Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
TSB cut its one year fixed rate to 4.34%. ICBC raised all its fixed rates for terms from 1 to 3 years.
TERM DEPOSIT RATE CHANGES
There have been many recent term deposit increases, which are reviewed here. After that was first published, more came through from ANZ, BNZ, and the Nelson Building Society.
REINZ HPI TELLS A SOBER STORY
House prices in Auckland's central suburbs and all of Wellington are now lower than a year ago. These two main urban centers along with Rotorua and Hastings are leading the national housing market down in price terms, according to the detail in the REINZ's House Price Index for April. All this comes in the shadow of fast-sinking sales volumes.
DEFLATING
Factory activity expanded slower in April than March. BNZ's analyst noted it "had a tinge of struggle about it". But at least it is still expanding and new order levels remain stronger than usual. It is the other factors like logistics, costs, and skill availability that are holding things back. Also, there was no mentions of staff isolations in this report.
CONSUMER ELECTRONCS MARKET IN RETREAT
Shanghai chipmaker SMIC, listed and "partially state-owned", told investors today that demand for mobile phones, personal computers and home appliances has dropped "like a rock" and shows no signs of recovering. It's stock has dropped -23% in the past three months.
INFLATION IS ENEMY #1
In the US, the Fed boss has signaled that they will raise their policy rate by "50-basis point increases at the next two meetings" despite "some pain".
SWAP RATES SHARPLY LOWER
We don't have today's closing swap rates yet as the local market is all focused on international gloom. Currently they show a further retreat of about -8 bps. The 90 day bank bill rate is down a rather sharp -4 bps at 2.11% as markets remove some of the pricing that assumed a +50 bps hike on May 25. The Australian 10 year bond yield is now at 3.38% and another -5 bps from this time yesterday. The China 10 year bond rate is now at 2.83% and down -1 bp. The NZ Government 10 year bond rate is now at 3.61%, down -10 bps from this time yesterday but that is above the RBNZ fix for this bond which was down -17 bps at 3.59%. After falling to below 2.82% earlier in the day, the UST 10 year is now back up at 2.89% and where it was at this time yesterday.
EQUITIES IN A FRIDAY RECOVERY
A late come-back meant the S&P500 ended its Thursday session down just -0.1%, a recovery from a -1.8% fall at one stage. But so far this week it is still -4.7% lower. Tokyo has started its Friday session up +2.6% and heading for a weekly dip of -1.1%. Hong Kong is up +2.0% in its early trade so far, heading for a weekly loss of -2.5%. Shanghai has opened today up 0.6% and if that holds they will end their week up +2.8%. The ASX200 is up +1.3% in mid-day Friday trade, but that would mean a -2.4% weekly loss. The NZX50 is up flat in late trade today, heading for a weekly loss of -3.8%.
GOLD FALLS FURTHER
In early Asian trade, gold has fallen to US$1824/oz and down -US$31 from where we were this time yesterday.
THE NZD HOLDS
The Kiwi dollar has fallen another -20 bps since this time yesterday, now down to 62.5 USc. But we are now at 90.8 AUc and up +20 bps there. And we are now at 60.1 euro cents and +50 bps higher in a day. That all means out TWI-5 is now just under 70.3 little-changed from this time yesterday. From the beginning of April it is down -5.6% on a TWI basis.
BITCOIN STAYS DOWN
Bitcoin is now at US$29,401 which is up +2.9% from this time yesterday but embedding most of its recent fall. Volatility over the past 24 hours has remained extreme at +/-8.7%.
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75 Comments
"Shanghai chipmaker SMIC, listed and "partially state-owned", told investors today that demand for mobile phones, personal computers and home appliances has dropped "like a rock" and shows no signs of recovering. It's stock has dropped -23% in the past three months."
When the free or cheap money runs out. The toys from China lose their appeal. Better just to put some gas in the car and some food on the table.
How long before the chip shortage quickly turns around to become an oversupply? People aren't buying many cars either with inflation rates dropping and with market bubbles bursting left right and centre, buyers will be drying up even more. Wonder how many Tesla/Rivian orders will be cancelled over the next few months?
Terra founder Do Kwon has requested police protection in Seoul as Korean investors are not happy about the stablecoin collapse. A whole range of crypto influencers are carefully covering their tracks on social media.
In the case of a property "crash" in NZ, I doubt there would be any repercussions for the cheerleaders. Granny Herald might have to tone it down a bit and run a few "couldn't it see it coming" articles.
