Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
NZ Home Loans cut their one, two and three years fixed rates. As NZHL is owned by Kiwibank, this may be a signal that Kiwibank is about to make a similar move down.
DEPOSIT RATE CHANGES
The Co-operative Bank has reduced rates on their 6, 9 and 12 month TDs, by -5, -10 and -5 bps respectively.
CONSUMER SPENDING STRONG
Retail spending using electronic cards rose in March 2017 to $7 bln, the first time a month other than a December has exceeded this level. The March data was an impressive +6.2% higher than the same month a year ago. Spending on 'hospitality' was up +9.9%, for fuel was up +9.5%, for vehicles up +10.9% and for 'services' up +13.1% from the same month in 2016. Spending weakness showed up in durables and apparel. The hospitality sector is now a $1 bln/month powerhouse, with that level being breached in three of the past four months.
A GAME OF TWO HALVES
ANZ's alternative inflation gauge indicates price rises of +2.3% pa. But that average masks the fact that it is the housing and household utilities group that provides the main impetus for the rises. Purchases of housing rose +1.3% and rents were up a further +0.5% in March from February. The squeeze on building sector labour and housing supply will likely see this group continue to feature strongly in 2017. But elsewhere? not much.
NOT SO BRILLIANT
We have an exclusive report about Mortgage Express who have severed ties with several Chinese brokers at a firm known as Brilliant Finance. There has been a very big reduction in Chinese speaking brokers at Mortgage Express, and the Financial Markets Authority has been called in over conduct and compliance concerns.
CHICKEN NUGGET
Chicken prices have taken a leap to the highest levels we have ever seen, at least in US dollars, according to the IMF monitoring we cover. Lamb is at 58.2 USc/kg, whereas chicken is now at 56.2 USc/kg. (Those same numbers in NZD are 83.0c/kg and 80.2c/kg.)
THE WORM TURNS
It used to be that being charged for insider trading was rare in New Zealand. But the FMA is changing that, and another case has been settled today with a guilty plea. An individual with interim name suppression today pleaded guilty at the Auckland District Court to one charge of insider trading under section 243 Financial Markets Conduct Act - namely, being an information insider advising or encouraging another person to trade. The FMA alleges that an Eroad employee sent text messages to a former Eroad employee that contained confidential material information relating to Eroad’s performance in the period to 30 September 2015. That individual then traded 15,000 Eroad shares.
BEST SINCE GFC
Trading conditions for Australian businesses last month were at their highest level since the global financial crisis, although confidence remained relatively lackluster during the period.
A TYPICAL AUSSIE
The Aussie census has allowed their statistics authority to reveal the 'typical' Aussie charactteristics. In 2016, the ‘typical’ Australian home is owned with a mortgage, but this differs across the country. For example, the ‘typical’ home in Tasmania and New South Wales is owned outright, while the ‘typical’ Northern Territory home is rented. (In 2006, the ‘typical’ Australian home was owned outright.) Although the ‘typical’ Australian has both parents born in Australia, the ‘typical’ Australian in New South Wales, Victoria, and Western Australia has at least one parent who was born overseas. In 2016, the ‘typical’ migrant in Australia was born in England and is 44 years old which is actually two years younger than ten years ago. There are however some differences between the states – the ‘typical’ migrant in Queensland was born in New Zealand, while in Victoria the ‘typical’ migrant was born in India. The ‘typical’ migrant in New South Wales was born in China.
TOUGH COMPETITION
Analysis by the Parliamentary Library for the Labour Party shows that the $7.7 mln spent by putting homeless families in motels in the last quarter of 2016 was enough to pay for an average of 400 motel rooms per night, based on the government’s cost estimate. The total cost of $7,700,000 spent on emergency housing grants in the December 2016 quarter is equivalent to spending $83,695.65 per night on average. This demand is competing with tourists who are also finding accommodation in short supply.
WHOLESALE RATES DOWN
Swap rates have lost most of yesterday's gains. They are down -2 bps for two year, up -3 bps for five years, and up -4 bps for ten years. The 90 day bank bill has slipped another -1 bp and is now at 1.96%
NZ DOLLAR HOLDS
The NZD is almost at the exact same level it was at this time yesterday, at 69.5 USc. Against the AUD, the NZD has held on at 92.6 AUc. Against the EUR we are still trading at around the 65.6 euro cents level. The TWI-5 is 74.9.
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5 Comments
CONSUMER SPENDING STRONG
I guess it's the way one holds their mouth.
From ANZ in my mail box.
Retail spending on electronic cards was surprisingly soft in March, falling for a second consecutive month. However, spending was still up for the quarter as a whole due to January’s large lift. Underlying trends are positive, but modest, and we actually view that as a good thing. Ongoing household restraint – at a point in the cycle when imbalances typically build – will elongate the economic cycle and reduce the risk of a boom/bust end to the expansion, which has been the historical tendency.
KEY POINTS
·Retail spending on electronic cards fell 0.3% m/m in March, the second consecutive fall (spending in February dropped 0.6% m/m). However, given we saw a strong 2.7% m/m lift in January, retail spending is still up 2.2% on a 3m/3m basis.
·Core spending also fell for a second consecutive month, dropping 0.1% m/m. That was on top of a 0.7% m/m fall in February. But as with total retail spending, a decent lift in January meant that core spending is still up 1.5% on a 3m/3m basis.
·Compositionally, it was a mixed bag. After some large increases, fuel retailing fell 1.9% m/m, which is consistent with a modest fall in petrol prices in the month. Consumables and durables spending fell 0.2% m/m and 0.3% m/m respectively, while apparel spending rose 0.8% m/m. Hospitality spending was effectively flat.
·Looking through monthly volatility, underlying trends remain positive, but modest. Total retail spending is growing at a 0.5% m/m trend pace, while core is growing at a 0.2% m/m run-rate. This pace of spending growth has been largely unchanged for roughly six months now.
.Therefore it is still a case that household restraint remains. Despite strong labour income growth, elevated consumer confidence, previous net wealth gains, a record number of visitor arrivals and strong population growth, retail spending growth remains modest. And we feel that is a good thing. Household restraint is allowing economic imbalances to remain far less worrying and domestic inflation pressures more contained than would normally be the case at this point in the cycle. It is a behaviour that should elongate the economic cycle, reducing the risk of a boom/bust end to the expansion.
insider trading has been in NZ for years, maybe those getting caught now are because of new technologies and not the age old word of mouth.
I always watch with interest officers SH returns and which way the share price heads in the month or two afterwards , the uncanny ability of some them to sell before a price drop does not surprise me
An operating lease is a contract that allows for the use of an asset, but does not convey rights of ownership of the asset. An operating lease represents an off-balance sheet financing of assets, where a leased asset and associated liabilities of future rent payments are not included on the balance sheet of a company.
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