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A review of things you need to know before you go home on Thursday; big trade deficit, higher incomes, iPredict closed, Aussie capex slump, rising yields

A review of things you need to know before you go home on Thursday; big trade deficit, higher incomes, iPredict closed, Aussie capex slump, rising yields

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

TODAY'S MORTGAGE RATE CHANGES
No rate changes again today, but Kiwibank has an interesting incentive.

TODAY'S DEPOSIT RATE CHANGES
No rate changes today.

WE ARE BUYING MORE THAN WE ARE SELLING
The trade deficit widened to $963 mln in October 2015, compared with a deficit of $892 mln for the same period last year, Statistics New Zealand said today. This result matched analysts expectations. Exports fell more than imports. The rise and fall of dairy exports has been driven by demand from China, and is reflected in our total exports to China. China became the top export destination in November 2013, but fell below Australia from March to September 2015. However, China is now both our top export destination for goods, and our top source of imports. Although milk powder exported to China fell -65% for the year ended October 2015, it is still the largest commodity. Smaller exports such as beef and fruit have doubled in value in the past year. The signals of rising demand from China has analysts looking forward more positively.

'AVERAGE UP +5.7%'
Statistics NZ today release details of its Household Economic Survey to June 2015. They pointed out average annual income from all regular sources was up +5.7%, to $93,880. (The median was $75,000, up +4.6%.) Average annual income from New Zealand Superannuation and war pensions was up +4.8%, to $24,322. And the proportion of households receiving wages and salaries was up almost 2 percentage points, to 76%. Their data also showed that average weekly housing costs increased +4% from the year ended June 2014, to $295.40. Building-related insurance payments increased +9.9% to $28.70 per week, and average weekly mortgage payments were $400.20, while average rent payments were $301.00 per week.

87% SAY INCOME 'ENOUGH'
In the same survey, Statistics NZ reported this: "We randomly selected one person 18 years or over in every household to complete an additional questionnaire on behalf of the household. Respondents were asked how adequately their household income meets their everyday needs (eg accommodation, food, and clothing expenses). Of the people asked: 59% reported their income was enough or more than enough, 28% said it was only just enough, 12% said it was not enough."

GOVT AML CONCERNS LEAD TO DEMISE OF IPREDICT
Online prediction market iPredict says its closing down in NZ and looking into inclusion on PredictIt in the US having been deemed "a legitimate money laundering risk" by Associate Minister of Justice Simon Bridges. iPredict, which is owned by the commercial arm of Victoria University, says this is because it does no customer due diligence checks. iPredict had sought an exemption from the Anti-Money Laundering and Countering Financing of Terrorism Act. Failure to gain this means compliance costs are too high, iPredict says. Over 7 years it has handled 3,782 withdrawals with an average trader net worth of $41. And here's the announcement.

WHO SHOULD PAY?
The Government wants to make travelers pay for the costs of border control but the border charge is a poor user charge and an inefficient tax says NZIER. They say it will dampen services exports and hence economic growth more than other revenue raising options. "If we need additional border control it would be far better to fund the system out of general taxation and welcome more visitors to New Zealand," they say.

OUCH !
Australia's capital expenditure data dropped -20%, the most on record. 'Buildings and structures' were down -24%, 'equipment plant and machinery' down -14% year-on-year. That undermined their currency. No-one was expecting falls of this magnitude.

RISING YIELDS
Today's DMO tender for September 2020 Government nominals saw the coverage ratio spike sharply, along with an average yield at 2.87% up sharply from the previous 2.73%.

WHOLESALE RATES HOLD
Local wholesale swap rates held the line today, although they gave up another -1 bp at the long end (5, 7 and 10 yrs). The 90 day bank bill rate also pulled back -1 bp to 2.86%.

NZ DOLLAR MOVES UP
Our currency has strengthened a little today, again. The Kiwi is now at 65.8 USc, at 91.1 AUc as the Aussie gave up yesterdays gains, and 61.9 euro cents. The TWI-5 is now at 71.5. Check our real-time charts here.

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8 Comments

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Australia's capital expenditure data dropped -20%, the most on record. 'Buildings and structures' were down -24%, 'equipment plant and machinery' down -14% year-on-year. That undermined their currency. No-one was expecting falls of this magnitude.

They never do as compounding interest on outstanding indebtedness, demands otherwise.

But Australia, like others, has to compete to secure extremely scarce foreign wholesale funding.

The demand is such that Eurodollars yields are finding it hard to remain static, never mind trading lower. View Dec 16 contract

...note, a ?dollar? is a claim on dollars for which no dollars actually exists.. Read more

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but from whom?

"According to a detailed analysis of 105 banks across 21 countries in the European Union conducted by the European Banking Authority (EBA), the experience of Europe’s banks to troubled customers is worse than that of their counterparts in the US.

The €1tn (£706bn) of so-called non-performing loans amount to almost 6% of the total loans and advances of Europe’s banks and 10% when lending to other financial institutions are excluded. The equivalent figure for the US banking industry is around 3%."

http://www.theguardian.com/business/2015/nov/24/european-banks-one-tril…

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who invests when there is no prospect of demand?

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what is the 4 pillared C suite to do?

"I'd still be surprised if there was a crash, but there may well be a sustained decline two to three years down the track."

That would not be a bad thing, Mr Eslake added, as rising house prices served little economic benefit and contributed great social harm by deepening wealth inequality between property haves and have nots.

Read more: http://www.smh.com.au/nsw/classic-ponzi-scheme-sydney-house-prices-cost…
Follow us: @smh on Twitter | sydneymorningherald on Facebook

or, is just not their problem....

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The poor pretending otherwise is a never ending source of rich entertainment.

"In reality, many parents – the Baby Boomer cohort – are asset-rich but income-poor. The blunt fact is few parents have enough savings and other liquid assets on hand to meet their legal obligations without selling their home if their children default," the report warns.

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The first rule of investing cashflow, cashflow. Cashflow .
It's not rocket science with it you can keep investing and like a snowball rolling down a hill it's gets bigger and bigger and rolls faster and faster

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you are talking as being the bank right?
- given a drawn home loan is an asset to the bank...

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