Seems like fake news…
https://www.thereportertimes.com/technology/fake-suicide-news-went-vira…
https://www.reddit.com/r/terraluna/
One or two stories on there IO, but of course, unverified. Be a lot of first time investors that haven’t been through a crash.
Last time I checked, Bitcoin wasn’t dead. In fact it grinds on with a new block added to its immutable ledger every 10mins. 100% up-time. No loss of data. No breach of the protocol. Greater than ever adoption. Stronger hands taking coins off weaker hands. This is the most stable ecosystem there is. You seem to be confusing Bitcoin with the shitcoin casino that’s on fire. You obviously haven’t figured it out yet. Good luck to you though.
A study of 775 fiat currencies indicates the average life expectancy of fiat currencies is 27 years, with some taking a month to crash and others surviving for centuries.
https://www.businessinsider.com/the-failure-of-money-2012-9
Approximately 2/3rd of all fiat currencies have failed, and if you haven’t noticed the USD, the strongest one currently, has lost about 99% of its purchasing power. And the rest of them are pegged to this. Don’t you think an engineered hard-money specifically designed for a digital economy is a solution to this problem? I do. I’d be interested to hear what your solution to this problem is? And don’t tell me a govt spycoin (aka CBDC).
Crypto and NFT's are the single largest, most extreme financial hoax in history. Nothing comes close. Spruiked by influencers based out of Bali and Vegas without an iota of finanical experience, for the life of me I never understood why people fell for the hustle.
The anti-fiat currency mantra was completely at odd's with the fact dozens of new coins are minted weekly, there was never a limited supply.
Agreed 100% Te Kooti, but that's greed and animal instincts for ya... people will believe what they want to believe if they're vested.
It is all just brilliant storytelling "we're the future, get in quick before we go to the moon" and replace the financial system with a bit of code on a centralised database (every crypto is built on Oracle)
Oh, the irony that the one that fell to earth hardest was called LUNA.
It is the future in some shape or form for sure, but not in our lifetimes.
It's not the internet 1994, it's DARPA 1964
#tothemoonandback
#hodlandpray
I'm not looking for a solution , 'cos I'm not believing there's a problem ...
.... got better things to do , investing in companies that are doing research & creating products to improve human health , than to waste time on glorified ponzis such as NFTs & Cryptocurrencies ...
I have my own medical practice, so I applaud you for investing in companies that also contribute to human health. I also agree that NFTs and cryptocurrencies are pretty much all scams. But there is common confusion, grounded in poor understanding and little research, that Bitcoin is the same, and it is not. Nothing to do with cultish beliefs, just an understanding that the Byzantine General’s problem was solved in a cryptographic protocol, thereby creating history’s first triple entry accounting system on an immutable ledger. This network also creates the rails for a global, borderless and permission-less payment system, the first settlement innovation in over 50years. According to Janet Yellen and Gary Gensler, Satoshi Nakamoto’s innovation is real, and is acknowledged as property by the IRS since 2014. Almost everything else is an unregistered security and soon, will be regulated as such. You need to learn the difference.
3/4 of your post could apply to cryptos also. In 25 years how many dead cryptos will there be?
At this point Its a speculative bet. At best currency trading.
Unless we turn communist or anarchist, there is no circumventing hireditory property rights, and power/wealth in balance associated with it. Which I think is why people seem to like it? Look how much I've won! Etc.
Doesn't matter what ends up as the future of market exchange. Smart educated people will always earn more and a productive farm will alway be worth the going rate, however that is defined.
Real wealth is energy production, physical resources, and land. Anything else is jus used to value the above. Fiat, dodge or otherwise.
Nope, I think you've misunderstand why currencies fail. There cannot be and it is not desirable for there to be a hard-money solution that is not subject to any government or institutional oversight. This is a system where there is no chance of wealth redistribution or equity.
It appears Emirates airline doesn’t agree with you.
https://twitter.com/blockworks_/status/1525036630305918978?s=21&t=yM_6E…
Hodlers at the moment -> https://ibb.co/xhMtDz9
Funny though because in my discussions with property investors the last few years, the justification for buying additional properties is that the market is now too big to fail and as such the RBNZ and government will save it all cost. So can't lose.
But now we have the Fed chair.....the most powerful central banker in the world saying, 'hey, a lot of this is actually outside of our control'.
Gulp......
Either/or. I've heard a lot of people cite a lot of reasons why they think their investment has good odds, but not that the RBNZ and government have their backs.
I've heard people talking about these mythical investors a lot though. Just never seen one in the wild.
Maybe I need to go to more wealth seminars or something.
