by Craig Simpson | 21st Dec 12, 2:38pm 1356053931

Merry Christmas & a Happy New Year!

I wanted to send some sort of holiday greeting to my friends and colleagues, but it is difficult in today's world to know exactly what to say without offending someone. So I met with my lawyer yesterday, and on advice I wish to say the following:

Please accept with no obligation, implied or implicit, my best wishes for an environmentally conscious, socially responsible, low stress, non-addictive, gender neutral celebration of the summer solstice holiday practiced with the most enjoyable traditions of religious persuasion or secular practices of your choice with respect for the religious/secular persuasions and/or traditions of others, or their choice not to practise religious or secular traditions at all.

I also wish you a fiscally successful, personally fulfilling and medically uncomplicated recognition of the onset of the generally accepted calendar year 2013, but not without due respect for the calendar of choice of other cultures whose contributions to society have helped make our country great (not to imply that New Zealand is necessarily greater than any other country ) and without regard to the race, creed, colour, age, physical ability, religious faith or sexual preference of the wishee.

By accepting this greeting, you are accepting these terms:

This greeting is subject to clarification or withdrawal. It is freely transferable with no alteration to the original greeting. It implies no promise by the wisher to actually implement any of the wishes for her / him or others and is void where prohibited by law, and is revocable at the sole discretion of the wisher. The wish is warranted to perform as expected within the usual application of good tidings for a period of one year or until the issuance of a new wish at the sole discretion of the wisher.

Best regards (without prejudice)

Name withheld (Privacy Act).

by steven | 21st Dec 12, 9:41am 1356036077

I wonder whats the end game for gold....

Is it the inflationistas hoping to make a killing on its rise, ie un-earned speculation/gambling? (added and some are now exiting?)

Around the developed world we see little sign of inflation so this realisation is why the price is dropping? Though china etc seems to be seeing some which is interesting in itself....but otherwise its looking like a long time low inflation or deflation aka japan....in which case gold holding its value seems likely?

If youbelieve that its something to "trade" for food in a zombie apocalypse scenario then surely the old backstop, pb is far better?

just curious.

regards

by Alex13 | 21st Dec 12, 9:58am 1356037099

The reported inflation rate is low, but is the real inflation rate that low?

by kiwimm | 21st Dec 12, 10:34am 1356039249

including or excluding housing?

by Alex13 | 21st Dec 12, 10:50am 1356040205

Why would you not include the cost of housing?

by kiwimm | 21st Dec 12, 11:12am 1356041552

This was my attempt at being facetious, probably didn't come across in the comment too well :)

Of course you should include all costs that you would reasonably incur into inflation even if the CPI does not. It is also fair to say that AKL real inflation is higher than the rest of the country as living in AKL becomes more expensive relative the the rest.

by steven | 21st Dec 12, 11:28am 1356042482

So if house prices are severly down in say invercargill?

regards

by kiwimm | 21st Dec 12, 11:47am 1356043672

Depends on how you consider house prices in inflation. If a person does not move then their housing price is not factored into their inflation. However, most people will move at some point so it should be included somehow.

I would suggest smoothing the increase over the the average length of time of occupation. This would include all housing costs: the mortgage, improvements, maintenance, buying and selling costs etc. A total cost of owership model. As we are looking at inflation, it is only the change in these costs over time that we are interested in. This will then give you a true inflation cost.

Note that your personal inflation costs can be manipulated in a number of ways so that you come out better by moving less often, arbitraging prices (a la Bernard Hickey) timing the market or renting instead of buying.

by steven | 21st Dec 12, 10:35am 1356039311

Well you either accept the data (after cross checking of course) or what your imagination thinks it is.

You could of course look at proxy data, things like is un-employment up or down?

The biggest for me is, are wages rising....no they are not...ergo some things are inflating and some things therefore have to deflate, overall we have no inflation....and that is one of the biggest.

Then there are things that mask or could fool you into thinking inflation is rising, such as exceptioanly cheap interest rates is encouraging speculation in commodities and housing, hence some bubble. Or OEPC's inablity and wish to keep oil prices down....at $112 a barrel do you really believe that they wouldnt pump faster to get more $s?

Up to you really....

