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A review of things you need to know before you go home on Wednesday; business costs go through the roof, average house now $1 mln, less concrete poured in lockdown, swaps slip, NZD soft, & more

Business / news
A review of things you need to know before you go home on Wednesday; business costs go through the roof, average house now $1 mln, less concrete poured in lockdown, swaps slip, NZD soft, & more

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

MORTGAGE RATE CHANGES
No changes to report today.

TERM DEPOSIT RATE CHANGES
Heartland Bank has raised its term deposit and PIE rates late yesterday.

COST PRESSURE EXTREME
The preliminary ANZ Business Outlook Survey results for November show that business confidence fell and nearly all forward indicators eased. They also showed costs that are "going through the roof".

A MILLION BUCKS NOW
The average value of New Zealand homes has passed $1 million for the first time, Quotable Value says. They rose +$50,000 in the three months to October, they say.

$22.75 PER HOUR
Cleaners, security guards and catering staff who contract to government departments are to be paid the living wage, it has been decided.

FINALLY SOMETHING SENSIBLE ON DENTAL HEALTH
The Director-General of Health will soon be able to decide whether a community drinking water supply should be fluoridated. (Just another thing the anti-vaxxers will grab probably, all the while complaining about the cost of dental treatment. But they never seem to complain about iodine in bread.)

PERMANENT SHORTFALL
The volume of ready-mixed concrete poured in the September quarter was sharply affected by the extended Auckland lockdown. Nationally, -10% less was poured in Q3-2021 than in Q3-2020, and -6.5% less than Q3-2019. In the circumstances, this is pretty good. The Auckland volumes fell by more than a quarter despite the lockdown affecting about half the June-September period. (It is a fall similar to the Q2-2020 fall.) But given the high levels of activity and presumably capacity being used pre-lockdown, there is unlikely to be a make-up surge. Projects will just be delayed. There was lesser change in the Wellington region (-8.8% y/y), and a reasonable gain in Christchurch (+8.6%).

FULLY SUBSCRIBED & MORE
The Auckland Airport 5 year bond issue was fully subscribed including the oversubscriptions allowed, and the margin set was 75 bps. That means these bonds will pay 3.29% pa.

PASSED ITS DAY?
It has been 54 days since any bank accessed the Funding for Lending program at the RBNZ. This is the longest quiet period this program has had. $6 bln has been lent to banks out of the $28 bln allocated.

ENOUGH TO SHOW UP IN THE NATIONAL ACCOUNTS
Peter Jackson has agreed to sell Weta Digital's "tools, pipeline, technology, and engineering talent" by the end of the year to Unity Technologies, a 3D game-development company that will take Weta's technology into their 3D game environments. The deal is worth US$1.625 bln (NZ$2.3 bln). For perspective, that is equivalent to 0.7% of NZ GDP. The Americans get the company, but Jackson gets the money. Will that stay in New Zealand? If so, what will he do with it?

COST PRESSURE IN CHINA'S FACTORIES RISES TOO
China's CPI inflation rate rose to 1.5% in October from 0.7% in September, but this was a rise that was expected. And small as it is, consumer inflation is creeping back in China. But their producer prices rose at a faster rate, up +13.5% in a year and well above the +10.7% rise in September. It is this acceleration that may have global consequences.

VOTING WITH THEIR FEET
In Hong Kong, they are moving to close some schools. That is because emigration is continuing apace there as Beijing bites the City hard.

LOCAL PANDEMIC UPDATE
In Australia Delta cases in Victoria have leveled out as 1003 cases were reported there today. There are now 15,031 active cases in the state and there were another 14 deaths yesterday. In NSW there were another 217 new community cases reported today with 2,762 active locally acquired cases, and they had another 3 deaths yesterday. Queensland is reporting no new cases. The ACT has 19 new cases. Overall in Australia, just over 81% of eligible Aussies are fully vaccinated, plus 8% have now had one shot so far. In contrast, there were two new cases in New Zealand at the border, and 147 new community cases. Now 89.5% of Kiwis nationally aged 12+ have had at least one vaccination, and the Australian rate is now also at 89.5% of all aged 16+.

