Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
None today so far.
TERM DEPOSIT RATE CHANGES
None here either.
EASIER AT THE MOMENT I
Retail spending levels rose by +7% (annual rate) in April from March. But they are only +2.1% higher than in April a year ago. The recent gain was larger than analysts had expected and points to firmness in spending appetites. However, at least some of those gains are related to price rises. However, over the coming months, it is expected that spending levels will come under pressure again from a number of building headwinds.
EASIER AT THE MOMENT II
This retail spending data is backed up by ANZ's monthly truckometer series. Their light traffic index jumped +8.3% in April, while the Heavy Traffic rose +2.3%, both the annualised gain from March. It is data is consistent with a recovering movement of both people and goods as the impact of the Omicron outbreak fades.
'CHALLENGING'
The RBNZ will report on the total size of the KiwiSaver fund investment for Q1-2022 at the end of May, but Morningstar released their report today which covers about 94% of all KiwiSaver funds. Morningstar is reporting a weak March quarter, noting market conditions were "challenging" meaning the industry bled about -$1.7 bln in those 90 days. They report that the average multisector category returns ranged from negative -3.9% for the Conservative category to negative -6.5% for the Aggressive category. Top performers over the quarter against their peer group includes BNZ First Home Buyer negative -2.1% (Multisector Conservative), Superlife Conservative negative -2.9% (Multisector Moderate), AMP Income Generator negative -1.1% (Multisector Balanced), Aon Milford negative -3.7% (Multisector Growth), and Superlife High Growth negative -4.8% (Multisector Aggressive). ANZ leads the market share with more than 22% or $18.5 bn. ASB is in second position, with a market share of 16.1%. Westpac holds third spot ahead of Fisher Funds, while Kiwi Wealth sits in fifth spot. The six largest KiwiSaver providers account for nearly 70% of all KiwiSaver assets.
KIWIBANK INCREASES MORTGAGE TEST RATE
Kiwibank has increased its mortgage test, or serviceability rate. It's now at 7%. Recent increases from ANZ and ASB see their test rates at 7.15% and 7.35%, respectively. A Kiwibank spokeswoman says test rates "give us the ability to mitigate the risk that potential increases may have on the borrower’s ability to repay their loan." They are the rate banks use to test mortgage applicants' ability to repay if interest rates rise.
ONE MILLION+ INFECTED
The Health Deportment reported that "we have reached a total of 1,001,898 confirmed cases of COVID-19 since the start of the pandemic in 2020." In that time 876 people have died of COVID. 95% of all eligible people (ie 12+) have had two vaccine doses, 71% have had three. Our population is now 5.176 mln.
VALUES SLIDING
QV said average house values are now sliding in most parts of the nation. The average dwelling value in Auckland is down -$48,000 since the start of 2022, but the average value in Queenstown-Lakes was up +$50,000.
BETTER CONDITIONS, LOWER CONFIDENCE
Aussie business confidence fell in April from March, perhaps due to their election campaign uncertainties. But business conditions improved as surveyed by the NAB Monthly Business Survey.
EASIER AT THE MOMENT III
Australian retail volumes rose despite very strong inflation and falling consumer confidence in the March quarter. While large household savings buffers, low unemployment and growing wage pressure should hide negative impacts on spending of both inflation and rate hikes in the short term, analysts there will be watching consumption closely in the coming months for signs of headwinds there too (as in NZ above).
SWAP RATES RETREAT
We don't have today's closing swap rates yet but they are likely to be lower by about -4 bps. The 90 day bank bill rate is up +1 bps at 2.15%. The Australian 10 year bond yield is now at 3.53% and -2 bps lower than this time yesterday. The China 10 year bond rate is now at 2.83% and also down -2 bps. The NZ Government 10 year bond rate is now at 3.81%, down -5 bps from this time yesterday and now well above at the RBNZ fix for this bond which was down -10 bps at 3.76%. The UST 10 year is now at 3.04%, down -2 bps.
A BAD DAY
Wall Street took a bath today, ending down -3.2% on the S&P500 and its low for the session. Tokyo is down almost -1.0% in late morning trade today. Hong Kong is back from a holiday and down -2.7% in its morning session. Shanghai has opened up +0.3% as the home team comes to the rescue. The ASX200 is down -1.5% in early afternoon trade. The NZX50 is down -1.4% in late afternoon trade.
GOLD
In early Asian trade, gold has slipped to US$1860/oz, down another -US$15 from where we were this time yesterday. Also, see this.