Im going with the data.

regards

by Alex13 | 21st Dec 12, 10:50am 1356040259

It is the official "data" that I am questioning...

by steven | 21st Dec 12, 11:52am 1356043936

OK, well mostly I do not, most anything else of course than the offical data has no mathematical basis or foundation to make sound decisions on.....

So sure you buy gold who will you sell to? think tulips, in fact I think whenever you see any item that is "appreciating" without good cause you have to consider if its a bubble or not and you are gambling that you can sell.

Housing for instance is only doing very well in a few areas....and really its value has to be under-written by the futire ability to pay for it. Otherwise really you are gambling that there will be a bigger fool than you.

Comes back to what can you do with gold that you could do with say something else? Is the idea to trade in an otherwise depressed or inflation crippled economy? or what? Consider ammunition....its a commodity price, there is no specualtion in it, so its very unlikely to be in a bubble (though its over-priced compared to the USA, so thats a risk). So lets start with gold, its currently $1973NZ per ounce Ammo say 22LR, 25000 rounds, which is more tradeable? which will hold its value better? honesty its hard to know, human behaviour plays a crucial part and that is hard to quantify.

What else is there? tools.....again over-priced compared to USA, maybe I could buy $1973 worth of spades....or improve (diversify) my skill sets, the Govn cant take that....they can take much else....

Which I suppose brings me to full circle, the danger is a Govn....they can take gold....America did it...but then its dense and easy to hide....

What do you want it for?

regards

by kiwimm | 21st Dec 12, 11:25am 1356042319

I agree. Financially-induced inflation now is stealing inflation from the future and therefore multiplying our future pain.

by Gareth Vaughan | 21st Dec 12, 9:22am 1356034929

Fitch comfortable with Aussies missing budget surplus.

Fitch Ratings-Hong Kong/London/Singapore-20 December 2012: Australian treasurer Wayne Swan's acceptance today that the government is unlikely to deliver a budget surplus this year (fiscal year 2012-13 ending June 2013) is not surprising and will not affect the sovereign's 'AAA' rating, Fitch Ratings says.

Australia's low sovereign debt ratios mean that it can afford to reduce its deficit more slowly than other 'AAA' economies, with more consideration for supporting its slowing economy and without diminishing its ability to absorb fiscal and economic shocks. We expect gross general government debt to peak at 28% of GDP next year. The median for 'AAA' sovereigns is 52%. Moreover, the sovereign's debt composition is a rating strength. The average duration and maturity of the debt have risen since the global financial crisis and almost all debt is in Australian dollars.

We had already concluded after the budget speech in May that it would be challenging for the government to return the commonwealth government budget to surplus. This is because of its reliance on a mix of revenue-enhancing measures (such as foregoing the company tax rate reduction) and spending cuts relative to fiscal projections, particularly if the economy slowed.

The slowdown in China has already affected the prices of Australia's coal and iron ore exports. Australia could be significantly hit if China has a "hard landing", although this is not our expectation.

Fitch upgraded Australia to 'AAA' from 'AA+' in November last year, citing the country's strong credit fundamentals. At the time, we said that successful implementation of the government's medium-term fiscal consolidation plans would support the ratings.

by steven | 21st Dec 12, 9:47am 1356036443

Thanks, however china not having a hard landing seems a bit of wishful thinking IMHO. A 10% per annum growth means a doubling every 7 years. 5 years after the GFC I look and see a lot of "make work" to keep that meaningless growth trajectory going....ie it isnt real IMHO.....ergo I think there is going to be a (very) hard landing....maybe its 2 or 3 years out yet....so how long can they keep the make believe confidence trick going?

regards...

by Gareth Vaughan | 21st Dec 12, 11:01am 1356040904

I just wonder whether they'll be so forgiving when/if our govt admits it'll miss its surplus target too...

by steven | 21st Dec 12, 12:24pm 1356045864

Whats the trajectory though? still up, even in a world economy that is at best aneamic. Look at say, Greece and Spain, they look to be an an un-controlable tail spin. US states are in a bad way, japan a bad way.....so little real positive news.

Of course we hang on OZ, China and our overblown housing market....the first two look like a trigger the latter how big it might be.

regards

by Christov | 21st Dec 12, 10:23am 1356038582

Cheers Sorel...enjoy , be well.