GOLD FIRM
In early Asian trading, gold is at US$1829/oz and up +US$5 from this time yesterday. But it is lower than the closing New York price, although above the earlier London fix.

EQUITIES LOWER
The S&P500 ended its Tuesday session down -0.4% in another unimpressive session. The NZX50 is similarly lower near the end of its session here today and down a larger -0.6%. The ASX200 is up a small +0.1% in their early afternoon trade. In Tokyo is down another minor -0.1% in late morning trade. Hong Kong is down -0.2% in their early trade, while Shanghai is down -0.7%.

SWAP & BONDS RATES SLIP
We don't have today's closing swap rates yet. They are probably softish. The 90 day bank bill rate is up +1 bp at 0.83%.The Australian Govt ten year benchmark rate is now at 1.76% and down -3 bps. The China Govt 10yr is now at 2.91% and down -2 bps. The New Zealand Govt 10 year rate is now at 2.54%, down -1 bp but still above the earlier RBNZ fix for that 10yr rate at 2.51% (-2 bp). The US Govt ten year is down -2 bps from this time yesterday to just on 1.47%.

NZ DOLLAR SOFT
The Kiwi dollar is now at 71.3 and a little softer than this time yesterday. Against the Aussie we are still at 96.6 AUc. Against the euro we are soft at 61.5 euro cents. The TWI-5 is now at 75.


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BITCOIN HOLDS
The bitcoin price is now at US$67,074 and a minor -0.7% slip since this time yesterday. In between it hit a new record high of US$68, 526. Volatility in the past 24 hours has been modest at just over +/- 1.6%.

This soil moisture chart is animated here.

Keep ahead of upcoming events by following our Economic Calendar here ».

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46 Comments

"5 year bond ... will pay 3.29% pa."

That...is likely to look like a very good deal in the not too distant future. And from Aussie today we get....Number of Jobs, up - Total Wages paid, down (Hmmm)

https://www.abs.gov.au/statistics/labour/earnings-and-work-hours/weekly…

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Just another thing the anti-vaxxers will grab probably

Opposed to forced vaccination? Anti-vaxxer. Opposed to government overreach? Anti-vaxxer. Opposed to censorship? Anti-vaxxer. Opposed to water flouridation? Anti-vaxxer.

Welcome to the new age of McCarthyism.

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Yeah that comment was unnecessary David, this is supposed to be a news article.

If you want to discuss this sort of thing why dont you turn on the comments on articles regarding govt curtailing our freedoms?

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yes - I wish they would open comments on Covid articles so all you freedom lot can go and troll each other in there.

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Agree 100%. Pro-choice isn't being an anti-vaxxer. Grow the F up. My family is fully vaccinated (including those vaccines not reimbursed eg meningococcal). I fully support the right of people to choose when the pros and cons have been described to them. 

Also the fortified bread has folate added to reduce neural tube defects AKA spina bifida. Iodine is ubiquitous in cereal, bread and most salts.

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That makes you a good person. As you have a healthy respect for the individual freedoms of others. Something that use to be valued in our society up until 2020. 

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Vaccination is not only just about one's self interest . . . it is about others as well, such as the potential indirect pressure on hospital services. Vaccination is safe and double vaccinated people reduce their likelihood of hospitalisation 18 fold (recent NZMOH data). 

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We already have informed choice on the vaccine and no one has been forced to take it. 

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As just two examples proving this incorrect: Air NZ Customer service staff, Airport security/customs. I'd prefer anonymity but my work has mandatory vaccination with employment termination for faing to do so.

I read but cant cite the claim that 60% of adults require vaccination due to work. School teachers are an example I could have included.

I hate Ardern.

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Precisely. Companies may make vaccination a prerequisite to reduce their financial risk but no one is forcing anyone to be vaccinated. Folk have the option of not working for those companies and not being vaccinated.

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Nieve thinking....

