Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
ANZ, ASB and Kiwibank all raised fixed home loan rates today. And each chose a separate rate to be the 'highest' in the market. More here. China Constriction Bank also raised rates.
TERM DEPOSIT RATE CHANGES
There were term deposit rate rises from ANZ, ASB, Kiwibank, as well as HSBC and CCB today.
LOW SUPPLY, LOW SALES, HIGH PRICES
Dominant Auckland realtor Barfoot & Thompson reported October sales activity today, where sales volumes were down -38% compared to October 2020, but prices set new record highs. Their median selling price was $1.15 mln in October but they ended the month with the lowest number of residential properties available for sale at the end of an October in at least 20 years.
ANOTHER HUGE MONTH FOR RESIDENTIAL BUILDING CONSENTS
A sharp rise in the number of consents for multi-unit housing is driving residential building permits up, and over the past few months consents for stand-alone houses have ticked up as well. 4483 new dwellings were consented in September, and as high as that is, there are signs that there is a backlog of processing at Councils. Almost half (46%) were in Auckland, and with the new push for more densification more large residential projects are on the way.
GETTING BACK TO SENSIBLE LEVELS
The number of new homes consented per 1,000 residents rose to 9.3 in the year ended September 2021, up from 7.4 in the previous year, Stats NZ said today. There has been a relentless rise from 3.0 in July 2011. (However, we are still well below the record high of 13.4 in December 1973.) Almost all consented dwellings get built over the following 24 months. This rise and rise over the past ten years has picked up speed recently, and we seem to be building more than the current population expansion requires now, although there is a considerable backlog to eat into yet before normal supply levels return.
WEAK, BUT COULD HAVE BEEN MUCH WEAKER
The patchy nature of building consents for non-residential construction was very evident in the September data from Stats NZ. Infometrics notes: "The value of non-residential consents fell by -20% pa in September, with $605 mln of consents. A large $104 mln consent for the University of Auckland softened the decline in consents. September’s result would have otherwise been incredibly weak, with consents falling -34% when this single consent is excluded."
SERIOUS FRAUD INVESTGATION
The Serious Fraud Office has executed search warrants in relation to an investigation concerning Thomas Alexander Tuira, Aroha Awhinanui Tuira and their companies Ngākau Aroha Investments Limited and Power to Me Aotearoa Tapui Limited.
HIGH HOPES FOR HIGHER DAIRY PRICES
After a +2.2% rise in prices at the Global Dairy Trade auction two weeks ago, we are settling in for another auction event tomorrow morning. This time the derivatives markets is signaling that WMP prices will rise about +3.5% and SMP prices will rise about +4.5%. If they eventuate they will more than justify the recent embellishment of farm gate milk prices forecast by everyone, including Fonterra. The global return of the foodservice sector is behind the upbeat outlook.
RBA WATCH - MEANINGFUL THIS TIME
The RBA will be communicating its policy decisions at 4:30pm today and it is widely expected to start moves to unwind its pandemic settings. We will update this item when that news is to hand. There may well be market-moving implications. Update: At its meeting today, the RBA decided to maintain its cash rate target at 10 basis points and the interest rate on Exchange Settlement balances at zero per cent, continue to purchase government securities at the rate of AU$4 billion a week until at least mid February 2022, and discontinue the target of 10 basis points for the April 2024 Australian Government bond.
WE ARE STILL BUYING CARS, MOSTLY NOT EVs
October recorded another good month of new car sales, although not as huge as September. Almost 9300 new cars were sold in October, helped by 1274 rental cars. The number of EVs was much less than in September at 728. And we brought in 10,600 used imports into our overall fleet in October, very much more than in September.
LOCAL PANDEMIC UPDATE
In Australia Delta cases in Victoria have dropped to 989 cases reported there today, and less than yesterday and the first time in more than a month it has been below 1000. There are now 21,959 active cases in the state and there were another 9 deaths yesterday. In NSW there were another 173 new community cases reported today with 3,331 active locally acquired cases which is lower, and they had 4 deaths yesterday. Queensland is still reporting zero new cases. The ACT has 5 new cases. Overall in Australia, more than 78% of eligible Aussies are fully vaccinated, plus 11% have now had one shot so far. In contrast, there were three new cases in New Zealand at the border, and 126 new community cases. Now 88.3% of Kiwis nationally aged 12+ have had at least one vaccination, while the Australian rate is now also at 88.3% of all aged 16+.
GOLD FIRM
In early Asian trading, gold is at US$1792/oz and up +US$10 from this time yesterday. This level is very little different from either the New York close, or the afternoon London fix.
EQUITIES MIXED
The NZX50 is down -0.2% in late Tuesday trade. The ASX200 is -0.7% in early afternoon trading there. Tokyo has opened -0.3% lower after a spectacular climb yesterday, so holding most of that gain. It is Hong Kong's turn for a large daily rise, with its open up +1.8%. Shanghai has opened +0.2% firmer in very early Tuesday trade. The S&P500 rose +0.2% in its Monday trade..
SWAP & BONDS RATES ON HOLD
We don't have today's closing swap rates yet. They probably retreated slightly again but they are at risk of the RBA decisions. The 90 day bank bill rate is down -1 bp at 0.80%.The Australian Govt ten year benchmark rate is now at 1.98% and up +2 bps from this time yesterday. Update: Immediately after the decision, it rose +2 bps to 2.00%. That may change after the RBA announcement of course. The China Govt 10yr is now at 2.98% and down -1 bp. The New Zealand Govt 10 year rate is now at 2.56% and unchanged from this time yesterday. That still leaves it above the earlier RBNZ fix for that 10yr rate at 2.52% (-2 bps). The US Govt ten year has slipped -1 bp to just on 1.57%.