THE NZD DEVALUATION STILL GROWING
The Kiwi dollar has fallen another -40 bps since this time yesterday, now down to 63.3 USc but that is the same as where we opened this morning. We are now at 90.9 AUc and a slight firming. We are now at 59.8 euro cents and a further -80 bps retreat in a day. That all means out TWI-5 is now just under 70.7 and a -50 bps fall from this time yesterday. From the beginning of April it is down -9.3%.
WORSE FOR BITCOIN
After getting very close to US$30,000 earlier today, bitcoin is off the canvas slightly, now at US$31,113, but still down -7.4% from this time yesterday, and extending its overall losses. The overall move lower from the start of April is now -34%, in an extended fierce bear retraction.
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61 Comments
The average dwelling value in Auckland is down -$48,000 since the start of 2022, but the average value in Queenstown-Lakes was up +$50,000.
OK. I'm largely ignorant about the QV methodology but I look at the value for Queenie and I really wonder about the sales impact on this valuation. I would suspect that the sales volume is small (but I don't know as I don't track it). If few sales have occured, this does not really reflect in the 'average value' IMO.
Anyone can enlighten me if they think they know.
From back when we hit our milestone of 500 COVID deaths:
https://i.stuff.co.nz/national/explained/300563481/covid19-what-we-know…
So, what do we know about those whose deaths have been linked to the virus?
To start, Ministry of Health data shows that to date, 51 of the 500 publicly reported deaths have been officially coded as due to Covid-19.
So just under 90% of reported "COVID deaths" had not been attributed to COVID at the time. I'd call that significant, and misleading.
Yes, and this very loose criterion of "a death within 28 days of a positive test" has been used globally to count C-19 deaths, which is food for thought.
"All deaths where someone has died within 28 days of being reported as having a positive test result for COVID-19 are now reported. This approach is in-line with that taken by other countries..."
https://www.health.govt.nz/covid-19-novel-coronavirus/covid-19-data-and…
"a death within 28 days of a positive test"
It's worse than that. The patient only has to have symptoms consistent with COVID-19, not actually test positive, as per WHO guidelines which are followed by at least the Australian Bureau of Statistics, our own MoH, and the CDC in USA.
Do you have a reference for that 6% figure? Seems pretty excessive.
My understanding from properly controlled seroprevalence studies is that the median infection fatality ratio (risk of dying if infected) before vaccines and before Omicron was between 0.3% and 0.5% overall, with huge age stratification (extremely low risk for under 40s, relatively high for over 70s). See for example:
https://www.thelancet.com/journals/lancet/article/PIIS0140-6736(21)0286…?
I believe the IFR for Omicron is much lower again, though I don't have figures to hand.
That 6% was based on a single country at a point in time around the time of Delta - I did a case/deaths calculation on a reported figure and it was 6% and I remember thinking "gosh that's higher than a lot of other countries". Even 0.5% is more than 5x higher than NZ and your phrase about 'proper' studies is really important.
The point is, it was really high compared to the flu at one point based on pretty robust annual flu death figures collected over many years, and has since settled down now we have more than 6 months of infections/deaths data worldwide.
Yes the pre-Omicron strains definitely had a higher IFR than seasonal flu, which I understand ranges roughly between 0.05% and 0.2% depending on the strain. But unlike the flu, C-19 poses very little threat to the young.
Regarding the 6% figure that you calculated, this is the case fatality rate, and it's easy to confuse this with the infection fatality rate (the actual risk of dying if infected).
The CFR is always higher than the IFR, because the number of people who were actually infected is always higher than the number of infections that were detected via testing. Many people got infected but were asymptomatic, or thought they just had a cold, or didn't get tested for some other reason. None of these were recorded as "cases", so the denominator is much smaller than it should be, inflating the perceived risk, sometimes as much as 10x.
So the 6% CFR that you calculated could have equated to an IFR of around 0.6% - but the only way to determine the IFR is to do a serosurvey of the population in question to determine how many people were actually infected at the time.
Microstrategy now down 83% from its peak. Interestingly, 123% of the company's current market cap is rat poison holdings.
https://twitter.com/DylanLeClair_/status/1523642349389180928/photo/1
Looks like government act with urgency to try to prop up our teetering housing market: https://www.rnz.co.nz/news/national/466806/government-expected-to-revea…
KIWIBANK INCREASES MORTGAGE TEST RATE
Kiwibank has increased its mortgage test, or serviceability rate. It's now at 7%. Recent increases from ANZ and ASB see their test rates at 7.15% and 7.35%, respectively. A Kiwibank spokeswoman says test rates "give us the ability to mitigate the risk that potential increases may have on the borrower’s ability to repay their loan." They are the rate banks use to test mortgage applicants' ability to repay if interest rates rise.
