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/LOAN RATE CHANGES
No changes to report today.
TERM DEPOSIT/SAVINGS RATE CHANGES
No changes here either.
THE TAX TAKE SOFTENS
Crown tax revenue fell -1.3% behind forecast in the nine months to March 2024, tracking $1.6 bln below forecast as the Budget 2024 approaches. All tax categories are starting to sag as the labour market eases and profitability sags. GST collected in the March month at $2.085 bln was its lowest for any month since June 2023. Monthly deficits on an OBEGAL basis are setting in consistently now, only covered by rising asset valuations.
MORE CUSTOMERS FALLING BEHIND ON REPAYMENTS
New Zealand's biggest bank, ANZ NZ, says interim profit rose as credit impairment charges fell, but the environment is challenging. They are turning cautious as more borrowers fall behind on loan repayments, they say. Interestingly, while warning of problems ahead, the ANZ-NZ CEO said "Given the ongoing uncertain environment, we need to remain cautious, which is reflected in the increase in credit provisions". She said that in May 2023, but actually profits rose and and credit stress provisioning fell. This year she said "Given the more challenging environment we are in, we do need to remain cautious. The number of customers falling behind on their repayments is rising". The warning may not mean ANZ's profits will fall. Besides their parent is funding a huge AU$2 bln share buyback, which will help keep their share price elevated (a key metric for management and board compensation).
MEAT EXPORTS FALTER
New figures from the Meat Industry Association provide grim news for March quarter.
A SHARP TURN SHORT
Mortgage borrowers are still shifting to shorter fixed rate contracts (and to floating). Households took out more six month home loan contracts in June than they took out 2 year contracts, for a second consecutive month, unique since this data series started in April 2021. The most popular term remains the 1 year fixed, accounting for more than half of new contracts. For investors the skew away from 2 years to 6 months is much more pronounced, and the one year contract for residential property investors now accounts for 56% of their fixed rate arrangements. For both types of borrowers, it is a sharp shift that has only taken hold in the first three months of 2024. More here.
TAKING RISK DOES BEST
Morningstar reported its March quarter KiwiSaver assessment today. KiwiSaver assets in their database increased by $4.6 bln during the March quarter to $108.6 bln. ANZ leads the market share with more than $20.4 bln. Fisher is in second position, with a 15.4% share. Milford is sandwiched in between ASB and AMP in fourth. The five largest KiwiSaver providers account for approximately 68% of assets and generate around 69% of the fees. All multisector KiwiSaver funds produced positive returns over the March quarter, with funds that contained risk assets benefiting the most.
MORE KIWISAVER OPTIONS
Nikko AM NZ has launched a personalised KiwiSaver scheme as a portfolio with a multi-choice combination of "high-quality handpicked funds" from their stable, plus some others outside. This positions them as a direct competitor to Sharies, InvestNow, and Consilium. The outside funds supported include those from Salt, Generate, Harbour, Pathfinder and Milford
EYES ON DAIRY PRICES
Tomorrow morning (Wednesday) we have another dairy auction. The last full auction on April 17 recorded virtually no change in prices overall. But the subsequent May 1 Pulse event brought lower prices (WMP down -2.7%, SMP down -3.6%). The spotlight on dairy prices comes as mineral commodity prices regain some shine. All this comes with the backdrop of rising Australian monthly production but declining New Zealand, US and EU monthly production. And New Zealand, Australia and US monthly exports increasing while EU monthly exports decreased.
A FOCUS ON "COMMON ERRORS"
In Australia, their tax department said it will be targeting "3 common errors" being made by taxpayers: Incorrectly claiming work-related expenses; Inflating claims for rental properties; and Failing to include all income when lodging. They are on the lookout for deliberate "errors", especially relating to rental property investment.
RBA HOLDS
The Reserve Bank of Australia has left its cash rate unchanged at 4.35%, as expected. It says; "the path of interest rates that will best ensure that inflation returns to target [2% to 3%] in a reasonable timeframe remains uncertain and the Board is not ruling anything in or out."
