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A review of things you need to know before you go home on Thursday; more retail rate changes, higher house prices, higher food prices, NZSF makes a $100 mln investment, swaps rise, NZD soft, & more

Business / news
A review of things you need to know before you go home on Thursday; more retail rate changes, higher house prices, higher food prices, NZSF makes a $100 mln investment, swaps rise, NZD soft, & more

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

MORTGAGE RATE CHANGES
ANZ and TSB both raised some fixed mortgage rates, both taking their carded offers to just under their main bank rivals. More here. ICBC also raised their market-leading rates and they have now lost that tag.

TERM DEPOSIT RATE CHANGES
Both ANZ and TSB raised some selected TD rate, and in the case of ANZ it was only by +5 bps, in the case of TSB the rises were +5bps to +30 bps. ICBC also raised their rates.

JUST WHEN YOU THOUGHT PRICES CAN'T GO HIGHER ...
Residential property sales volumes were down -22% in October year-on-year as the largest market stayed in lockdown, but prices went through the roof. This is according to the October REINZ reports. Auckland's median selling price was up +$250,000 in the last 12 months, a "mere" $120 per working hour (and that was tax-free), or equivalent to a worker being paid $180 per hour. How sustainable that is, is being questioned by ASB's economists.

FASTEST RISE IN A DECADE
Food prices "fall for the first time since February" is how Stats NZ led its release of October data. But that is seasonally normal and has happened in October from September for 11 consecutive years. In this case, the more relevant year-on-year measure has them up +3.7% and that is the highest rise in the past ten years for an October.

OUR FUND TO INVEST $100 MLN IN THEIR FUND
The NZ Super Fund has committed US$100 mln to the Fifth Wall Climate Technology Fund, an early-stage fund managed by leading real estate technology venture capital firm Fifth Wall, that seeks to invest in new technologies to "decarbonise the global real estate industry". There is a lot of cascading fund investing these days and in this case we seem to be well down the line. This is a pattern however. In October the NZ Super Fund announced a €125 mln investment in "sustainable energy infrastructure" in the Copenhagen Infrastructure Partners’ Energy Transition Fund. Lots of money, lots of good intentions, exposed to big fees from savvy venture capital firms in early-stage, risky ideas. The worthwhile thing about this investment is a) the NZ Super Fund has a good track record, and b) the real estate industry is a large generator of hot air so anything to reduce that is probably a good thing.

NEW TICKET CLIPPER
Share market operator NZX, through its subsidiary Smartshares, is paying $25 million to buy the management rights for the ASB Superannuation Master Trust from ASB. The Trust manages some $1.8 billion in retirement savings for more than 17,500 members across more than 100 employer groups. The management rights transition is expected to happen either in late 2021 or early 2022 with a transition of services over a two-year period.

YIELDS STABLE
There were 86 bids at today's NZGB bond tenders and 46 won something. The May 2026 $200 mln went for a yield of 2.31%, and a fraction lower than the 2.32% last time. The May 2031 $200 mln was the most popular attracting $737 mln in bids and going for a 2.60% yield, compared with 2.58% last time. The $100 mln May 2037 was won with a 2.92% yield, vs 2.84% last time. All up, just under $1.3 bln was bid today leaving $789 mln hanging.

FREIGHT IS WHERE THE MONEY IS
NZX50 listed freight company Mainfreight (MFT, #4) reported strong conditions in its first half trading to September 30, 2021. All five regions in their global network improved. Revenue was up +41% to $2.275 bln. Net profit after tax was up +79% to $130 mln and more than double its pre-pandemic half-yearly result.

GROWTH BUT NO PROFITS
Xero posted a small -NZ$6 mln loss today, but also announced it had acquired an American inventory tracking software start-up, Locate. They now have more than 3 mln subscribers.

GULP
The Australian unemployment rate jumped way more than expected. Employment dropped by -46,000 in October when a +50,000 rise was expected. Most of the jobs lost were full-time jobs, bringing to more than -326,000 the number of jobs lost during lockdowns in NSW, Victoria and Canberra. Their jobless rate went from 4.6% to 5.2%.

LOCAL PANDEMIC UPDATE
In Australia Delta cases in Victoria have risen as 1313 cases were reported there today. There are now 15,675 active cases in the state (an increase) and there were another 4 deaths yesterday. In NSW there were another 261 new community cases reported today with 2,779 active locally acquired cases, and they had another one death yesterday. Queensland is reporting three new cases. The ACT has 9 new cases. Overall in Australia, just under 82% of eligible Aussies are fully vaccinated, plus 8% have now had one shot so far. In contrast, there were no new cases in New Zealand at the border, and 185 new community cases. Now 89.9% of Kiwis nationally aged 12+ have had at least one vaccination, and the Australian rate is now also at 89.7% of all aged 16+.