My company is about to mandate... and expects all the companies it trades with to do so....

Kinda makes it hard to work don't you think?

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So why not just get vaccinated then? Is the chance of you having a severe reaction (which is incredibly low) worth you losing your livelihood over?

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The point is we shouldn't be being forced to make this choice. Just because it was an easy decision for you doesn't mean it is for everyone.

My wife has a condition where her doctors have advised her not to get vaccines for the last 10+ years, the evidence is showing roughly a 10% chance of her having a severe reaction and about 40% for minor to moderate reaction. That is considerably higher than the risk from covid. The govt will not give her an exemption.

She is faced with a lot of pressure and stress just to make a personal medical decision. She does not deserve to be labelled antivax and excluded from society. She is far from the only one in this position.

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The mixture of protestors yesterday reminded of 1981 anti tour protests. There too you could see a tweed skirted granny type happily alongside a bikie. That was a protest about a wrong being inflicted on our nation by an out of touch prime minister and it rose up immediately. Yesterday ‘s event took twenty months to percolate to the surface. That is the rub. The clamp down on freedom has gone on too long for most to endure, even if you have not experienced  the far greater burden placed on Aucklanders. Just about all of those people had been patient and compliant but enough has become more than enough. The perception that the government caused the protraction of the restrictions because they failed to either procure or plan vaccination as early as they should have, is not easy to dismiss. People have turned on this from every point of the compass because they feel they are being punished in order to cover the government’s  inadequacy

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Well put.

Signed HouseMouse, pro-vaxx, pro-choice.

Anti this govt and their incompetence and unreasonableness.

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Middle class, white collar, pro vaxx and pro choice. I'd stand in the picket line alongside a biker too. The enemy of my enemy is my friend.

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I think at this point the feeling is everyone who wants the vaccine has had it. Stop being a control freak and PM Ardern and open the country. We don't need you micromanaging all aspects of our lives under the guise of controlling covid. 

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The Trump 2024 flags at the protest were particularly telling.

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That he's running in 2024?

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Re QV values: Fantastic news for some, terrible news for others. Everything has already been said over the last 12 months. The 3 main causes in chronological order- immigration before infrastructure, CGT fail, RBNZ interest rates. Personally even though my house is now 1.3, a sad day for NZ and what we used to have. RBNZ- I dare you to come up with more BS and not raise rates this month.

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The 1% have got wealthy by indebting the 99% for housing that has soared in price, 20% just in the last year in the United States, and also for medical care, utilities and education. The economy has been forced increasingly into debt just to function without wages and living standards rising.

How can one solve this? Taxation will not be enough. The only way that you can actually reverse this concentration of wealth is to begin wiping out the debt. If you leave the debt in place of the 99%, then you’re going to leave the 1% savings all in place. These savings are largely tax-exempt. Basically, I think you’ve left out the government’s role in this wealth creation of the 1%. Finance has indeed grown faster than the economy, and finance and real estate have merged into the Finance, Insurance and Real Estate sector, the FIRE sector.

High finance has absorbed the oil industry, the mining industry, and it’s absorbed most of the government. Financial wealth has become the economy’s central planner. It’s not planned in Washington or Paris or London. It’s planned in Wall Street, the City of London and the Paris Bourse. The economy is being managed financially, and the object of financial management is to make capital gains.

As your statistics point out, capital gains are really what explains [00:20:30] the increase in wealth. You don’t get rich by saving out of earnings and income. Rent is for paying interest. Income is for paying interest. You get rich off the government subsidizing an enormous increase in the value of stocks and bonds by the central banks.

The reason that inequality is occurring is that the largest public utility of all, money creation and banking, is left in private hands. Privatized banking in the West is very different from what government banking is in say, China. Government banking would create credit for public uses, for what the economy needs to grow. In the United States and throughout the West, banks create credit to slow the economy from growing, they make loans not to create new means of production and new factories. They make loans against property already in place – mainly to buy real estate already in place. Some 80% of bank loans in America and Europe are for real estate.