LOCAL BOY MAKES GOOD
We should also note that Wayve, a start-up British AI company specialising in self-driving technology, has just won a US$1 bln early stage investment from Japan's Softbank. This is after others like Elon Musk have seeded US$200 mln or so. Why is this noted here? Well it was started by a Christchurch Kiwi out of the University of Canterbury, then to Cambridge, England. Alex Kendall is co-founder and CEO, now in the big-time.
SERVICE SECTOR ACTIVITY BUOYED
Japan is on a roll. Their services PMI for April has come in at a strong level (54.3), outpacing the US (51.3), China (52.5), and the EU (53.3). Only India (60) tops them among the world's largest economies.
SWAP RATES STABLE
Wholesale swap rates are likely to be little-changed again, maybe a bit soft. Our chart below will record the final positions. The 90 day bank bill rate is unchanged at 5.63%, a level it has hovered around for more than 70 days. The Australian 10 year bond yield is down -2 bps from yesterday, now at 4.43%. The China 10 year bond rate is down -1 bp at 2.31%. The NZ Government 10 year bond rate is down -8 bps to 4.78% and the earlier RBNZ fix was at 4.72% and down -6 bps from yesterday. The UST 10yr yield is currently little-changed from yesterday's close at 4.49%. Their 2yr is now at 4.83%, so the curve is deeper at -34 bps inverted.
EQUITIES MIXED
The NZX50 is down -0.4% in late trade, compounding yesterday's drop. The ASX200 is up +0.5% adding to yesterday's gain. Tokyo is up +1.2% in early Tuesday trade. Hong Kong is down -0.7% in its morning trade. Shanghai is down -0.2%. Singapore is up a minor +0.1% so far. Wall Street ended its Monday session up a full +1.0% on the S&P500.
OIL HOLDS FIRM
The oil price is +50 USc today from this time yesterday, at just over US$78.50/bbl in the US, while still just over US$83.50/bbl for the international Brent price.
GOLD FIRMISH
In early Asian trade, gold is up +US$10 from this time yesterday, now just under US$2321/oz.
NZD HOLDS
The Kiwi dollar is little-changed from this time yesterday at 60.1 USc. Against the Aussie we are marginally softer at 90.7 AUc. Against the euro we are unchanged at 55.8 euro cents. This all means the TWI-5 is now at 69.3, and little-changed.
BITCOIN STABLE
The bitcoin price has slipped to US$63,704, a minor -0.6% lower than this time yesterday. Volatility of the past 24 hours has been moderate at +/- 2.2%.
This soil moisture chart is animated here.
Keep abreast of upcoming events by following our Economic Calendar here ».
100 Comments
Imagine Luxon and the boys (and Nicola) sitting round looking at the books. Bbbbut, we're pulling back spending and our net operating position is still negative and heading in the wrong direction... What the hell is going on? How much more do we have to reduce our costs before we start generating a surplus?
If only someone would sit them down and explain. Listen, boys (and Nicola), Govt is not a business. Taxpayers have to get money from somewhere to pay their taxes. Now, where do they get their money from? Basically, three places:
- Savings
- Bank loans
- Govt spending
Guess what? People have locked their savings away in term deposits paying a reasonable return for the first time in years. Bank lending is broadly static - repayments and new lending are cancelling each other out. Govt spending (that's you lot) is only a dribble more than tax collected and Treasury are snaffling uncommitted budgets.
Are we clear? Great. Now, why don't you call a press conference, explain all of this to the public, and share your cunning plan for avoiding a catastrophic recession?
Once again we have voted the wrong government in at the wrong time. Recessions are a great time to increase government spending...
well not sure we had much choice as the wrong govt was voted in 6 years ago
Plot twist: they’re both the wrong government
That wrong government was voted in to fix the mess the previous wrong government had made when it went austerity after the GFC.