GOLD FIRM
In early Asian trading, gold is at US$1850/oz and up +US$21 from this time yesterday. That is very similar to the closing New York price, although -US$9 lower than the earlier London fix.

EQUITIES MOSTLY LOWER
The S&P500 ended its Wednesday session falling away sharply to close down -0.8% in yet another unimpressive session. The NZX50 is unimpressive too near the end of its session here today but at least it is holding its own, unchanged. The ASX200 is down a sharp -1.2% in their early afternoon trade. In Tokyo is up +0.3% in late morning trade. Hong Kong is down -0.5% in their early trade, while Shanghai is up +0.3% and bucking the trend.

SWAP & BONDS RATES TURN UP SHARPLY
We don't have today's closing swap rates yet. They are higher and steeper. The one year is up +4 bps, the two year up +8 bps, and the ten year up almost +10 bps. The 90 day bank bill rate is up +1 bp at 0.84%.The Australian Govt ten year benchmark rate is now at 1.84% and up +8 bps. The China Govt 10yr is now at 2.94% and up +3 bps. The New Zealand Govt 10 year rate is now at 2.63%, up +9 bps but now below the earlier RBNZ fix for that 10yr rate at 2.64% (+13 bp). The US Govt ten year is up +10 bps from this time yesterday to just on 1.57% and following the huge CPI jump in the US.

NZ DOLLAR SOFT AGAIN
The Kiwi dollar is now at 70.6 and -¾c lower than this time yesterday. Against the Aussie we are only marginally lower at 96.4 AUc. Against the euro we are unchanged at 61.5 euro cents. The TWI-5 is now back at 74.8.


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BITCOIN VOLATILE
After hitting a new record high at US$68,991 earlier in the day, the bitcoin price is now at US$64,502 and a net -3.8% retreat since this time yesterday. Volatility in the past 24 hours has been very high at just over +/- 4.7%.

This soil moisture chart is animated here.

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

Daily exchange rates

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Source: CoinDesk

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33 Comments

Not sure of the validity of this report, but a German consulting company has filed bankruptcy proceedings against Evergrande and is calling on all bond investors to join it.  

https://www.prnewswire.com/news-releases/evergrande-officially-defaulte…

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To put matters in perspective:

OUCH! Tesla erases $199bn in its worst two-day performance since Mar. Shares tumble for second day following Musk Twitter poll. Brother Kimbal Musk sold Tesla stock on Friday, before poll. https://bloomberg.com/news/article      Link

 

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Further to the Aussie job numbers, the Melbourne Institute has released data showing wage growth at <1%. Accounting for margin of error, this potentially means wage growth is non-existent or negative. 

(Sorry no source data but https://twitter.com/AvidCommentator/status/1458613593478471686/photo/1)

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Lucky indebted country

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They destroyed the productive capacity of Australias economy with extended lockdowns, obviously inflation is going to rise faster than wages. When a country produces less than it consumes inflation follows.

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China and US may have hijacked the methane pledge by agreeing to set standards for agricultural methane and other sources.

https://www.msn.com/en-us/news/politics/us-china-release-joint-climate-…

When they say jump to it the only question will be how high.

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Sounds like something drafted by Sir Humphrey Appleby!

The two sides pledged to continue working together and with all parties. They agreed to establish a working group on enhancing climate action in the 2020s to promote cooperation between the two countries and the multilateral processes.

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Yes, but it is not as wishy washy as the UN COP26 draft statement which is blah blah blah, these two know how to get things done.

”The two countries also say they'll develop additional measures both nationally and subnationally, and will meet during the first half of next year on methane standards for fossil fuels and landfills and incentive programs for agriculture.”

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Possibly one of them now does.

Have we gotten to the stage where no one dares sell anything, because everyone knows that the Central Banks will have to keep 'stimulating', otherwise the whole lot will fall in a heap? So even as 'prices' go up, no one actually makes any money, because that happens upon sale  (when profit is realised; borrowing against an asset value is cashflow, not cashing-out)?

Yes, in all likelihood. Unless... Xi has decided that 'enough is enough', and if one of the Superpowers has to go down to bring sense back to the financial system, it isn't going to be his Superpower.

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Russia is a player and they play their own games learned the hard way after the collapse, so global politics is played out between the three with the old EU watching from the side.

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China's path to zero carbon is paved with U.....150 new nuclear power plants over 10 years.

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326,000 jobs go south in Australia's big two states (+ Canberra). Strewth! And an election within the next 6 months. Hmm. Interesting times.

