Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
Nothing to report today.
TERM DEPOSIT RATE CHANGES
Nothing here either. Update: Heartland Bank has raised its term deposit and PIE rates.
IMPROVING
Stats NZ reported retail card spending for October today, citing a rise from September. Westpac analysts noted: "Retail spending levels rose by 10% in October. That reversed much of the weakness seen in August and September following the dialing up of the Covid Alert Levels. Even so, spending levels remain around 10% below those we saw prior to the Delta outbreak. ... Today’s result was lower than our forecast."
HOLDING UP
New job ad levels are holding up, according to the BNZ-Seek data. Low candidate availability gels with the low jobless rate they say.
DODGY ROAD SIGNALS
Lockdowns are affecting road traffic activity a lot. ANZ has a "truckometer" series as an early indication of national economic activity. But with lockdowns they say: "Differing regional lockdown restrictions mean that the Truckometer indexes are unlikely to be a reliable GDP indicator in the near term." For what it is worth we can note that the Light Traffic Index (for cars) fell -6.4% in October from September, while the Heavy Traffic (for trucks) lifted +1.0.
A "FLEXIBLE SHAREHOLDING STRUCTURE"
Fonterra said today that it is pushing ahead with its capital restructuring. It is feeling defensive. "“We see total New Zealand milk supply as likely to decline, or flat at best. Our share of that decline depends on the actions we take with our capital structure, performance, productivity and sustainability. If we do nothing, we are likely to see around 12-20% decline by 2030 based on the scenarios we have modelled." More here.
TAXPAYER ON THE HOOK
The Government has decided to back the holiday season music festivals against Covid disruptions. They have promised to underwrite up to 90% of the losses on festivals that are cancelled.
STONKING RESULT
BNZ posted a +74% surge in annual profit to $1.3 bln and a record high, as income jumped +14% and expenses tumbled -9%. BNZ is the last of the big Aussie banks to report, and delivered one of the more impressive results. That means the big 4 banks' combined annual profit reached just under $5.5 bln in 2021.
A TIGHTER HUG
ASB has signed on as the anchor tenant in Microsoft’s Azure data centres in New Zealand. Shifting to the cloud is a core part of ASB’s digital transformation ambition and Microsoft has had a decades-long relationship with ASB.
FEELING ALRIGHT, MATE
In Australia, business conditions and confidence rose in October according to the widely-watched NAB survey, as lockdowns came to an end in both NSW and Victoria. Each of the trading conditions, profitability and employment subcomponents contributed to the improvement in conditions, which was driven by gains in NSW. Confidence also rose, and to a six month high.
RAPID REVERSAL
The size of the reversal in Chinese steel production is becoming apparent, and it is impressive - in a car-crash sort of way. The iron ore price has fallen more than -60% since its peak in May.
LOCAL PANDEMIC UPDATE
In Australia Delta cases in Victoria have leveled out at the 1069 cases reported there today. There are now 15,607 active cases in the state and there were another 10 deaths yesterday. In NSW there were another 223 new community cases reported today with 2,817 active locally acquired cases, and they had another 4 deaths yesterday. Queensland is reporting no new cases. The ACT has 18 new cases. Overall in Australia, just under 81% of eligible Aussies are fully vaccinated, plus 8% have now had one shot so far. In contrast, there were three new cases again in New Zealand at the border, and 125 new community cases. Now 89.3% of Kiwis nationally aged 12+ have had at least one vaccination, while the Australian rate is now at 89.4% of all aged 16+.
GOLD FIRM
In early Asian trading, gold is at US$1824/oz and up +US$8 from this time yesterday. It is similar to the closing New York price and above the earlier London fix.
EQUITIES UNINSPIRING
The S&P500 ended its Monday session just in plus territory (+0.1%) in an unimpressive session. The NZX50 is similarly flat near the end of its session here today. The ASX200 is singing the same flat tune in early afternoon trade. In Tokyo is up a minor +0.1% in late morning trade. Hong Kong is up +0.4% in their early trade, which Shanghai's gain is very minor (+0.1%).
SWAP & BONDS RATES RISE
We don't have today's closing swap rates yet. They are probably firmish. The 90 day bank bill rate is unchanged at 0.82%.The Australian Govt ten year benchmark rate is now at 1.79% and up a minor +1 bp. The China Govt 10yr is now at 2.93% and up +2 bps. The New Zealand Govt 10 year rate is now at 2.55%, up +3 bps and still above the earlier RBNZ fix for that 10yr rate at 2.53% (+4 bp). The US Govt ten year is up +2 bps from this time yesterday to just on 1.49%.
NZ DOLLAR FIRM
The Kiwi dollar is now at 71.5 and and firmer than this time yesterday. Against the Aussie we are up +½c at 96.7 AUc. Against the euro we are firm at 61.8 euro cents. The TWI-5 is now at 75.3 and close to a four year high.
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BITCOIN HIGHER AGAIN
The bitcoin price is now at US$67,542 and a +3.6% rise since this time yesterday - and another record high. Volatility in the past 24 hours has been moderate at just over +/- 2.1%.
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30 Comments
The S&P500 ended its Monday session just in plus territory (+0.1%) in an unimpressive session.
S&P 500 mini futures, currently down 10.
Fed Issues Market Red Alert: Warns Stocks Vulnerable To "Significant Declines"
It's not just increasingly more banks warning that the market is in a bubble and extremely elevated asset prices are risking a broader market crash (see "This Is How One Bank Will Trade The Bursting Of The Biggest Ever Asset Bubble In 2022"): moments ago, in its semi-annual Financial Stability Report, the Fed itself has issued the same warning.