It wasn’t long ago on here, anyone that did not believe that zero interest rates were coming, and it was the last chance if you ever wanted a house, was an idiot. Look how things have turned out. We had an idiot government for the last six years and things have turned to custard; and the new government is going to have to deal with it. They can’t print their way out of it, the last government printed their way into it, with the predictable mess we have now. What many here and around NZ are experiencing is the classic, denial, anger, bargaining, depression, acceptance cycle. I’d say we are at the denial stage, because things have started to turn to custard, but, we approaching the anger bit, as now the people that said I told so are the bad guys, along with the new government. So,4-5 stages of the cycle to go….
Why do you refuse to acknowledge the role our Reserve Bank played in this?
(The answer for you (if you're honest): "Facts don't fit with my narrative and interrupt my ranting".)
Just telling it like it is. I agree with you though. re-RBNZ, but then Orr was appointed by Robertson, and as a result of the excellent job that Orr was doing, he was appointed again for goodness knows how long to continue the damage. Remembering Orrs only claim to fame is that he managed a super fund through a sharemarket boom. No wonder he is not up to it.
It’s a good point re: Orr’s appointment, and his reappointment
The previous govt also changed the RBNZ’s mandate
You won't find me defending the previous Govt from 2021 onwards (or 2017-2019 actually). However, the villain in the 2020 over-stimulus story was very clearly RBNZ. They stepped in when Govt had the recovery covered with fiscal.
The trouble now is that we have the wrong Govt to handle a recession. They will double down on austerity and destroy the economy. My only hope (genuinely) is that they get the private finance flowing into infra quickly. It's a spectacularly expensive way to get an economy moving, but anything is better than an explosion of poverty, crime, unrest etc.
sure we had a pandemic but Labour blew their wad before the recession got here.....
Why do you too refuse to acknowledge the role our Reserve Bank played in this?
Incorrect.
Net taxpayers pay their taxes from income generated from jobs & businesses.
Approx 60% of households are not net income taxpayers after allowing for credits, benefits & receipts.
25% of Govt taxes from GST
https://www.ird.govt.nz/about-us/publications/annual-corporate-reports/….
Gotcha. So...
- Businesses print themselves some New Zealand dollars
- Businesses give those dollars to workers in exchange for work
- Workers pay their Govt taxes with some of the dollars they get from businesses
- Businesses pay Govt taxes with some of their dollars
- So, to stimulate the economy, Govt just needs to take fewer of those dollars away from businesses?
Never looked at it that way before.
Tax cuts for businesses coming May 30th, then? ;-)
Edited: And probably a nice big government slush fund for businesses to dip into? (Technically, govt spending tho.)
Approx 60% of households are not net income taxpayers after allowing for credits, benefits & receipts.
Again, you keep portraying this as if it's working for families, jobseeker, etc that is causing that stat when the main driver of it is superannuation. Literally 50% of the welfare budget is super, then another big chunk is the accommodation supplement which may as well be a direct transfer to landlords.
It's painting a false picture that there is a bunch of working-age people sitting around doing nothing which just isn't true.
Here is the old document where that stat originated from.
And another one that links to the new report that was released very recently.
I stated the stat in the context of responding to the original Jfoe post about taxpayers. I didn't "portray" in any other way you drew your own inferences.
Apologies if that wasn't what you were inferring. It's more my frustration with you continuously bringing up that particular statistic that has been stripped of such a large amount of useful context to the point that is just ends up being misleading and inaccurate.
"It's painting a false picture that there is a bunch of working-age people sitting around doing nothing which just isn't true"
Of course it's true, of course there are "a bunch of working-age people sitting around doing nothing"
or we could sell things we make/grow to people overseas and receive real money in return
Wot! There is an economy beyond the government. Who woulda thought.
Double entry accounting has a neat symmetry, but it does not rule the world.
"There is an economy beyond the government"
Yeah, in NZ it's called the housing market
True. At a macro level, a trade surplus would mean offshore NZD savings being spent into the domestic economy. Yes, that would be stimulatory. Now what have we got that is worth more than oil ($10bn / yr), cars ($10bn), and machinery ($8bn)?
