July 3 (BusinessDesk) – Stocks on Wall Street and government bonds from Wellington to Washington have fallen since Federal Reserve chairman Ben Bernanke said on June 19 that the central bank may wind back its US$85 billion-a-month of bond buying this year and end the programme in 2014.
Since then other Fed officials have attempted to massage the message but the net result may be lost in translation.
Federal Reserve Bank of New York President William Dudley is the latest. In a speech overnight to the Business Council of Fairfield County in Stamford, Connecticut, he reiterated Bernanke’s viewpoint, saying there was “a strong case can be made that the pace of growth will pick up notably in 2014.” Wall Street initially rose then fell. The kiwi dollar fell back toward its 12-month low and the US Dollar Index gained.
Last week Dudley was saying asset purchases could continue for longer if economic growth didn’t pan out as expected. In a separate speech last week Atlanta Fed President Dennis Lockhart said policy would need to remain “highly accommodative” for “quite some time.” San Francisco Fed President John Williams said in his speech last week that it was “still too early” to end quantitative easing.
Investors will get some more data on which to divine the timing of tapering this week. Non-farm payrolls are out on Friday, expected to show 165,000 American jobs were created last month, little changed from a month earlier. The unemployment rate probably fell to 7.5 percent – still above Bernanke’s aspirational target of 7 percent.
Lombard directors under lock and key:
The former Lombard Finance & Investment Finance directors, including former ministers Doug Graham and Bill Jeffries, will have to finish knocking out a settlement with the failed lender’s receiver from the comfort of their homes after being sentenced to home detention.
The Court of Appeal yesterday upped the ante on the Lombard four’s sentences, having decided community service was “manifestly inadequate” and dished out home detention for each of them.
Jeffries was sentenced to eight months home detention and 250 hours community work and former chief executive Michael Reeves got nine months home detention and 250 hours community work. They had initially been sentenced to 400 hours community work each.
Graham and Lawrie Bryant, a former PR adviser to the Queen, were each sentenced to six months home detention and fines of $100,000 apiece. Graham had his sentence of community work reduced to 200 hours from 300 hours.
They may not end up under lock and key, with a final appeal to the Supreme Court on the cards.
At the same time the receiver for Lombard, PwC’s John Fisk, gave his latest update to some 4,400 investors who’ve received just 13 cents in the dollar out of their $127 million.
He’s still working through “complex factual and legal issues” with the former directors as he tries to cut a deal with them to avoid costly legal action, but if that sours, court is still an option.
Christchurch City Council consenting raises “serious concerns”
The Christchurch City Council is reeling after losing accreditation to sign off on new building consents, a vital component to rebuilding the country’s second biggest city.
International Accreditation New Zealand revoked the council’s sign-off on consenting – a major function for any local body – saying council had signed off on permits that didn’t meet the building code and had the potential to cause damage to property and injure people.
IANZ chief executive Llew Richards told Radio New Zealand’s Morning Report programme that wasn’t to say those buildings would be dangerous, but that the council can’t prove they’re safe.
Canterbury Earthquake Recovery Minister Gerry Brownlee and Local Government Minister Chris Tremain are on their way to meet with the council. Brownlee has stressed there won’t be a moratorium on issuing permits, which would put stress on an already strained rebuild.
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