Here's my summary of the key events overnight that affect New Zealand, with news of another Aussie bank caught taking advantage of its clients.
But first, this morning's dairy auction saw generally higher prices with the overall index up +2.6% in US dollars which is the fourth rise in the last six auctions.
In NZD, prices advanced +4.3%, their biggest rise since October 2015. The overall index is now back to levels we last saw in early January. Still, despite this rise, there is little to suggest farmgate milk prices can be raised significantly.
At just 18,113 tonnes sold, volumes were their lowest offered and sold since 2011. But remember, Fonterra sells by far the most of its production through other, direct channels. The purpose of the auction is to just set a transparent price basis for all sales.
In the US, there is more evidence prices are rising. Today's CPI data shows that energy prices took a big jump in the month. However, food prices remain low, and the index without food and energy rose +2.1%, as markets expected. But now the low oil price has pretty much moved through the system we may start seeing 'good' headline price rises. The same will be true for New Zealand, but starting later in the year.
Today's American data has markets expecting the Fed to use this as a reason to raise its benchmark interest rate. In fact, two Fed governors say interest rate markets underestimate the chance of a June rate hike.
Stock markets may be coming to the same conclusion; they are down on Wall Street today in fear of the consequences. And that is despite good industrial production data from the Fed, and good capaciity utilisation data as well.
In Australia, HSBC has been forced to repay some of its clients. A review of its files found client investment goals in some files were closely aligned with the features of the products being advised upon. This case follows the rate-rigging cases and is compounding the calls for an official inquiry into bank behaviour and sales culture.
In New York the benchmark UST 10yr yield is unchanged today to 1.74%.
The oil price is marginally higher with the US benchmark now just over $48/barrel and the Brent benchmark just over US$49/barrel.
The gold price is also marginally higher at US$1,277/oz.
And finally today, the NZ dollar will start at 68.1 US¢, at 93 AU¢, and at 60.2 euro cents. The TWI-5 index is now at 71.7.
If you want to catch up with all the local changes yesterday, we have an update here.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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48 Comments
Auckland's disgraceful housing situation hitting the headlines again.
"Hundreds of families in Auckland are living in cars, garages and even a shipping container as a housing crisis fuelled by rising property prices forces low-income workers out of private rental accommodation.
Charity groups have warned that, as the southern hemisphere winter approaches, most of the premises have no electricity, sewage or cooking facilities.
“This is not people who haven’t been trying. They have been trying very hard and still they’re failing,” said Campbell Roberts of The Salvation Army, who has worked in South Auckland for 25 years.
“A few years ago people in this situation were largely unemployed or on very low-incomes. But consistently now we are finding people coming to us who are in work, and have their life together in other ways, but housing is alluding them.”
http://www.theguardian.com/world/2016/may/17/new-zealand-housing-crisis…
I agree, and in theory it holds that it should balance out. But we operate in a Global Market (kind of) - NZ is a free market, but most of the rest of the planet is not...
Housing in NZ is open to the whole world. Anyone can buy property here. So you are competing against people that
a) can have higher incomes, and
b) can get funding with better rates.
Jobs in NZ are also pretty much open to the whole world. So, you accept the low wage pay here, or the company can just get someone in from overseas that will.
NZ Company - We couldn't get any NZ Doctors to work for minimum wage.
Immigration - oh no! you better get someone from overseas who will
In a free market if there is a labour shortage, wages should rise. We stop this from happening by letting in foreign workers to fill any position. If there is not a labour shortage, then why are we actively seeking foreign workers?
NZ is/was a great place to live, so people want to come here. NZ is also relatively easy to get into (providing you don't bring in an apple) We issue visas at will to pretty much anyone that can find us.
Will taxes, rates, fees, etc... change this? Not at all.
Do we need physical restrictions? Yes.
- Restrict Residential property to citizens only.
- Restrict work visas and make them harder to obtain.
- Restrict Student visas to Universities only.
