Here are the key things you need to know before you leave work today (or if you already work from home, before you shutdown your laptop).
MORTGAGE RATE CHANGES
No changes so far today.
MORTGAGE INCENTIVES
Some main banks now offer cash-back or a newish insurance-subsidy incentive. For ANZ, theirs is a $500 insurance subsidy. Neither ASB nor BNZ have incentive offers in the market right now.. For Kiwibank, they offer up to $2000 cashback and up to $2000 insurance subsidy. For Westpac, it is $200 cashback for home insurance. In all the insurance cases, you only qualify if you buy the bank's insurance product.
TERM DEPOSIT/SAVINGS RATE CHANGES
ASB raised most rates out to a 12 month term. That puts its 6 month rate at 5.55% and its 12 month rate at 5.75%. At these levels they are higher than their four main rivals (although Kiwibank matches their one year rate). The Cooperative Bank also raised most TD rates out to a 9 month term. Westpac has raised its 8 month rate to 5.70%, a sharpish +20 bps rise.
BUDGET 2023/24
The election Budget includes new spending on childcare, health, transport, and energy costs. More here, here and here.
AN EXTRA $20 BLN TO BE BORROWED
The 2023/24 New Zealand Government Bond program has been increased to $34 bln, $4 billion higher than that published at the Half Year Economic and Fiscal Update 2022. The forecast NZGB program for 2024/25, 2025/26, and 2026/27 have all been increased, by $2 bln, $10 bln and $4 bln respectively. The forecast for the 2022/23 year is unchanged, with a $28 bln NZGB program. By 2027 gross Government debt will be 40% of GDP. (All this includes repurchases of bonds from the RBNZ held under the Large Scale Asset Purchase program.)
MORE SUBSIDIES FOR PUBLIC TRANSPORT
The Budget also includes more subsidies for free or part cost public transport for young people and better wages for bus drivers.
HIT HARD
Listed horticultural business T&G Global (ex-Turners & Growers and ENZA) is heavily exposed in the Hawke's Bay with up to a quarter of its planted orchards in the region impacted to a moderate to serious extent. They have switched their guidance from a $20 mln operating profit in fy 2022 to a -$28-$34 mln loss this year. Over the years T&G have had a very volatile profit performance. Munich-based BayWa has a 75% majority shareholding. China-based Wo Yang has a 20% minority shareholding. Only 5% of its shares are listed locally. The T&G visibility on profit is interesting because it gives an indication of the scale of the profit hit the East Coast/Hawkes Bay cyclone event has had on businesses in the region.
RISING POPULATION
Our population almost touched 5.2 mln as at March 31, 2023, rising +1.6% in the year. That is a gain of +84,000 in a year (the equivalent of a New Plymouth). +25,600 of those were 65 or older. Since March, our population probably rising faster as net migration ramps up. A record high 16.6% of our population at March 31 2023 was 65 years and older. Then there were 3.9 people who are 15-64 for every one 65 and over. But for the first time since 2003 this metric has not gotten worse. Faster immigration will do that.
DEATH RATE UP
There were 38,835 deaths were registered in the year to March 2023, up from 35,394 in the 2022 year. The death rate fell sharply to 6.46 per 100,000 in the year to March 2021 and stayed down the following year when pandemic restrictions made us all very health-conscious. But with the ending of restrictions, that rate has jumped to 7.55/100,000 in the year to March 2023 which is the highest since 1993.
PPI SLOWS
Producer prices were up +5.3% in the year to March 2023 and a sharp retreat from the +9.7% rate in March 2022. The annualised rate of increase in Q1-2023 from Q4-2022 was a much slower +1.2% pa, and a clear indication inflation from the productive sector is slowing fast.
FARM COSTS EASE TOO
But it is still tough on farms. Their costs (excluding livestock) rose an eye-watering +12.3% in the year to March 2023. But the annualised rate from Q4-2022 to Q1-2023 is also slowing fast now, up at only a +2.4% pa rate. Still, that is twice as fast as in the wider community.
MORE THAN JUST BLUE SKIES
Xero shares rose more than +8% today to be +45% higher for the year so far. It is benefiting from tech sentiment that rewards profitable growth. They posted a bigger net loss, but their free cash flow surged to more than +$100 mln in the year, a portend for imminent profitability (or so they guess).
MORE CASUAL
In Australia, their jobless rate rose to 3.7% in April from 3.5% in March. It was a rise that wasn't expected. At the same time, employment -4,300 when a +25,000 rise was expected. Full-time jobs fell -27,100 while part-time jobs rose +22,800.