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what could explain the difference in the relative strength of NZ employment?

Is it because our property ponzi is more powerful? (that would be my suspicion)

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what could explain the difference in the relative strength of NZ employment?

What would lead you to believe that? NZ is gagging for cheap labor. That's not a relative strength. 

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I'm talking about the employment rates.

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I'm talking about the employment rates.

IMO, a meaningless metric.

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It's because Grant Robertson is spending like there is no tomorrow. 

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there is no tomorrow... the credit card is almost maxed out 

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Lower productivity meaning we require more warm bodies to get things done.

When other countries look to grow their industry, they say how can I use robotics/technology/capital investment to achieve it.

In New Zealand we say how can I throw money at a media campaign to convince politicians we desperately need more migrants (with the added bonus the costs get socialised and our housing market will be perpetually under stress). Cha-ching!

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In New Zealand, if you are on the dole and not actively looking for work, you no longer count as being unemployed. 

We should look harder at the number of people claiming a benefit.

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That's a pretty standard metric worldwide I think.  Look at LFPR if you want to know how many people are in the workforce out of the working age population. 

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How do you get on the dole and not be required to look for work? Asking for a friend..

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Option 1: Get born with a severe genetic degenerative condition that kills most of those with the condition before the age of 30.

Option 2 Get denied every application you make for jobs even after submitting hundreds. Obviously this one is the easiest considering even a non degenerative condition and minor disability will immediately mean after thousands of application employers will not hire you and you don't have the money to start a business. Most of those I support with benefits are physically disabled or neurodiverse and no NZ employers will hire them (the depression and suicide ideation normally kick in after a year of looking and being turned down at every application)

Option 3: Wait 65 years.

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Most of those claiming a benefit are over or near the age of 65, followed by those with disabilities or carers (inc for those over 65 or with disabilities). There are very very few out of work without a severe medical impediment or the luck to be born older than generation X. Those younger than 65 out of work are predominantly denied any access to transport or work (over 50%). Much like how near 50% of disabled youth are not provided the opportunity to be in education, employment or training. Supporting many and it is bleak out there; think lockdown and no access to family, friends, work or housing for over a decade and years of hundreds of applications for work or study being turned down. Covid actually made things a little better for the disabled with remote tech finally recognised by more companies even though it has existed for decades.

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The US Govt ten year is up +10 bps from this time yesterday to just on 1.57% and following the huge CPI jump in the US.

Why Joe Biden Will Soon Talk With Mohammed Bin Salman

International relations are never about values or human rights. They are about interests.

It is not in the U.S. interests, nor in Biden's personal ones, to further worsen the relations with Saudi Arabia.

Biden has sound reasons to hold back on bothering the clown prince. One is that the Saudis are a major reason for the predominance of the U.S.-dollar in the global financial system. If they were to decide to sell oil in Chinese Yuan the U.S. dollar would no longer be the main reserve currency. The U.S. taxpayers would actually have to pay for their government's deficits. (The chance for this is low as the U.S. would probably rather invade Saudi Arabia than let that happen.)

It is Saudi Arabia that has the most available capacity to pump oil beyond the current production rate. And it is here where MbS has direct power over the U.S.

With gas prices at their current height and still rising it is no wonder that Biden's approval rating is down to 38% and that the Democrats are likely to lose in the midterm elections.

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is there a decent correlation between the price of fuel and the popularity of the President?

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 "One is that the Saudis are a major reason for the predominance of the U.S.-dollar in the global financial system. If they were to decide to sell oil in Chinese Yuan the U.S. dollar would no longer be the main reserve currency. "

But would it?....there may be a desire to unseat the USD but the alternative has to be demonstrably better....the yuan (or euro) isnt (nor despite the promo, bitcoin).....reserve by default...until who knows.

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% of Population Fully Vaccinated

  • New Zealand is number 29 today with 67.8%

 See this link

 

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Wow why are other countries so bad? We will prob be in top 10 in a few weeks

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What do they say about Nzers & sheep ...

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I didn’t know that gave you covid. 

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Geopolitics - so pleased to see One News lead with the story at 6pm;

https://www.1news.co.nz/2021/11/11/fears-over-chinas-involvement-in-kir…

If only the UNFCCC (Framework Convention on Climate Change) had prescribed payment for ecosystems services (PES) instead of carbon trading all those years ago - imagine where the planet would be today.

The carbon sequestration potential of our oceans/seas would not be under threat from commercial enterprise as they are today.  Ditto the Amazon rainforest. This Marine Protected Area in Kiribati, if lost, is a tragedy beyond comprehension.

We really are a species governed by intellectual num-nuts.  I fear I will die before they (the powers that be) become enlightened. 

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