Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (6403)	1/28/2004 10:09:52 PM
From: russwinter	Respond to of 110194

New Zealand Raises Interest Rate a Qtr Point to 5.25% Jan. 29 (Bloomberg) -- New Zealand's central bank unexpectedly raised its key interest rate a quarter point because inflation is accelerating amid a housing boom and a surge in consumer spending. Reserve Bank of New Zealand Governor Alan Bollard raised the official cash rate to 5.25 percent, saying ''inflation pressures in some parts of the domestic economy have started to become more apparent.'' Eleven of 14 analysts in a Bloomberg survey had forecast no change. Bonds fell and the currency rose. Bollard, who cut interest rates three times in April, June and July, said low interest rates are stimulating home lending and consumer spending. That's spurred demand for building materials from companies such as Carter Holt Harvey Ltd., which said today it had record domestic sales in 2003. ''Looking at the domestic pressures, it's easy enough to see the argument for a rate increase,'' said Robin Clements, chief economist at UBS New Zealand Ltd. in Christchurch. Still, today's statement ''smacks of an urgent need to move which I didn't think there was a case for. The New Zealand dollar rose and bonds fell after the rate increase. The dollar bought 67.66 U.S. cents at 9:55 a.m. in Wellington from 67.52 cents earlier. The yield on the 6.5 percent bond maturing April 2013 rose 4 basis points after the decision. The yield is up 13 basis points to 6.07 percent from yesterday. A basis point is 0.01 percentage point. Inflation Speeds The consumer price index rose 1.6 percent in the year to December, more than the 1.2 percent expected by the central bank. ''If domestic inflation is left unchecked, the CPI may start to rise to uncomfortable levels,'' Bollard said in a statement released in Wellington. Bollard, who must keep annual inflation between 1 percent and 3 percent, last month forecast prices will rise 2.5 percent in the year to March 2005 and 2.8 percent a year later. ''Data since December have pointed to stronger activity than we then thought,'' he said. ''Further inflation pressure is likely in the next few months.'' More than a third of all companies expect to increase their prices in the next quarter as costs increase, according to a New Zealand Institute of Economic Research Inc. survey. By raising rates today, the central bank may ''avoid having to raise interest rates more aggressively later on,'' Bollard said. ''By historical standards we do not expect that a large adjustment in interest rates will be necessary.'' Rate Gap New Zealand's key interest rate is 4.25 percentage points higher than the U.S. Federal Reserve lending rate, which makes New Zealand government bonds and its currency more attractive to foreign investors. The currency gained 24 percent against its U.S. counterpart the past year. The rising local dollar is crimping incomes of Fonterra Cooperative Group Ltd. and other exporters whose sales make up 30 percent of the economy. Fonterra, the world's biggest dairy exporter, yesterday said the rising currency cut revenue by NZ$650 million ($440 million) to NZ$5.6 billion which may affect how much it pays farmers next year. ''I just felt the rising exchange rate was going to be doing sufficient of the work to not need to rates,'' UBS's Clements said. The rising currency has placed pressure on exporters though ''has not had much effect on spending in the local economy,'' Bollard said. ''In time this will happen, probably reducing the need for interest rates to rise as much as they otherwise might.'' Cheaper Imports The rising currency helped reduce the price of imports by 1.3 percent in the year to December, the central bank said last week. Bollard said falling import prices have kept inflation low. Still ''those reductions are unlikely to be sustained,'' he said. Interest-rate cuts and the arrival of 36,770 migrants in the year to Nov. 30, boosted demand for housing. Home building approvals rose 19 percent in November, suggesting construction will continue to grow this year. House prices in December were 19 percent higher than a year ago. Auckland-based Carter Holt's Carters building products distribution business had its best-ever sales and earnings in 2003 as it took full advantage of the strong New Zealand housing market, the company said in a statement before the central bank raised rates. ''The outlook for the New Zealand housing market remains positive for the near term,'' the company said. Eleven economists surveyed before the statement expected the benchmark rate will be higher by March. One expected an increase in June and two said there was no need for rates to rise this year. Bollard next reviews the rate March 11. The yield on a three-month bank-bill futures contract maturing in March was 5.47 percent yesterday in Wellington trading. That suggests traders expect the benchmark rate would rise 0.5 percentage points in the first half of the year.

To: mishedlo who wrote (6403)	1/28/2004 10:11:54 PM
From: yard_man	Read Replies (1) \| Respond to of 110194

Have you seen the ad?? I'm no fan of moveOn.org -- but I loved the ad ... CBS's excuse is lame biz.yahoo.com Oh I see Laura is doing her bit to expand the deficit, too <vbg>

To: mishedlo who wrote (6403)	1/29/2004 11:03:02 AM
From: yard_man	Read Replies (2) \| Respond to of 110194

buy back your short silver call today, mish, IMO -- and add more long if you can

To: mishedlo who wrote (6403)	1/29/2004 2:03:00 PM
From: yard_man	Respond to of 110194

WASHINGTON (Reuters) - Freddie Mac's federal regulator slapped the No. 2 U.S. mortgage finance company with a 30 percent higher minimum capital requirement on Thursday until it sorts out its books after an accounting scandal.