Is that what we will do? No. So I fully expect it to get a lot worse for the average Kiwi.
NZ is a free market, but most of the rest of the planet is not...
No it's not. A state owned enterprise gets to choose short term interest rates - that is the Overnight Cash Rate (OCR) in a bank dictated residential housing market interface that raises a massive chunk of it's funding in the O/N space - retail, wholesale I know not which exactly. View RBNZ latest bank funding stats.
It's human nature, and applies to everything. We all want equal rights, so that's what the government does. But rights clash, and if everyone is equal whose right takes precedence?
Read any news site and every story in essence comes down to this clash in rights.
Eg.
Normal toddler whinge
I have the right to enjoy my holiday/cafe/etc..
You have the right to enjoy your holiday/cafe/etc..
My toddler sadly ;-) has a right to come with me.
Migrant crisis in Europe
I have the right to maintain my culture
You have the right to maintain your culture
Your culture opposes my culture
Housing crisis
I have the right to buy a house
You have the right to buy a house
You have more money
I would argue a citizen's rights should always Trump those of a non citizen (but then that is not equal), I guess that's why he is getting the votes.
Governments job is to uphold the constitutional rights and that takes discipline and there is a complete lack of discipline by all politicians......intolerance of others where you stop them from having a right is where the inequality arises.....is it a lack of money or a lack of personal resources....a person might not be able to buy the house but could use their labour and build a house....but the politicians and bureaucracy won't allow people to build unless one has all their boxes ticked and paid for......so the state has taken this right away and a person is basically f&^#^d over because he/she can't afford to buy one either!
Perhaps harder to find than you think:
http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11640259
its not hard to find, its just harder to get them to stand in front of camera and say what the situation is.
who wants to stand in front of the public and say we work but we are struggling please help.
the old saying pride comes before the fall
in saying that this is why this government gets away with the crap they do because the opposition are even worse.
as another saying goes to get good government you need good opposition to keep them honest.
unfortunately we have neither
I would have had more sympathy for the woman they interviewed if she didnt have a large 4 legged eating machine at her feet.
I have no problem with the taxpayer helping those in need but people need to get their household p&l in order before any money changes hands.
Housing can be an incredibly emotive issue. Shelter and a sense of home is essential to our well being, which is why the right to housing is enshrined in the conventions of the United Nations and, in turn ratified by most national governments. Housing provides us with sanctuary , a sense of identity and belonging. Providing high quality , affordable and securely tenanted housing for all its citizens is a core stated ambition of most governments. However there is a marked difference between rhetoric and reality, in part due to the ideology of ruling parties and the machinations of vested interests. Furthermore there is an increasing tension between housing as a form of shelter (its use value) and housing as an asset class (exchange value), particularly in light of the finanzialisation of mortgage markets.Any statistical metric of New Zealand housing and in particular Auckland shows that there is a unfolding crisis, there is failure across the board , yet those that own their own home especially those free of debt appear particularly smug akin to the pictures of real estate agents that adorn our streets . (I have used an excerpt from an irish paper)
not all of us that own and are mortgage free are smug, though i would concede we are a minority and a very small one at that and we are more sad as we can see around us what is happening and how it will come back in later years to hurt us all, financially and as a society especially to our young
I am both mortgage free and in my own home and I am anything but smug. I raised concerns about house prices 10 years ago but was rubbished, now the truth is there for even the most idiotic of us. LLs are terrified that Governments will actually do something real about it thus killing their free ride, but they are a small minority while the people are increasingly having to live on the streets. This is a consequence of right wing free market economics.
There is absolutely nothing that is right wing free market about housing......the problems are left wing controlled policies that started in the 1990's......regulation is the problem and one only has to read the diatribe that gets posted on the likes of interest to see the clear lack of sophistication there is in understanding the effects of policies and regulation..