Banks make loans for corporate takeovers to buy other companies. They don’t make loans to build new factories, which is what government money creation in China would do. As long as you leave banking and credit in private hands, you’re going to have banks creating their product: debt. The more debt they create, the more debt service that borrowers, the 99%, have to pay the banks in order to obtain a house. or an education. or medical care, or just to break even.

The more money they pay the financial sector, the less they have to pay for goods and services. As the economy polarizes between the 1% and the 99%, the economy as a whole, shrinks, because more and more of its income is spent not on production and consumption, it’s spent just on debt service. My solution is to restore banking and credit to public hands to prevent the lending that simply finances asset-price inflation.

Second, you talked about taxing. Some taxes are more important than others. As long as the banks and the financial sector write the tax codes, as long as the government lawmakers are basically employees of the financial sector that finances their political campaigns, you’re not going to be able to tax them, or to close down the fictitious transfer pricing that corporations use to pretend not to make money except in artificial enclaves without an income tax.

You have to tax the source of the money that pays interest to the banks. That source is mainly economic rent. It’s primarily land rent. If you would tax on the increase in land values, if you’d have a land tax, which is what the whole 19th century was about – Adam Smith, John Stuart Mill and even Marx. You would not have this increased rent being paid to the financial sector to be monopolized by the 1%.

You’d have to change the way in which the tax code is based, away from earned income and wealth. But that is really not very practical in today’s political situation. You’d have to have a land tax and a natural resource tax to get rid of monopoly rent. You also have to return basic key infrastructure to the public domain, where it was before 1980, so that basic needs can be supplied at low prices, not creating monopoly rent for the 1%.

You have to realize that financiers use this wealth to take over the economy. This has to be reversed, because once you have wealth taking the form of financial claims and loans to other people as debt, you have compound interest. Any rate of interest is a doubling time, and compound interest is always going to grow faster than the economy’s real growth. The way to prevent this isn’t simply to lower the interest rate, which has been done today, to 0.1%. The only solution is to wipe out the overall debts that are stopping economic growth  Link

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“Britain has pioneered and is now a world leader in a phenomenon that might be called legalized corruption or corruption without breaking the law.” Link

I have lived under corrupt regimes – the cynicism stalking Britain is all too familiar - Link

 

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Fantastic read. 

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Agree with the sentiment. Disagree with the 1% vs 99% split. It's always ok to demonize the rich. Purely subjective but I'd say a majority of kiwi households have made solid capital gains albeit unrealized on housing. A subset of this has really creamed it (5-10%) via ownership of second properties, holiday homes, stocks etc. My social circle universally hate the current Government but recognize the financial windfall the last 4 years have produced.

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 It's always ok to demonize the rich.

Nobody's being "demonized". Furthermore, there's a big difference between the 1%ers and middle NZ.  

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China's CPI inflation rate rose to 1.5% in October from 0.7% in September..

The China Govt 10yr is now at 2.91% and down -2 bps.

Phew - a positive real rate should attract inward investment demand.

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Looks like the concrete delay will further escalate construction timeline and costs.

As a whole, housing supply may have reached its peak.

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Almost certainly has. Expect it to be at least 25% down by this time next year.

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"The average value of New Zealand homes has passed $1 million for the first time.."

I'd just like to remind everyone lol :)

I did say:
'..average house prices to over a million by years' end' 
'..I believe you Boomers can do it'
'..don't just push the boat out - you can set it sailing'
'to the Moo ooo ooooon'

lol =) congratulations, if I was in such real estate positions; I'd like to think I'd take some profit. 

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NZ's Boomer Enrichment Scheme has performed as hoped, indeed! Look at all the record debt foisted on the next generations. Amazing achievement.

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It will go on till it doesn't.

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Get over it!

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As soon as we stop doing it I will happily stop criticising it for the evil it is.