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SWAP RATES RISE FURTHER
Wholesale swap rates are probably a higher again today and maybe substantially. However, the real action in swap rates comes near the close. Our chart will record the final positions. The 90 day bank bill rate is up +5 bps at 5.70% and 45 bps above the OCR. This is another unusually large daily rise. The Australian 10 year bond yield is now at 3.44% and down -2 bps from this time yesterday. The China 10 year bond rate is up +2 bps at 2.75%. And the NZ Government 10 year bond rate is now at 4.37% which is up another +10 bps, and still well above the earlier RBNZ fix at 4.26% which is up +10 bps from yesterday. The UST 10 year yield is now at 3.57% and up +4 bps from yesterday.
EQUITIES RISE STRONGLY
The NZX50 is up +0.5% near the close, little-changed following the Budget release. The ASX200 is up +0.6% in early afternoon trade. Tokyo is up +1.3% in an extension of they strong run so far this week. That has cumulated to +3.6% since the Monday open. Hong Kong is up +1.5% in early trade today but that is only +1.2% so far this week. Shanghai is up +0.6% in their early Thursday trade. The S&P500 ended its Wednesday trade up +1.2%.
GOLD LOWER
In early Asian trade, gold is down at US$1984/oz and down -US$8 from this time yesterday. It closed in New York earlier at US$1982/oz, and in London at US$1974/oz.
NZD HOLDS
The Kiwi dollar is marginally firmer from this time yesterday at 62.6 USc and not much moved by the Budget. Against the Aussie we are up almost +½c at 94.1 AUc. And against the euro we are up marginally at 57.7 euro cents. That means the TWI-5 is up slightly at 72.3.
BITCOIN INCHES UP
The bitcoin price is a little higher today, now at US$27,310 and up +0.9%. Volatility over the past 24 hours has stayed modest at just under +/- 1.7%.
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93 Comments
A bigger annual loss attracts a higher valuation for one software company. Perhaps they should change their name from XERO to NEGATIV and the share price will ZOOM ever higher. Whenever I turn on I-heart there's a xero ad booming through, so how come they can't make money. Perhaps they need a better accounting system 👍
It's always obvious, in hindsight!
Patterns are quite clear for the observant Dr Y. Inverse correlation between JPY and the Nikkei. Positive correlation between JPY and gold.
Prudent Japanese investor would have been socking away Nikkei ETF, gold ETF (or even Sumitomo Metal Mining which mines some gold), and the ol' rat poision.
Who buys the index at the very nub of the lows. Whats more, from memory it was a V shape comeback so at its low for a very short time.
But even without leverage auckland real estate has probably quadrupled since 2009 or thereabouts.
Still good to hear that the index (and economy) is in good shape. Though below ATH of 39000
I saw 384% sold very top bought about 6 months after the best buy in the neighbourhood... partner still tells me we could have not only got best sell but on her advice best buy, still we got a better lifestyle imho
Many like HW2 say never sell but where would real estate agents be if property only ever sold once....
The “never sell” mentality is common, however some may not have a choice. Does the bank want investors to have the monopoly on their main source of income? Once the mortgage is paid, that asset no longer pays the bank until it is sold again. If it is never sold, the bank never makes money again. An OO may pay a mortgage for 40 years moving up the ladder then sell to another bag holder.
Markets could be moving IT GUY
NZ listed RV stocks over last 5 days have between 5 and 13 percent gains. They tend to follow the housing market fortunes.
Not saying the HPI is up 13 percent in 5 days mind you.
We have to bake in 6 months gains before you believe the market has turned. Tell me if your better half thinks it has turned.
Am too set in my ways to agree, but yes I prefer the Aussie go-getter thinking.
Example, NZ house building plans have got so detailed and front loaded, the draughties get a lot of RFIs. We are stuck answering questions and going in circles while the Aussies crack on with it
A consultant planner tells me that the educated people in council can't think straight, so it would be better to not have uni's. I would like to deal with council myself and save a tonne but you have to use the right lingo to talk to council planning or get nowhere
Nick Leeson would be a tad miffed!
That's the trade he anticipated at 16,000, but was 30 years too early.
A bit like Bernie, if he could have held on, he'd be a hero today. It makes you wonder "How many did?" (I know Olympus Corporation gave it a go, but even a couple of decades of holding-on eventually caught them out)
Nick Leeson would be a tad miffed!
Doubling: Nick Leeson's trading strategy
Why did Peter Baring keep meeting the margin calls?- he must have realised he was up against the big Japanese broking houses.
These guys (labour) and the other guys (national), have forgotten about vision. We want a vision of the future which is realistic, and the current fiscal policies are not doing it for anyone. These fiscal policies have not changed for nearly 30 years. Give us a tax switch and a big tax break and lower GST. Is that really too much to ask, obviously it is with people of little vision and only thinking of the next 3 years in power.