The housing supply problem and affordability issue would be solved inside a year or two if the whole industry was deregulated...I will repeat that....THE WHOLE HOUSING AFFORDABILITY ISSUE WOULD BE SOLVED INSIDE A YEAR OR TWO IF THE WHOLE INDUSTRY WAS DEREGULATED.....abandon the RMA, get rid of all the Council interference, do away with all the H&S nonsense that has arisen......What use are MBIE they are just another costly bureaucracy adding to the price of houses........you cannot have thousands of people sucking a living off an essential like housing and then call that the free market or right wing!!
If you do not have freedom you have regulation.....and there is NO freedom in housing.
Fully agree. The housing crisis has been brewing for a number of decades, but has accelerated in recent years as various regulation fads have swept through the bureaucrats. A brief sample of my humble opinions about the causes of the rot are here http://waymad.blogspot.co.nz/search/label/Housing but a short read follows:
- The price of land is inflated 10x via MUL's and other TLA planning fiascoes (should fiasco plural have an E?) Required reading: Productivity Commish 'Using Land for Housing': http://www.productivity.govt.nz/sites/default/files/using-land-for-hous…
- So anything built on the land starts life with a massive pricing disadvantage and cheap, quick accommodation is nigh-on impossible. Of course, local monopolies rule (your efficient Local Government unit, what else?) with predictable effects on pricing and service levels.
- Building materials pricing is in the grip of a cosy duopoly.
- There's a license for most types of residential building: MBIE guidelines here. http://www.business.govt.nz/lbp Self-builds are thus ruled out despite being one bleedingly obvious path outta the morass.
- Elfin Safety leeches productivity out of the system at every turn: signage, fencing, testing of power tools, working at heights, long sleeves, helmets, safety goggles scaff, liability. Try cleaning your 2.4 m high gutters without 'appropriate certification, gear and training' and watch the bureaucracy descend gleefully upon your hapless efforts. Nice story from a neighbour: has to wear glasses and helmet to test fully encapsulated, house-size electrical gear in power stations, while working at a computer screen tens of meters away.
- Zoning (another baleful TLA legacy) causes commuting by separating uses (no living over the shop, bunking down in a donga on the construction site, or residing next to - shock, horror - a Commercial Premises) thus raising costs, which fall most heavily upon the poor and low skilled.
By contrast, older housing was low-to-no regulation, often self-built (recall that Norman Kirk built his own...) in large part, and has weathered a stern test here in Christchurch by managing not to kill a single one of its occupants (exogenous causes and URM excluded, naturally) so passes the safety test. No zoning to separate uses, so no commuting. And t'was cheap, both in land and build terms, hence affordable.
But them days are goneburger....welcome to Today.
Thanks for link to your Waymad blog and NZika article...always enjoy reading your articles and posts.......I also read the article that linked through to information on the German Constitution right to build.......I think it should be mentioned that we have a similar right under the 1688 Bill Of Rights as building your own house would be considered an Ancient Right.........NZBORA goes on to protect all existing rights and then of course the Universal Declaration of Human Rights explains all the things.issues that a State is to guarantee to the people by keeping their noses out.
The NZ housing supply issues and affordability have occurred because of the failure of the politicians and bureaucracies to consider our constitutional rights when making legislation.....I see no way other than through the courts to sort this non compliance issue by parliament out.......parliament must uphold the 1688 Bill of Rights it is stated in the wording.....NZ is meant to have 2 houses that sit and we don't so therefore it should be deemed that all the legislation that has not gone through a 2 house process is invalid.
David, therein lies the problem. Media more interested in irrelevant "Gottcha" moment around organisation of a press stand up than actually investigating the (serious) issue.