Hydrogen?
1kg of Hydrogen = 2.8kg of gasoline on a calorific basis.
(Just a few practical problems to resolve first though. But nothing that no.8 wire can't fix. ;-)
Energy return on energy invested to convert and transport hydrogen is very poor, much better energy stores available for most applications. H2 is the fuel of choice for oil barons wanting to look green
Agreed. I was musing about what NZ could do if oil hit $300 a barrel in 2025. (Pure science fiction stuff although PDK may disagree.)
Or stop buying stuff from overseas like oil and cars
Oh wait the govt just doubled down on ICE cars (and therefore oil)
And megayachts?
Maybe we could stimulate productive businesses here that encourage our resident and foreign billionaires to spend their vanity dollars in NZ?
https://www.nzherald.co.nz/nz/new-zealands-richest-man-graeme-harts-new…
Grant Robertson had an answer for that Jfoe. We have suffered since.
Bad memory Jfoe, the RBNZ has been deliberately trying to engineer a recession for the last 6 months at least. The current situation was entirely predictable, we are not even into the worst of it yet as a few people are still to roll over onto higher mortgage rates. Time to clear out the dead wood that was propped up by the Labour government throwing free money all over the place.
It wasn’t free.It was what New Zealanders had earned and paid the government for earning it. But that government took it, spent it, with little more concern than Santa running a lolly scramble.
The whole 'cleansing recession' thing is next level stupid. Countries that try that permanently fallback from their peers. We did it in 1990/91 and we are doing it again now.
My prediction is that this Govt will spend more than Labour over the next few years. They won't have a choice - Govts are forced to spend in recessions. Look at the UK - shiny new Tory Govt elected in 2011 on a platform of 'fiscal prudence', 'cutting waste', and 'reducing the Govt debt'. How did that go? They failed spectacularly and turned the UK into a laughing stock.
But but but nuzilund iz diffrunt
More on the CRE apocalypse.
Canada Pension Plan Investment Board has taken a whopping USD176 million loss on a San Francisco office building. They just sold their share for USD43.5 million - 80% haircut in <10 yrs.
One of S.F.’s biggest office buildings sees value plunge by 80% after departure of Uber, Block
https://www.sfchronicle.com/sf/article/s-f-office-building-value-194384…
Yeah I think you're missing the bigger picture due to your confirmation bias.
San Fran is ideosyncratic and most funds are more than compensating with soaring equity and tech valuations.
Yeah I think you're missing the bigger picture due to your confirmation bias.
The apocalypse is not confined to SF. It's quite widespread. TBH, I expect CRE values to hold higher in places like SF compared to say St Louis.
Anyway, I never made the claim you can't go wrong with bricks and mortar.
How is it an apocalypse? Apart from a few small regional banks there is no distress anywhere in the US banking system, no CMBS defaults, nothing.
This is downtown San Francisco which the liberal fruit loops have destroyed, I bet Palo Alto is doing very well.
Agree. Wake me when Miami falls over.
California and New York have been run into the ground by the Democrats. People and Businesses are leaving in droves.
Were are they going?
Texas
California last year the nation's 27th safest state, Texas is 47th..(and lets not mention womens health choices)
"Texas attracted more relocating businesses than any other state, ..."
https://www.texastribune.org/2024/02/02/texas-relocating-businesses-job…
If only NZ inc could as well...
"...no corporate or personal income tax"
https://gov.texas.gov/business/page/why-texas#:~:text=As%20the%208th%20…
Texas enabled cheaper housing... California plagued by housing NIMBYs...
Texas, Florida, North and South Carolina.
"For the first time, six fast-growing states in the South — Florida, Texas, Georgia, the Carolinas and Tennessee — are contributing more to the national GDP than the Northeast, with its Washington-New York-Boston corridor, in government figures going back to the 1990s. The switch happened during the pandemic and shows no signs of reverting.