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Why is it that Boomers are to blame for the financial woes of the ensuing generations.  I am a 'Boomer' but have achieved some degree of financial security not because it was handed out on a plate to my generation but because I worked hard and most importantly avoided debt along the way as much as I could (that was the common mantra prevailing in the post-war years).  I do not own any investment property and from what I have seen it is as much Gen X who have second or third properties as anyone. As my generation made its way through adult life we did not expect as a normal thing to do things like go on overseas trips with the kids to the Pacific Islands or Australia, drive European cars v. a cheap Asian car, have a glossy magazine wedding as a pre-requisite to the start of married life, have the right home in the right suburb and in the right school zone (reality property television shows may have a lot to answer for), etc., etc.  Whilst I agree this is a massive generalisation which not every Gen X and younger families indulges in (certainly not outside Auckland), these largely 'image is everything' aspirations have served to push up the cost of life for everyone.  And if you think that university study was completely free for Boomers, then think again.  Sure course fees were cheaper and we didn't have student loans (which rightly allow those who don't have the money to still get their degree 'meal ticket') but then nowhere near as many of us actually attended university.  Back then it was only if the career choice demanded attendance. Now-a-days everyone seems to think that a degree is the minimum requirement to measure one's educational worth and so there are tertiary courses 'for Africa'. Consequently all fees have had to go up to support the necessary academic megalith to achieve this.  If the basic degree sets (Arts, Science, Commerce, Law, Medicine, etc.) were all that were offered at the universities as a multi-year degree instead of just about everything under the sun, then the overheads for these institutions would be so much lower and student's fees would be consequently more affordable also.  But then again I guess we need to employ everyone out there in some capacity so the academic ante like everything else must keep being raised. 

So, I'm sorry RickStrauss but I don't buy into this blame game that is now so fashionable to heap upon the Bloomers.  That is an all too easy off-load to make but the cause of the financial stresses in modern life, of which there are too many, cannot simply be laid at the foot of the Bloomers. I doubt you will agree with this but then perhaps you have only experienced a post-Boomer's life.

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It has been 54 days since any bank accessed the Funding for Lending program at the RBNZ. This is the longest quiet period this program has had. $6 bln has been lent to banks out of the $28 bln allocated.

Funding for Lending Programme (FLP) has been declared a repo transaction available to existing RBNZ counterparties.

Outstanding bank funding arrangements for eligible collateral securities are forecast to be replaced by RBNZ OCR priced funding under this arrangement.

Banks will retain an economic interest in the securities posted as loan collateral, unlike the debt securities sold, in QE transactions, to the RBNZ.

Surely this programme was meant to be an RBNZ hedge against rising OCR costs associated with a bloated monetary base (bank reserve assets) caused by QE?

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Why would this be Audaxes? The sheeple are not lining up for more debt so banks don't need it? 

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The main FLP collateral is RMBS - plenty of source material. I guess banks are wary of a three year lock in.

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Cindy lies and cheats again today!

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But sweet and kind and innocent Jacinda said she never lies.

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Just seen that Mahuta has announced terms of reference and steering committee for Three Waters.  As I thought, Three Waters certainly looks like it is primarily designed to transfer control of water resources to Maori.  Not surprising that she revealed all after the close of business today and will probably leave for her overseas Foreign Minister's trip before too many questions can be leveled at her.

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An arrogant, out of touch and authoritarian 'top down' government! 

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NZ super only payable after 20 yrs. This is the best news of the day. I am happy beyond words with this.

A shame that its being phased in and its a shame that the Greens see this as being racist but nobody will be surprised by this racist response.

https://www.odt.co.nz/news/national/new-eligibility-rules-superannuatio…

 

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I was embarrassed getting mine after only 11 years.  They only pay to top up my UK state pension so I'm not robbing you Kiwis too badly.  BTW in the UK it is pro rata to 30 years working in the UK. That makes sense.  How racism gets into the equation I can't fathom. 

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Great news. The piss has been taken by this on some migrants for many years.  

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Genuine question: why are banks reluctant to access funding for lending. It’s never been popular and the banks that do access it often seem ashamed to have done so. 
 

m does it come with fish hooks attached? I do t know enough about it. 

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