NZ DOLLAR STILL STABLE & STILL HIGH
The Kiwi dollar is now at 71.8 USc and holding a higher level than this time yesterday. Against the Aussie we are unchanged at 95.4 AUc. Against the euro we are at 61.9 euro cents and little-changed. The TWI-5 is still at 75.3, and still well above the top of the 72-74 range we have been in for most of the past eleven months, and settling in to a new higher band.
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BITCOIN SOFT
The bitcoin price is now at US$60,916 and -1.0% lower than where we were at this time yesterday. Volatility in the past 24 hours has been moderate at just under +/- 2.4%.
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41 Comments
Great narrative on millennials and investment from Raoul Pal from Real Vision. Great read for the boomer set to understand the psychology. An intro:
"They are a new generation of investors. 86 million millennials got financialized in the US last year. They hit their prime investing ages of their 30's. They have debts, no savings, no hope from the grind. They are poorer than any 30 year old in the last 70 years."
"Unlike their parents in their 30's, they didnt get gifted equities with a P/E of 7, bond yields at 13% or real estate at the lows versus income. They got the opposite. Their opportunity set was an expected negative future returns. They didn't want any part of our financial system."
"They had occupied Wall St and no one gave a shit. Now they don't give a shit about how you or I think you should invest or run markets. We let them down. Why the fk should they care? They were sacrificed to the altar of debts, leverage and greed"
"We let them down..... They were sacrificed to the altar of debts, leverage and greed"
Yes we did. But not the plural 'we', but the singular. The singular 'we' of our Government and Regulatory Bodies. The 'we' that the rest of trusted to know better and to know what they were doing, and they didn't. And judging from today's public releases, they still don't get it. The plural 'we' just did as we were encouraged to do, and those who didn't - because 'something just didn't feel right' were left behind, and they told they were fools to think otherwise. "You can't lose with property, mate" became the be-all and end-all of our entire society. What a shame.
Raoul Pal is a boomer who is so desperate to be cool (witness the wrist bands and festival chic) that he'd rather YOLO into online Ponzis than enjoy his retirement in the Caribbean.
He's encouraging the young to abandon any hope of real economic clout in favour of 'the Metaverse'. Yah, giving each other tips for memes in the Metaverse is gonna save us from inequality!
Abandoning reality in favour of magic beans isn't revolution, it's a retreat. Refusing to play a rigged game is one thing; making up your own and pretending it's consequential is another.
Wow a few truth bombs there. I finished reading The 4th Turning recently which is a theory based upon repeatable cycles of generations and the interactions between them. Many of what he says aligns with what the authors predicted in that book written back in the 90's.
Right now we're in the peak of the 4th Turning as boomers leave the workforce and get established in retirement. Millenneals are waking up to the mess that they've inherited (in the same manner that the GI's had to contend with the depression and WW2 in their young adult years). Gen X are going get get pulled in two opposing directions. Up to now, they've essential just done as the boomers say - puppets basically - and that has worked well for them. But the millenneals are going to be the new power of society and are going to want to shake things up. For boomers it was all about the self and not caring about society or investing in infrastructure etc....for the millenneals its going to be all about civic virtues, working together, restoring order and rebuilding infrastructure that will work into the future. Gen X will eventually find they are drawn towards supporting the cause of the milleannals as they see how short term the boomer plans are (i.e. the Me Generation simply doing what is best for them while they are alive with little care to what mess they leave behind) and when boomers lose their voting power as they age, die off and leave politically powerful roles in the management of society.
Things could get very interesting the next few years as these big power shift takes place. The '4th Turning' started in the 2000's (think terror attacks and GFC) and usually runs for around 20 years so is expected to be resolved by the end of this coming decade.
The "serious" fraud office is a bit of a misnomer.
They decided that they didn't have the ability to investigate the 650M fuji xerox fraud 'cos it was too big'
Smaller operators they can probably wack.
https://www.reseller.co.nz/article/658219/why-serious-fraud-office-pass…
Bill Issuance Has Absolutely Surged, So Why *Haven’t* Yields, Reflation, And Other Good Things?
Despite deluge of bills, over the past several days there have even been clear signs of "scramble for collateral." Trading today was more persistent buying, which is otherwise inconsistent with supply increase.
At its meeting today, the RBA decided to maintain its cash rate target at 10 basis points and the interest rate on Exchange Settlement balances at zero per cent, continue to purchase government securities at the rate of AU$4 billion a week until at least mid February 2022, and discontinue the target of 10 basis points for the April 2024 Australian Government bond. [my emphasis]
RBA blinked - thankfully or the taxpayer would have been stretchered off the market.
One for the hyperinflation skeptics:
'Fears of serious, durable inflation, aggressive central bank action, and subsequent financial market chaos are still wildly premature'
https://www.nzherald.co.nz/business/opinion-the-dawn-of-the-quantitativ…
Obviously, houses are the only story in town. The top five leading stories on this blog today are all about houses. Unbelieveable, but perfectly understandable.
Only idiots invest in Bitcoin.
Only idiots invest in Gold.
Only idiots invest in the sharemarket.
Only idiots invest in Kiwisaver.
Only idiots invest in term deposits.
ALL THE SMART MONEY HAS GONE INTO HOUSES !!!!!
Why? Because no one wants to live under autocratic despotic torturing governments; or crazily led governments like the USA where the likes of Trump can get a foothold and every second person carries a gun. Or USA wanna-bes like Australia where they desperately indulge USA hoop-la to gain USA favour and where climate change will inevitably turn Australia into another Sahara Desert.
The anti-Ardern whiners on this site underestimate why crowds of would-be immigrants want to live in NZ whether or not they own their own home. The whiners don't understand this phenomenon because they are ensconced on their basement couches glued to their computer screens. They should get out and talk to some new immigrants and see what they think of NZ.
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