I made this claim last year after the fact. I got my affairs in order in 2018 and was taken by surprise that the pandemic didn't cause a drop in house prices. It looked to me like the government engineered it so that property prices wouldn't drop. I recall writing something like I wish they had told me they would do that.
It is fairly reasonable to conclude that a government might consider something to be too big to fail. Especially if a lot of the members of parliament have property investments.
We know they can juice a market to spur the economy, but the government couldn't give two shits whether people own homes or not.
99% of people were predicting financial armageddon in March 2020, the government fiscal responses world over seemed unprecedented.
What it should be teaching every one of us is that "money" is really a place holder, and its value largely a vote of confidence in the over riding economy.
Rather than getting caught up in who's getting capital gains at someone else's expense, the discussion should really be around how one can ringfence their situation to be better immune to periods of stagnation.
Might be in for a wild swing from inflation to deflation as people stop spending as the 'wealth effect' is gone with asset prices falling.
Question is, if we rapidly move into deflation, will central banks just print even more money like they did in 2020, and buy even more financial assets putting the world in an even more precarious economic situation? If the US pay even more stimmie payments will their GDP declines, then you might see another rapid swing into inflation again! (the 1940's was a bit like this with big swings back and forth).
But we appear to be walking the road towards financial armageddon as deflation is a terrible outcome with all of the debt present in the system - that is when defaults happen as incomes fall below the required ability to service the interest on debt.
Because of this:
Paolo Ardoino, Tether’s chief technology officer, on Thursday vowed to defend the token’s dollar peg and said the company had bought “a ton” of US government debt, which it is willing to offload in that effort. But in an interview with the Financial Times, he declined to give details about its $40bn hoard of US government bonds because he did not “want to give our secret sauce”. “Our counterparties are not public. We are not a public company,” he said. “So we keep that information [to] ourselves, but we are working with many big institutions in the traditional financial space.”
When the buy the treasuries the price goes up and the yield goes down and $40 billion is a lot of US treasuries.
The NZX50 is up flat in late trade today, heading for a weekly loss of -3.8%.
And the whole long 19th century leading up to World War One was this revolutionary value theory that depicted land rent and monopoly rent and financial returns as being unearned income and wanting to strip it away.
And all of this seemed to be moving toward socialism. The industrialists were all in favor of government public utilities, of government enterprise, because they said, if the government doesn’t provide health care, then individuals are going to have to pay it, and it’ll cost a lot of money, like it does in the United States.
And so you had the conservative prime minister of England, Benjamin Disraeli, saying, health, all is health, we’ve got to provide public health for the people.
And it was the conservative Bismarck in Germany that said, we’ve got to provide pensions. If labor has to save up for the pensions, then it’s not going to have enough money to buy the goods and services that we Germans are producing. We have got to make pensions public.
So all of this move towards socialism was not only in favor of increasing living standards, which soared in the 19th century, but also in freeing the economy from the rentier class, from the landlords, from the bankers.
And for the classical economists, a free market was a market free from landlords, free from bankers, free from monopolists. Link
She's OK, but not as good as she thinks she is :) Her house price forecasts have been schizophrenic - falls of 3%, then 7%, then 10% in pretty quick succession...
Also I can't make sense of her forecast of a peak OCR of 3.5% and house price declines of 10% (nominal terms).
If the OCR goes to 3.5%, it's almost certain that house price falls will be at least 20-25% (nominal terms)
I really think you haven't summed up this at all well blobbles. The reserve bank is not out to impress any one. They are there to try and balance the economy as best they can. As far as I can make out our NZRB has done a reasonable job compared to many other reserve banks around the world.
... no , they have not ! ... by law , the Reverse Bank is required to maintain an inflation rate of between 1 & 3 % ... that is their task .... that is where 100 % of their focus should be , to receive their $ 700 000 salaries ...
And have they done that ? ... hell , no ! ...
Shanghai chipmaker SMIC, listed and "partially state-owned", told investors today that demand for mobile phones, personal computers and home appliances has dropped "like a rock" and shows no signs of recovering. It's stock has dropped -23% in the past three months.
Saudi Aramco overtakes Apple as the world’s most valuable company, stoked by a surge in oil prices https://trib.al/IITSILp
One of NZ’s huge weaknesses is our small population and small and fairly weak depth of analysis in all issues, including economics and finance.
while my view of a lower OCR than is forecasted is ridiculed by most here, it’s not an uncommon view in Australia, refer this article:
https://www.macrobusiness.com.au/2022/05/insane-markets-double-down-to-…
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