I wonder how many new mortgage holders in the last couple of years wouldn't have been given credit under these increased test rates.
The fact is banks were using higher rates as tests in mortgage serviceability. Who would have known where the economic situation of the world would end up in such a short time. I guess there are some economic genius's out there who think they can predict the future direction and sometimes they fluke it. But in general, real life things roll with what happens geopolitically. As Homer Simpson famously remarked when asked " What is the meaning of life" he replied " Life is just a whole lot of stuff that happens"
Wall Street took a bath today, ending down -3.2% on the S&P500 and its low for the session.
Low rates and quantitative easing made everyone look competent. When everything is going up picking losers is hard, when they go down picking winners is hard. It was a market even Cathie Woods could make money in.
That is the problem with asset bubbles.....idiots start to believe they are intelligent investors and are often more willing to give financial advice than the real (value) intelligent investor.
And they use the continued rising prices to show that they are 'right' and the value investor is 'wrong'.......until.......it all comes crashing down.....
https://www.sharesoc.org/wp-content/uploads/2016/10/bengraham.png
Have you read Benjamin Grahams book?
It might be a good idea to do so, then you can decide which group you identify with (before deciding which group other people fit into).
You just don't get it IO, you just cannot see that YOU are the one, always judging others, labelling them, putting them into good or bad, right or wrong "groups"… Have you ever asked yourself what gives you the right to judge others? Decide if they're "idiots" or "wise" ?
I don't decide, claim or judge as to who is an idiot and to who is an intelligent investor....the results/consequences of peoples choices/decisions will be the deciding factor of that, nothing to do with me. And these things can only be determined in retrospect.
Why? Have you jumped to the conclusion of who is the idiot and who is the intelligent investor already?
I haven't.....and perhaps you're the intelligent investor because you claim to have made a million dollars from your last rental property and another million dollars by chopping down some trees at another home...so perhaps I'm the idiot and you're the one who is easily triggered?
Would that settle the nerves and fears of being judged as either intelligent or as an idiot? Its not so much of a fear for me as I've been told by the likes of P8 regularly that I'm an idiot, who oddly you tend to agree with? What a strange world we live in when one group of thought can decide who the idiot is, but the other cannot. And then judge them for doing the same.
Low rates and quantitative easing made everyone look competent. When everything is going up picking losers is hard, when they go down picking winners is hard. It was a market even Cathie Woods could make money in.
Would you consider yourself to be a better investor that Cathie Woods?
It's hard for me to draw an conclusions though as ARKK hasn't been through a full market cycle yet. However as ARKK has averaged 13.6% p.a. since inception (2014) it appears I'm ahead, for now, but that could easily be ascribed to luck given the short time period.
According to Bloomberg today about ARKK:
From inception, the fund’s net asset value has still grown to $45.59 on Friday from $20.12 in the last week of Oct. 2014 when it launched -- a gain of about 127% -- according to figures from the company’s website. But the S&P 500 had a total return of 136% over the same period...
Hard to justify those "management" fees when sitting on your hands in a low cost index would have made a better return.
Just a thought,
To protect ourselves against viruses, we inject ourselves with a controlled amount of the virus, so that our body will produce antibodies which will fight the virus, when we are exposed it.
With Covid, we have done the exact opposite, we have attempted to avoid any contact with viruses, using sanitisers, masks, social distancing, lockdowns...
Does it make sense?
Your analogy is faulty to the point of not having much meaning.
We do NOT inject controlled amounts of measles, rubella, chicken pox etc. into ourselves.
We inject preparations containing (dead) fragments of those pathogens .
As soon as we had similar preparations for Covid we started using them - so no difference at all to the way we approach those other diseases.
"...so no difference at all to the way we approach those other diseases."
Really? Indeed most traditional vaccines inject virus fragments or inactivated whole virus, which the immune system then responds to.
But the mRNA vaccines use a completely novel method, whereby the messenger RNA code for producing part of the virus (the spike) is injected, and our own cells use the code to produce spike proteins, which the immune system then responds to. Very different indeed.
I believe that to date, only the Chinese vaccines and the new Valneva vaccine use inactivated whole SARS-COV-2 virus.
Am I the only one getting tempted by Bitcoin at the moment? Hard to know where the bottom is - unless this is the time that everyone realises the true value of nothing is nothing (would be just my luck).
Sounds like the best option for you is to DCA my friend. Buy at the top and the bottom. Let volatility work its magic.
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