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A review of things you need to know before you go home Monday; Christian Savings cuts rates, Treasury and Fonterra make key appointments, Gull swallowed up, Aussies selling at a loss, swap rates and NZD stable

A review of things you need to know before you go home Monday; Christian Savings cuts rates, Treasury and Fonterra make key appointments, Gull swallowed up, Aussies selling at a loss, swap rates and NZD stable

Here are the key things you need to know before you leave work today.

MORTGAGE RATE CHANGES
No changes today.

DEPOSIT RATE CHANGES
Christian Savings (formerly Baptist Savings), a $150 mln specialist institution, has today taken -5 bps off a number of its rates, except its nine month TD rate which has been reduced to 3.30% from 3.50%.

LOOKING ABROAD
Ex-UK public servant, and now our Treasury Secretary Gabriel Makhlouf, has picked a Queensland government official to be a Deputy Treasury Secretary. Jon Grayson is currently the Director-General, Department of the Premier and Cabinet with the Queensland Government. He previously had an investment banking career, and was CEO of an ASX listed infrastructure fund. He will head up the work of the DMO, the Export Credit Office, and the "Crown Balance sheet" [sic].

SENDING IN THE FIXER?
Fonterra has appointed Paul Washer to a set of roles that suggests he being groomed for higher honours. Firstly, Washer will become acting CFO until February 2018. He is currently "Director of Financial Planning and Performance". Then in early 2018 he will ship out to be "Vice President, Commercial for Greater China", where he will be keeping a close eye on a very large investment (about 100,000 cows in China) that has yet to contribute any earnings.

MAKING THE EFFORT PAY
And Fonterra is using the Government to try and prise open access for more trade in Mexico, Peru, Chile and Columbia. These four have a combined economy of over NZ$5 tln per year, and we trade with them at the rate of NZ$1.1 bln per year. But they do have very high tariffs, especially for dairy. so the TPPA relationships are about to be energised to see whether some of the negotiated TPPA benefits can be realised directly.

REGULATOR BLOCK ENDS RELATIONSHIP
It is now all over for the proposed partnership between Vodafone and Sky TV. The Commerce Commission opposition won't be appealed. The OIO had seen no issues, mainly because both are already overseas-controlled.

GULL SOLD TO CALTEX
Caltex Australia has received regulatory approval to buy Gull New Zealand in an approximately $340 mln deal as part of its plan to increase its retail business. Now that hurdle is resolved, it will own the Gull network here from early July.

SELLING AT A LOSS
And then there is this little gem from across the ditch: "Across the country, 9.6% of dwellings sold for less than their previous purchase price over the first quarter of 2017. The proportion of dwellings selling for less than the previous purchase price was higher than the 8.8% over the final quarter of 2016." When you get 10% of dwellings being sold at a loss from the purchase price, you know that the issue is becoming shakier - because over there the those houses were bought incurring stamp duty, so the cash losses will be greater that that. If there are Kiwis involved, selling up to come home will leave them with less than they had hoped when they get here. The Aussie issue is more acute for 'units' than 'houses'.

WHOLESALE RATES MARGINALLY HIGHER
Almost all terms have seen a tiny rise of +1 bps, returning to levels we had on Thursday. The 90 day bank bill rate is also up +1 bp taking this rate to 1.96%.

NZ DOLLAR FIRMS
The NZD is again marginally firmer than at this time on Friday at 72.8 USc. On the cross rates, against the Aussie we are holding at 96.1 AUc, as we are against the euro 65 euro cents. That all takes the TWI-5 to 77.2. But bitcoin is weaker, down -5.8% to US$2,619.

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22 Comments

The corelogic link for the sell price drop is broken.

e: things look really bad in the mining regions with 11%+ losing on sale. Given the big downturn in both jobs and contract income it's not surprising.

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Thanks. That's interesting. Looks like they have withdrawn the original report summary. But they have replaced it with one that now sets the narrative the other way around - "90.4% of sellers realised a profit" in Q1-2017. But same basic fact is that almost 10% suffered a loss, by this measure.

over the March 2017 quarter, 8.1% of houses and 13.3% of units resold at a loss across the country. 6.1% of capital city houses and 11.5% of capital city units resold for less than their previous purchase price over the March 2017 quarter.

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As you will likely be aware David, the narrative is all important in keeping spirits high.

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It's really the same technique to spin if you had a 10% mortgage default rate you can say 90% of mortgages didn't default.