Maybe you should have referred us to this. The actual minister in charge of doing something, exposed as ineffectual on morning report this morning.
http://www.radionz.co.nz/national/programmes/morningreport/audio/201801…
Well, well, well - lookee here
Some years ago a (somewhat similar) situation arose regarding the welfare and accommodation and treatment of a particular group somewhere down in the Waikato
With great concern and a need to see for himself, Bernard Hickey got in his vehicle and drove down there to confirm or deny the allegations, to witness first hand the situation, to check it out
That would become the Crafar Saga, which was to subsequently receive vigorous treatment
Andrew Little's promotions advisor pre-warns the media to turn up for a presser
Was Bernard there for a first-hand look-see?, or Interest.co.nz or David Chaston?
Yes but did you read the whole article.. it's terrible piece of reporting.
At the start of the article something is stated as if it is a fact, completely unsubstantiated and without evidence of any kind ..
"Hundreds of families in Auckland are living in cars, garages and even a shipping container.."
By the middle facts are finally pushing their way in and contradicting the headline "fact" ..
"Nobody knows exactly how many people are living rough in Auckland.."
If the statement is true then the reporter is incredibly lazy not to even *try* to substantiate their claim.
If the statement is not true then the whole article has as much substance as a fart in the wind.
Interesting parallels with housing here and in Canada. Our Government is just as desperate to avoid having the bubble pop on their watch.
"There's a bidding war for government action on Canada's soaring housing market, but as fingers point to foreign buyers as a reason for escalating prices, governments at all three levels are not yet motivated to cool the market down.
Young Canadians complain home ownership is increasingly beyond their reach. Governments fear rules to put a lid on stratospheric prices — expected to show another strong increase in today's real estate data for April — could have an an economic impact far beyond the first-time buyer market.
Tax on home flippers may be helpful, but most foreign investors are likely legitimate
Toronto, Vancouver are creating all Canada's job growth
The difficulty governments face is that while Canadian manufacturing and exports fall, while oil and resources crash, the property market has become the spark plug of the economy. The proverbial engine of growth is firing on a single cylinder."
http://www.cbc.ca/news/business/crea-home-prices-foreign-buyer-economy-…
We should build workers accommodation in Auckland and their families could live in nice houses around Huntly. Every weekend they can return home. We could try and build really good communities in Mercer or Huntly with lovely houses, facilities, parks and good schools. Time to start thinking about better solutions than just cramming everyone in.
Have you ever heard of the Heliopolis project established by Belgian industrialist Empain outside Cairo in the early 1900s? People there still kiss the hands of his descendants when they visit because this artificial city is one of the few well designed and functioning places in the country.
I am afraid, however, that in NZ nobody will have the courage and imagination to do likewise. Key will sit it out, Little is hopeless by definition of Labor and Winston will not be given a chance by the establishment.
PeterPen - No I had not heard of this project. Very interesting. Here is the Wiki if anyone else is interested:
Heliopolis (Cairo suburb)
Not such a stupid idea.
It is time Councils/Government started to look at better zoning rules around infrastructure. The reason everyone is cramming in, is because that's where everything is.
More and more developments are built on the fringes and don't have facilities. A lot of new areas in Wgtn have no schools, no shops, no public transport. In New Plymouth, they build minimal lots, one at a time to avoid having to put in parks, etc... e.g. over 10 acres requires some green space, but you can build 3x9 acre developments that don't require anything. My personal favourite - get consent for 10 properties. Once that is all done subdivide and put in 20. Strains the sewers, water, comms, and power - the local Retirement villages are experts at it.
I have seen new areas in WA, people flock to them. Difference between there and here. They have shops, schools, greenspace, direct transport to the CBD. They have built entire new towns/satellite hubs from scratch in the last decade.
My BB parents always said they had to buy miles out of town to afford a place in Wgtn, and they did (at least it was miles out back in the day). I am not adverse to doing the same, but the kicker is they still had schools, shops, and a train station nearby. If I buy miles out of town I have nothing. So spend my whole life in a car driving to work/school/shops.
At some point, you have to accept, it's not actually a lack of houses, it's lack of overall infrastructure meaning that many houses aren't really fit for purpose.