The problem with absolutes is that is it usually wrong. As a health care professional COVID IS BEING TALKED ABOUT ALL THE TIME. It is true that it is talked about less in the general population, as with all pandemics, but it is not gone, it is going to kill more people than the flu this winter, it continues to affect all aspects of society in terms of sickness and, in economic terms, loss of productive days etc. You may not be talking about it, which is fine, but don't speak for all of us. It's insulting to me and my colleagues, who are trying to do our best to treat individuals with COVID.
To be honest it's irrelevant. If you are unwell, you are unwell, whether first, second or third (and fourth will be approaching). Long COVID is a major problem for our working population and is being ignored (and from a purely economic perspective reduces tax intake - look at the UK), as well as major distress to those affected. It's also more common after a second infection. You can have the flu one year and survive, and then die of it the next year. COVID is no different. Like all health issues it seems to be that until it effects you personally it doesn't exist. I haven't had COVID yet, officially (been unwell, haven't tested positive), I don't want it. It has caused young and middle aged fit people immeasurable harm, deaths are only part of it. Like everything it seems to be 'I never knew it could be this bad, until I had it'. Instead the narrative follows the people who say 'It's no more than a cold'. That's not the reality for many. I am incredibly saddened by the comments by people who don't deal with this day to day and who speak with such confidence that it's nothing, or fake, or some conspiracy. I actually find it insulting, we have literally busted are butts to help people, have been abused, threatened, and told we are part of a conspiracy. Sigh.
How does a minor issue of a Russian invasion setting off unpredictable inflation feature in that forecast.... it didn't. Now the issue is unpredictable monsoon storms affecting vege prices. The rub is that the RB hopes to solve these by increasing interest rates on the young fhb and indebted property investors.
Hopefully the africans can pull off a coup and get both Russia and Ukraine to agree to a withdrawal though not holding my breath.
"How does a minor issue of a Russian invasion setting off unpredictable inflation feature in that forecast.... it didn't"
Inflation was at 5.9% in Dec 2021 so that horse had already bolted...i.e. hardly unpredictable when it was already double the upper mandated level before Russia started their invasion!
Every fruit picker brings a family.. wife, parent, child. Didnt you know - and they all get the use of our benefits and infrastructure (maybe not quite that bad but still its not exactly a good deal)
My bet is the average immigrant these days costs NZ about $3m over their lifetime (conservatively) . But they make about $30k a year in the first 3 years for their farmer boss..
Be cheaper to just give some of our taxes to the farmers to do nothing (thats what they do in europe) .. better still pay them to plant some trees instead of apples or grapes or whatever.
You may have misread the stat.
"Our population almost touched 5.2 mln as at March 31, 2023, rising +1.6% in the year. That is a gain of +84,000 in a year (the equivalent of a New Plymouth). +25,600 of those were 65 or older. Since March, our population probably rising faster as net migration ramps up. A record high 16.6% of our population at March 31 2023 was 65 years and older. "
That simply means there are 26k more older people in the country, because people tend to get older.
In terms of the migration arrivals data, it looks like 15k / 324k arrivals were 65+, or 4%. Those younger ones will bring down the average age of the country.
Massive
Australian gold miner Newcrest Mining Ltd said on Monday it would back Newmont Corp's (NEM.N) A$26.2 billion ($17.8 billion) takeover offer in one of the world's largest buyouts so far this year.
The deal, subject to approval from shareholders of both companies and other regulatory hurdles, would lift Newmont's gold output to nearly double its nearest rival, Barrick Gold Corp (ABX.TO), and catapult the miner past Freeport McMoRan (FCX.N) to become the largest U.S. gold and copper producer by market capitalisation.
https://www.reuters.com/markets/deals/australias-newcrest-supports-newm…
No additional tenant supplement. No or reducing tax rinse. Anti slum requirements. No lazy eviction. No capital growth.
More good tenant kiwis leaving. More housing supply arriving. More maintenance legislated. More budget for social housing. Inbound DTI legislation, meaning more real equity required.
Be quick...to bail out.
I dont mind if AS is removed. But all HNZ / KO tenants go on market rents and all benefits removed except for the most needy.
All kiwis treated as equals instead of the taxpayer being a cash cow
We will see how strong our economy is and we will see the true attitudes of those with their hands out.
In my area it's only the small pharmacies (the kind you find in those little strip malls in the middle of neighbourhoods) that still charge. I don't think there'd be many people here in Christchurch who don't live within a short walk, bike, drive or subsidised bus trip of a Chemist Warehouse or Bargain Chemist.