A flood of transplants helped steer about $100 billion in new income to the Southeast in 2020 and 2021 alone, while the Northeast bled out about $60 billion, based on an analysis of recently published Internal Revenue Service data.
The Southeast accounted for more than two-thirds of all job growth across the US since early 2020, almost doubling its pre-pandemic share. And it was home to 10 of the 15 fastest-growing American large cities."
https://www.bloomberg.com/news/features/2023-06-29/millions-move-to-the…
Apart from a few small regional banks there is no distress anywhere in the US banking system, no CMBS defaults, nothing.
You do realize that the banks were effectively bailed out by BTFP after the bank runs, right?
FYI,
The record shows that the entire US banking system — the Fed, the banks, and the bank regulators — knew by 2022 that they had lost the money of many millions of depositors.
Banks tried hiding the losses via hold-to-maturity accounting tricks (should be called hide-to-maturity). And regulators allowed them to bury the fact of their literal insolvency in footnotes. But this just deferred the judgment for a bit. In a sense, the entire bill for many years of printing was coming due all at once. Hundreds of billions of dollars in losses for the central bank, the commercial banks — all of it had to be imposed on someone.
Traders have been hiding poor decisions in the long book for years.....
Just before the GFC no one wanted to admit that sub prime could become.... more prime....
Its just like this site, Spruikers don't believe that a few mortgagee sales can start to distort the market for all those not in default....
Buckle up, you are not in Kansas anymore.
What about this one? https://www.trademe.co.nz/a/property/residential/sale/wellington/wellin…
Bought for $2.4 mil, homes.co.nz lower estimate of $1.8, buyers not allowed to view the property, so probably sell way less. These are some massive losses that are very hard for most people to recoup, life destroying.
Even worse with business loss, I know couple who are 64 who just lost there house, now renting a 2 bd rm .... total wipeout.
Losses ? It was bought for $30'000 in 1981, that's way, way better than doubling every 10 years, it's a spectacular increase in value !
What reason is there not to allow viewings? Tenants? Someones going to get tuned up.
Must be a rental. Or owner has gone rogue and won’t allow it (which will increase their overall loss).
Is that Terry Serepeisos' house
You're doing God's work promoting the property.... or is it yours TK
Bought for 1.25m in sept 2019 and sold less than 2yrs later for almost twice that. Gains like that would make IT GUY blush
The Seripisos special back on the market eh? He left his mum out to dry...
the city’s (San Fran) office vacancy rate is a record high 36.6%.
Ouch, that is a huge vacancy rate. It's not just bad for the empty buildings, but for the whole CRE valuations. As vacancies rise, rents drop to attract "any lessee". Lower rent means lower CRE valuations by way of Yield, which itself is often still out of date (too low).
Example: a building was valued in 2020, rent was $1 Mill and yield was 4% (when interest rates were 3%) = value of building $25 Million. Today the rent has reduced by 20% because of vacancies (a reasonable figure) and the yield has risen together with interest rates to 8% = new value of same building $10 Million. A loss of 60% or today's value is 40% of what it was four years ago, this is most likely less than the finance on it. The issue is that there are thousands of CRE that have valuations not been revised down properly.
This is from Audaxes link below. It's about stock valuation, but it equally applies to CRE and it illustrates my point perfectly.
Multiplying depressed earnings by a low P/E is really double counting. Multiplying peak earnings by a high P/E, which is what we’re doing today, is also double jeopardy the other way.
It’s obviously the same for residential housing too; the yield needs to be higher to match interest rates, so the house must be worth less.
Nowhere near as much as Commercial JJ. Residential is valued mostly on "comparable sales", and to a degree by "replacement value" (land + depreciated building), much less on income and yield. Commercial is basically simple maths, rent divided by yield = value.
These buildings are in a lot of peoples pensions - particularly in Aus. They keep them empty so they don't have to take the valuation downgrade - they keep trumpeting their 10% pa 30 year returns......