All workers should down tools and go on the dole and be subsidised just like most of the rental owners. We can all work for the State and load it all up on borrowed money.
Then we can have a vicious circle of events. See just who is paying who for what. ??.
When the dust settles, it would be very interesting. Or of no real interest at all.
When money is borrowed into circulation, someone will have to pay eventually, or it just all make believe.
you bring back how it was when i started work, ironically for a government department and we used to have single man workers huts to live in during the week and could return home on the weekends.
those with families were supplied housing close by, in fact that is how a lot of little towns popped up all over NZ
are we going to be during the clock back and now have to supply the same for our policemen, nurses, young doctors, teachers. or are we just going to bite the bullet and pay them more to work in auckland
And that is despite good industrial production data from the Fed, and good capaciity utilisation data as well.
As with many other economic accounts, we find of late that the Fed was serially overstating the level of economic activity and therefore the whole recovery. As noted with last month’s benchmark revisions, the whole IP series was revised downward largely erasing the acceleration in recovery that economists thought they saw in 2014 and even into 2015. That meant the contraction portion of the slowdown is now calculated to have begun earlier in 2015 but more importantly the data series itself has been forced to belatedly recognize the whole slowdown from its start in 2012. Read more
Moreover, it wouldn't be unkind to accuse the Fed of thinking they are still in 1956. Read more and welcome to my past life.
The recovery stories are just to cover the fact that they need to raise their OCR. The fear of unknown emergent effects is more than a few basis points of interest (which will do little damage at this time). In the US people still have interest rates at retail of 1.99% to 6.2%. An OCR increase isn't going to make large differences but they need to make up a story that people can buy into.
At just 18,113 tonnes sold, volumes were their lowest offered and sold since 2011. But remember, Fonterra sells by far the most of its production through other, direct channels. The purpose of the auction is to just set a transparent price basis for all sales.
In principle similar to the Gold Fix since 1919 and up until the exceptional nation decided otherwise.
In 1933, Executive Order 6102 was signed by U.S. President Franklin D. Roosevelt, requiring US citizens to turn in their gold for $20.67 per ounce. Afterwards, the price of gold was set at $35.00 per ounce.
This man made 1billion in a day betting against, allegedly, stupid pollies in UK...
Now he is betting against US (and expects huge problems in China similar to 2008) .
He has not increased his share in Apple (unsurpisingly).
http://www.cnbc.com/2016/05/17/soros-fund-management-outlines-new-alloc…
Lets see if he is right....
It's Soros, if he puts a large portion of capital behind it he's certain of the outcome. There's quite a good documentary on what was happening in the UK when Soros was betting against the Pound.
https://www.youtube.com/watch?v=K_oET45GzMI
Even Soros cannot "make" a market. There are plenty of potential black swans around cf this interesting piece on Chinese military aggression: http://www.cnbc.com/2016/05/17/the-black-swan-that-could-sink-oil-marke… but after so many years of unscrupulous money printing and rate rigging, I cannot believe that the central planning banksters will let Soros get away with it. They will just print whatever it takes to bring him down.
Personally, I would welcome Soros going down. He also seems to think that he will make a buck from destabilizing Europe e.g. by sponsoring the dirty Merkel-Erdogan-pact to flood the continent with illegal migrants. This greedy man has brought immeasurable misfortune on millions of people and should be stopped.
On the other hand I doubt that Buffet understands the IT business. IBM is a dinosaur and Apple will have a very tough time to repeating past glories. I would buy later.
Most IT people couldn't care about Y2K bug.
Once it was known it was quite fixable... No one expected a meltdown.
The press can build up and tear down a story (regardless of the facts)...
What is the next killer thing from Apple?
The iPhone (and to some extent the iPad) was the killer application... but now that's gone.. whats left? the watch.... really???
Perhaps he knows something we all don't...
Rumor has been electric Car, maybe he has inside knowledge
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=116…
Abolish Auckland city limits - Labour
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