I couldn't tell you the last time anyone in my family paid for a prescription.
I guess maybe small towns would benefit?
The optics are bad on this for National, but then again they are useless campaigners it seems. At least Seymour had the gumption to link the fact that you'll probably wind up paying more in extra inflation-related costs than you'll save in free prescriptions.
What I can't figure out is who is actually paying $5 per prescription these days? Everywhere you look there's a Chemist Warehouse, Bargain Chemist or even some local pharmacies doing it for free now.
As others have pointed out, it also seems very expensive for the relative impact. I'd argue a better spend of the money would be more targeted support for GP visits for lower income earners to try and keep people from going to the ER as they can't afford the doctor.
Now the taxpayer gets to foot the bill for something that private businesses were doing as a loss leader ... genius stuff. But ultimately makes for good headlines and National should have kept quiet on this.
Of course, loss leaders are never done for no good reason. But ultimately if you just want a prescription you can currently get one for no cost from multiple free script pharmacies. If you lack the willpower not to buy a 10,000 pack of Vitamin C gummies and a Hugo Boss fragrance in the process of picking up your script (which is where the cash is presumably made) then that's your own problem and the taxpayer shouldn't have to foot the bill for that.
Do you take the red pill and swallow the co-governance and missing-out-unless-you-get-a-handout rat, or do you take the blue pill and swallow the landlord-shaped rat? It's like being Neo from the Matrix, only I don't have the option to wake up in my bed and believe whatever I want to believe.
It would be great if we could have a party that took the middle ground and ran with the best bits of Nationals policies and the best bits of Labours policies. Then we'd have a party worth voting for.
As it stands, both have bits of policies that I find quite repulsive.
The best way to get the best bits is to boot out all politicians at govt region and local levels and have rolling referenda using direct democracy. Then you can vote for each suggestion on its merits. Personally I would like % sampling referenda or about 52000 votes on each policy with an auditor for each block of 100000 voters.
Fiona Johnson as Woman in Red in the Matrix.... you can substitute easy tax free money for sex if you wish.....
On analyzing this particular scene in The Matrix, it becomes clear that the woman in red is a deliberate distraction, a simulated character who is a part of the Agent training program. While the woman appears harmless, she wears a vibrant shade of red in order to distract trainees, triggering what's known as the "red dress effect" - a phenomenon where women wearing red are perceived to be more attractive and open to sexual advances than those in plain colors. This doesn't just apply to form-fitting dresses; the "red dress effect" has been shown to work even in a study where subjects were shown a photo of a woman wearing a white T-shirt and a red T-shirt in the same style.
There's more to the woman in the red dress than just being eye candy for Neo, though. The stark contrast between the monochrome attire of the pedestrians and the woman in red in The Matrix serves to highlight the gap between appearance and reality. The moment she senses a threat to the matrix, she is overwritten by an armed and dangerous agent, underlining the themes of illusion and control within the framework of the system. Her character also alludes to the Scarlet Woman or the Whore of Babylon, references lifted directly from the Book of Revelations, and the mythic lore of the goddess Babalon in Thelema.
If one were to delve deeper, Morpheus is named after the eponymous messenger of the gods in ancient Greek mythology, who is known for entering the dreams of mortals to share esoteric knowledge - which is essentially what Morpheus does to Neo in order to usher his awakening. While Morpheus represents Truth, Neo (or νέος in ancient Greek) means “young one,” which is a reference to his disillusioned state of mind after learning the truth, still fresh from its unshackling. By pointing out the reality behind the woman in red, Morpheus asks Neo to peer beyond the web of deception and lies within the training simulation, which is designed to stimulate and distract.
Connecting the symbolism of the woman in The Matrix to their own lives, the Scarlet Woman represents a lure within our own worldly construct - be it rampant consumerism, or pre-programmed choices of a murkier sort. After all, the matrix is primarily a means to exert control and to keep its subjects docile. As Neo begins to understand the nature of illusion, he becomes better equipped in his journey as “The One”, which in turn, allows him to escape the prison of surveillance and taste true freedom in the process.
Yes, the politicians only pander to their core constituents, since neither team red or team blue truly do things in the interests of the nation and its future, there might be merit in voting out of pure self interest. If you can’t beat them, join them.
I am not writing off the option of voting blue, especially if they give me tax cuts and get tougher on crime.
Financial markets knows this is going higher for longer and is also anticipating that the only why Labour can buy this is to promise things funded by more borrowing..... we are about to hit a wall, you will still smell the burning wreckage on Oct 13th 2023 I actually think cash kiwi saver could out perform other asset allocations. Your millage may vary..
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