???
Some good sense there Dr Y. Via my mailbox:
The biggest bubble I see in Australia is...
Commercial real estate (CRE) below <$10m. This sector has exploded in last 5 years because of CRE buyers agents, who have purchased more than $10bn alone in the last 5 years and retail who are having a crack themselves.
It's mainly unsophisticated investors who don't understand that CRE has short term loans with high vacancy.
These are always fine in the bull markets, but when business insolvency shoots up that's when the trouble begins. Was the same in 2005-2007 and early 90's.
Folks are literally buying at 5 cap rate (yield) and borrowing at 7%+ which is globally wild and similar to the last two big downturns in Aust. Negative spreads (yield less interest rate) are massive red flag in CRE and this is one of the most negative periods in history.
Loans are typically 5 years or less, and vacancies in a downturn can shoot as businesses go bankrupt.
The retail market isn't set up for this.
Banks in CRE are pushing the can down the road by extending loans when they don't meet ICR / DSCR covenants, but this is usually the start.
It's happening but will take some time to play out.
Institutional markets are now typically buying at 6% yields and borrow at 6%, which is significantly better but still somewhat heated.
Now that rates are not sure to go down over the next 12 month (Rate yield curve is showing higher rates), the risk has materially increased over the last two months.
I am very bearish.
Yes, exactly this.
And all it really highlights is a fundamentally flawed monetary phenomena, and a flawed asset inflation model that cannot be sustained (as we've seen again and again historically), that has a wide reaching impact on sectors of the economy and society.
The FIRE sector is the elephant in the room that nobody wants to look at.
RBA holds 4.35%
AUD getting smoked - below 0.6600 (gold and silver proxies on ASX - ETPMAG, GDX, PMGOLD - roaring). Bond yields down 5-7bps. ASX up and closing in on a new record high.
Retail spending dire.
% change qq
Sep 22 0.0%
Dec 22 -0.4%
Mar 23 -0.1%
Jun 23 -1.1%
Sep 23 -0.2%
Dec 23 +0.4%
Mar 24 -0.4%
The might Chris Joye comments:
"So the RBA considered hiking rates this week, but took the dovish option of keeping rates on hold and fudging their forecasts to pretend they can get inflation below 3pc next year so as to not annoy their political masters. Yet another central bank trading away its political independence, which will only further fan inflation expectations. The Fed wrote the playbook for the RBA in terms of political acquiescence. Chalmers chose well."
More from Chris Joye. Breathing fire and like a hibernating bear that's been disturbed.
RBA and Fed clearly now captive to the political and asset pricing oligarchies where the central banks' inflation targets are not worth the paper they are written on as politicians wrest control of monetary policy back from unelected bureaucrats. Treasurer doing to the RBA exactly what his hero Keating did - taking policy control. The central banks will eventually be forced back into data dependence once the unpopularity of high and volatile inflation gets sheeted home to the politicians
Man Aussie is going to demonstrate to the entire world, the faster you go, the bigger the mess.
Yes. Central Bank independence is exaggerated
No one seems to be monitoring it either. When Covid hit and the RBNZ went crazy, did anyone question whether they were trying to control inflation (their job) or trying to be a hero (not really their job).
KiwiSaver funds produced positive returns over the March quarter, with funds that contained risk assets benefiting the most.
Today is in the top percent on the Shiller P/E of all time, and when you start from this level, you have a very hard time going up materially. You’ve done it once or twice, but you’ve only done it for a while: in the last gasp of 1929; in the last gasp of 1999; and notably and most impressively in Japan, where maybe for two and a half years you kept going. And in each case, they ended incredibly badly. So, the price you paid for bucking that kind of law was a very high price. Link
The arithmetic is straightforward. Over the past 10, 20, and 30 years, both nonfinancial corporate revenues and nominal GDP have grown at an average annual rate of about 4.5%, which includes the impact of the recent bout of inflation. Meanwhile, the dividend yield of the S&P 500 currently stands at 1.4%. Assuming that valuations remain at a “permanently high plateau,” prices would grow at the same annual pace as fundamentals. Add the dividend yield, and estimated long-term S&P 500 total returns – assuming permanently elevated valuations – come to about 5.9% annually.