I don't know what the results would be here but there's a few houses on trade me that are being sold where they were sold at a lost in the last couple of years in the previous sale. The property market has never been all upside despite what people think.

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Hold on ..... has Caltex NZ not just been sold to Z ?

We should be extremely concerned about the concentration of interests in the fuel sector when we should be seeing disaggregation in the interests of competition .

Soon we will have just Z ( former Shell and now Caltex NZ ) , BP and Mobil ( which is tiny ).

This is not healthy for a commodity we all have to use to be controlled at the retail level by just 2 players .

Time for some pointed questions to be asked

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My thoughts exactly Boatman - what is going on? Taking out a strategic thorn?

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Best thing that has happened is here in Otago we have Allied and McKewens, which means petrol and diesel are cheaper in the distant province than in Dunedin city. The power of a little diversity.
But I also fear those small players are only allowed to be in remoter places. Probably if they step out of line, somehow their supply will dry up. (mysteriously of course)

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It is Caltex Australia that is buying Gull, nothing to do with Caltex NZ (which has been bought by Z Energy)

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So are there no cross holdings whatsoever ?

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Will your next vehicle run on dinosaur juice? I would expect to see more of this as their market shrinks.

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The demand side for oil is getting interesting. Some people predict production declines after peak oil would drive prices higher, all else being equal yep....the but its not "all else being equal" in there is the un-expected lack of demand. The q is how much of it is lack of afford-ability (most I think) and how much of it is change ie EVs (not so much), very interesting times.

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In Nelson the near monopolies have actually made room for NPD, which has a great local focus and gives much cheaper fuel, also it is well supported by the locals.

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If 100,000 cows in China is a "very large investment", what are 5 million freedom camping cows in NZ? Too big to fail?

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No wonder Z shares have been ticking up nicely of late, I wonder how many MPS have taken a punt on them

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Australians may soon be struggling to make ends meet.

With real wages going backward in the first quarter and the developed world’s highest debt-to-GDP ratio after Switzerland, consumers are setting aside less cash for a rainy day: their savings levels have more than halved in five years. Further intensifying the squeeze is a rising cost of living, with electricity prices climbing as much as 20 percent in New South Wales state next month.

At stake is the economy’s trajectory: consumption accounts for more than half of gross domestic product, and any long-term weakness in spending will weigh on growth. As to ballooning debt, while the central bank can’t say how high is sustainable, it warns that the deeply indebted can be more sensitive to declines in income “and may respond by reducing consumption sharply.” Read more

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China's transformation from rags to riches isn't over quite yet.

Thanks to economic reforms put in place by Deng Xiaoping from the seventies that set off rapid industrialization and urbanization, the China miracle is set to continue with its per capita GDP seen rising to 64th out of 166 countries by 2022, up from being the 133rd-poorest in 1992 — on par with Haiti and with over half its population living on less than $2 a day.

The current $16,676 per capita GDP level is already higher than Brazil's when adjusted for purchasing power, according to a Bloomberg analysis of International Monetary Fund data. Read more

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Channelling GGZ/Zach here. There is a house in my street in Wellington that has been for sale for four weeks. It started off listing for no price and I thought it might go for low $700s. You see the real estate agents have been promising 700-800 to people nearby. Anyway it now has a BEO of $649k. Will be interesting to see if it moves and what for. I'm guessing the market has cooled because previously houses like that were scooped up.

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At the end of the day I believe it all comes down to location location location. Even a derelict house in a fantastic location will be snapped up in no time. Maybe you can identify if there is anything wrong with the location e.g. below the road, on a steep site, flood zone, lack of privacy from the neighbours, lack of sun/shaded, not in a good school zone etc.

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Haha, I can see (down) into one of the bedrooms from my dining area!

I don't think it's a great house, the only useable outside area is a small deck. They say it's 130sqm but I think they are cooking that figure a bit.

Still, it is 10 minutes from town and Wellington was going gangbusters - the new Auckland now that Christchurch and Auckland have stalled. But I think we might be seeing a slowdown here now too. I guess it's only Rotorua with a vibrant property market these days and we all know the fundamentals there are uniquely strong.

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Yes I think properties that aren't well presented will be difficult to sell. For example this derelict house on a steep site near where I live has been in the market for 2 months and had an asking price of $2.1m before is now selling below $2m. It now has a ridiculous headline:
"DGZ Remuera Home on full 817m under $2M - Stop It!" LOL~
http://rwremuera.co.nz/auckland/remuera/34-aldred-road-11219931/

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