In the 85-page report published moments after the market close, the Fed warned that as Bloomberg put it, "prices of risky assets keep rising, making them more susceptible to perilous crashes if the economy takes a turn for the worse" adding that “asset prices remain vulnerable to significant declines should investor risk sentiment deteriorate, progress on containing the virus disappoint, or the economic recovery stall."
It's fascinating to watch Gold, in particular, rise in price while the tentacles of financial repression embrace lower negative real yields.
This is the phenomenon we study. Financial repression (FR) is defined in Box 1, while Table 1 describes a selection of policies that defined the FR era in the United States but are representative for other countries, advanced and emerging alike. There is considerable cross country variation in the extent of financial repression and the magnitude of the financial repression tax. When controlled nominal interest rates coupled with inflation produce negative real interest rates, it liquidates (reduces) the stock of outstanding debt; we refer to this as the liquidation effect. However, even in years when real interest rates are positive, to the extent that these are kept lower than they otherwise would be via interest rate ceilings, large scale official intervention, or other regulations and policies, there is a saving in interest expense to the government. These savings are sometimes referred to as the financial repression tax. Link
Good story from the WSJ about younger cats giving the investment industry a boot.
More rich young investors are opting to go without a traditional financial adviser. Instead, they are betting they can get good-enough investment options from do-it-yourself digital platforms that are cheap and easy to use. Many also want to invest in riskier assets, like cryptocurrencies and tech startups, that mainstream advisers often don’t offer.
When Cabell Hickman turned 18, her stepfather gave her money to buy stocks. He later invited her to invest alongside him in private companies. A few years ago, she put $100,000 into a blockchain fund run by a friend she met in college. Now 26, she is managing her own $6 million portfolio.
Her stepfather died last year, leaving Ms. Hickman a complex estate, and for the first time she is considering hiring a professional financial adviser.
Ms. Hickman, a higher-education consultant, said she has found some good if homogeneous options: “I’m talking to, frankly, a bunch of old men.”
https://www.wsj.com/articles/rich-millennials-to-financial-advisers-tha…
Good read. No way I'd be taking "investment advice" from a banker. Speaking of this, my parents had 6 figures come out of a term deposit. I explained how the rates were complete shit and inflation meant they were getting a negative return in real terms. They had a "wealth manager" contact them and offer some traditional (read: crap) options. I told them to tell him to piss off and I'd set them up a crypto portfolio. They kindly obliged and are up over 500% this year and will be cashing out shortly to enjoy some gains.
Bloody top job mate, I have tried. We all like to share our successes with our friends and family.
Sad to say one of my mates go hooked by a "were have some money for you, send us some BTC and we will send it to you" scam recently. Will be working through filing a police report with him tonight.
Sorry to hear about your friend, that is really unfortunate. Not sure there is much the police can do?
I'm just glad they trusted me. I spent the entire bear market convincing people to put some money into crypto - no one was interested as it was all a "scam" and "going to zero". Guess who are suddenly getting interested in crypto and coming out of the wood work lol. A good lesson in doing the opposite of the crowds.
Underwrite 90% of musical festivals? that seems both an extravagant and open ended commitment of tax payers money. Recall being astonished some time back, when revealed that the buskers thingy in Christchurch was costed at about $1.3 mill (god knows how for something just in the street) so one would hope here there is careful scrutiny concerning actual viability and authentication of financial exposure(s) and liability being assumed.
Why just music festivals? Why not shows like Warbirds over Wanaka as well - they had to cancel out last time because of covid. Or those who have already cancelled (because of the uncertainty of govt policy relating to covid) - e.g. 2022 Burt Munro Challenge https://www.burtmunrochallenge.co.nz/Burt_Munro_Challenge_2022_Media-Re…, Southern Field Days etc The Southern Field Days is one which all the family can, and do, visit. I am sure there will be many more around the country in the same situation.
Looking at the International statistics.
% of NZ Population Fully Vaccinated is 67% so we are number 33 on the list, progressing well !
https://coronavirus.jhu.edu/region/new-zealand
https://coronavirus.jhu.edu/vaccines/international
Just imagine, if NZ had commenced in March as expected by Pfizer, or earlier as could have been possible if cabinet had been appropriately briefed according to WP, then NZ would not have had to “catch up” to no 33. Instead NZ could have continued on as the “world leader” self acclaimed status our government so avidly proclaimed and basked, in the self adulation thereof. And just imagine if that had occurred, there may not have been any need, after 20 months of compliant patience, for good people to take to the street and protest about the predicament(s) they have been placed in by this utterly incompetent government.
That was one strange crowd of people. Pro Trump supporters mixed with gang members. Contrast the picture of Trump deploying the National Guard on the Lincoln memorial steps with NZs, short sleeved shirt wearing, police service on the steps of the Beehive. I know which country has the most freedom. The government may have made a mess of the Covid response but as usual it is more cock up than conspiracy.
I reckon ignore the nutters at one's peril.
I am pro vax but there are many things the government has done (or hasn't done) that anger me.
I reckon there will be many kiwis, including me, who have some degree of sympathy with the protesters.
Rather than arrogantly dismissing them, Ardern should take notice - they are symptomatic of growing discontent.
The government may have made a mess of the Covid response but as usual it is more cock up than conspiracy.
I think you are ultimately right with this statement. They seem to have a clear plan in mind now, they just don't want to be too transparent in case they screw it up yet again, and get held to account.
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