Now allow MarketCap/GVA to retreat from its current extreme of 3.2 over the coming decade, but no lower than the level of 1.7 we observed in early 2020. In that case, the estimated total return includes not only growth in fundamentals and dividend income, but also the annualized impact of the change in valuations:
Estimated 10-year S&P 500 total return: 1.045*(1.7/3.2)^(1/10) – 1 + 0.014 = -0.5% annually
Now assume that MarketCap/GVA instead retreats to its historical norm of 0.98. Historically, that level has been consistent with run-of-the-mill subsequent S&P 500 total returns averaging 10% annually. Valuations regularly fell below that historical norm (followed by high subsequent market returns) in much of U.S. market history before 1995. As I noted at the time, the S&P 500 also dropped to undervalued levels in October 2008. In contrast, recent market returns have relied on valuations pushing to record highs. Suppose that valuations a decade from today instead reach that norm of 0.98:
Estimated 10-year S&P 500 total return: 1.045*(0.98/3.2)^(1/10) – 1 + 0.014 = -5.8% annually Link
OOPS! Berkshire Hathaway’s cash pile hit another record at $189bn as billionaire investor Warren Buffett sold ~13% of its stake in #Apple in Q1 2024. Buffett said he didn’t mind amassing the cash and said it could reach $200bn by the end of Q2. https://bloomberg.com/news/articles/2024-05-04/buffett-s-berkshire-says-cash-hits-record-as-earnings-gain?sref=R17xFhjo Link
Even though the quote is from perma bear Jeremy Grantham, it's very hard to argue with his logic.
Blame for the property ponzi is now being targeted at the crypto bros. Media getting desperate for scapegoats.
That Wolfie guy / gal has some explaining to do.
Crypto bros eager to buy homes lifted prices as the wealth effect from tokens spilled over to some housing markets, study says.
https://fortune.com/crypto/2024/05/05/crypto-bros-wealth-effect-home-pr…
The tax man cometh though
The number of customers falling behind on their repayments is rising". The warning may not mean ANZ's profits will fall. Besides their parent is funding a huge AU$2 bln share buyback, which will help keep their share price elevated (a key metric for management and board compensation).
A debt that diminishes shareholder's cash flow potential.
Market capitalization isn’t “wealth.” It’s the latest price, times shares outstanding. Blotches of ink on paper. Flashing pixels on a screen. If a dentist in Poughkeepsie buys a single share of Apple at a price that’s 10 cents higher than the previous trade, $1.6 billion in market capitalization emerges from thin air. If a single share trades 10 cents lower, $1.6 billion evaporates just as quickly. Whatever happens, every security in existence has to be held by someone until it is retired. Ultimately, the wealth inherent in a security is the future stream of cash flows it will deliver to its holder(s) over time. Price fluctuations don’t change those underlying cash flows. They just provide opportunities for the transfer of savings between investors. High valuations favor the sellers. Low valuations favor the buyers. Investors have never paid higher prices for those future cash flows, or accepted prospective returns so low.
Put simply, the bubble hasn’t changed the wealth, and a collapse won’t change the wealth. What will change is the market cap. I suspect that the erasure of market cap in the coming years, and possibly the coming quarters, may be brutal. Still, no forecasts are required, and our own attention will remain on observable valuations, market internals, and other factors. Meanwhile, even if an investor sells at these extremes, the only thing that will change is who holds the bag. Link
The Reserve Bank of Australia has left its cash rate unchanged at 4.35%, as expected. It says; "the path of interest rates that will best ensure that inflation returns to target [2% to 3%] in a reasonable timeframe remains uncertain and the Board is not ruling anything in or out."
Will it or are they being cowards?
String puppets controlled by their masters
Townhouses for rent in Auckland soaring. Over 620 available on TradeMe, as completions surge. Should help keep rental inflation in check.
On the bright side REs have a lot of listings......
One mans disaster is another's opportunity, as long as capitalism is allowed to play out... RBNZ has done there job with strong banking regulation, and the Government is competent in an emergency..... wait a minute.
What did Stalin say re tragedy vs merely statistics ..... I know people who are in tragic situations, in ten years time all we will remember is the stats around this recession.
Under townhouse this 2 bdrm is Just 480pw
https://www.trademe.co.nz/property/residential-property-to-rent/auction…
Jobseekers claims in Auckland up around 18% on same time last year. Do you think people are starting to ship back out to the regions? Still plenty of work on the East Coast shifting silt - in fact Hawkes Bay and Gisborne the only places in the country where jobseeker claims aren't rocketing up.
The RBA holds at 4.35% and is surprised that inflation is not falling as fast they expected.
The RBNZ holds at 5.50% and is surprised that inflation is not falling as fast they expected.
Anyone think they may be close to concluding that their reliance on high interest rates alone to force inflation down isn't having the effect they expected?
Yeah? Maybe? I doubt it. Central banks have embraced a religion. And changing the minds of religious fanatics is nigh on impossible in the short term.
They really need to understand - far more thoroughly than they do now - who is actually negatively affected by high interest rates ... And who isn't. And who will change their ways ... And who won't.
Interest on mortgages is now running at nearly $20bn per year - up from $10bn per year in 2021.
About $12bn of that mortgage interest is from households, $8bn from landlords.
Interest on business debts is running at $15bn per year - up from $6bn in 2021. This is a cost to business - like wages, higher energy costs or anything else.
Banks are paying out about $26bn per year interest to people with savings (almost all households) and shovelling around $7bn in profits (after tax) to their parents (equityholders).
So, RBNZ are trying to 'tame' inflation by loading billions of cost onto businesses, making households richer overall (noting that some are getting hammered). My view is that net impact is still a net reduction in demand. But, assuming this leads to moderating prices is a leap of faith I can't make.
Have you considered that the only real effect is that the reduced demand, causing some businesses to exit a market, pushes the remaining firms further along their supply curves so they produce at higher volumes and at reduced cost per item? Also, that the remaining firms need to focus heavily on reducing the cost of production through innovation & investment in better plant and machinery? (In NZ's context where markets are small I doubt either have much effect but in larger markets, for certain types of goods and services, the effect is usually small but noticeable, and very occasionally substantial.)
Central bank's don't really have a choice. Interest rates and the fear around them are the only tool they have been given. Governments need to take more responsibility here and stop passing the buck
Interest rates and money supply
Yet another pompous, ignorant, dinosaur:
https://www.nzherald.co.nz/nz/kings-counsel-files-complaint-over-tikang…
I think you will find he is quite right. This issue is on the 'nonsense for cancellation" list later this year. In a couple of months a judicial review will find that the REA overstepped is mark in forcing real estate agents to learn compulsory nonsense unrelated to their work each year...and they will be forced to remove the requirement. The same rules have been used by the Council of legal education, and will also be forced with withdraw it. So, next year....maybe it will be part of the curriculum, but probably not. I suspect these odd people people at Auckland University and AUT will not be in their roles much longer either.
Given the Treaty, how is tikanga Maori not relevant contextual / cultural information for legal education? He seems to be saying it’s not part of law - that’s hugely arguable, but even if it’s right, it is - again - besides the point.
given court protocol is to respect tikanga Maori, and allow for evidence in te reo, how is tikanga Maori not relevant to legal education ?
He is saying it is not part of the law, and it's not, in the same way as some sort of Maori world view is irrelevant to commerical and residential real estate transactions. The Treaty does not say a lot, and it certainly does not say anything whatsoever about Maori customs needing to become any part of any legal system.
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