Here are the key things you need to know before you leave work today (or if you already work from home, before you shutdown your laptop).
MORTGAGE RATE CHANGES
HSBC revised most of their fixed rates lower today.
TERM DEPOSIT RATE CHANGES
Kiwibank raised it one year TD rate to 4%, the first main bank to do that. More here.
RETAIL SPENDING STALLS
Statistics New Zealand says retail spending - excluding fuel - dropped by -0.3% in June. And with prices charging higher, the amount of goods we're actually able to purchase is being eroded. And the pressure on household budgets is set to become more pronounced over the coming months. Separately the latest Kiwibank household spending data shows that the June quarter did see a rebound in consumer spending, but thanks to inflation, the growth in dollars spent is outpacing the volume of transactions
WELCOME REBECCA STEVENSON
We are very pleased to announce that experience business journalist Rebecca Stevenson has joined our journalists today. More here. Readers will also have noted that Bernard Hickey is also back on board on a contributing journalist basis. And we are still hiring for a replacement for our Wellington press gallery position. Qualified business journalists should apply here.
REPLACED
The position of Director of Public Health, previously held by Dr Caroline McElnay, who resigned in April 2022 after holding the role for five years, it to be filled by Dr Nicholas Jones, who is currently Clinical Director and Medical Officer of Health at the Hawkes Bay DHB.
NATURE AT WORK - ONE OFFICIAL ACTION SPARKS AN EQUAL, OPPOSITE REACTION
In Holland, "huge protests" have swept the country triggered by the introduction of laws designed to cut nitrogen and ammonia emissions by -50% by 2030, and by -75% in protected nature reserves known as Natura 2000 areas. The latest demonstrations were sparked by a government announcement suggesting some farm closures were inevitable in June and a detailed map suggesting which areas needed reductions from -12% to -95%.
SOFT
In Japan, machinery order data for May was weak, but no weaker than expected for that month. They fell -5.6% in May April, posting their first drop in three months and nearly matching forecasts for a -5.5% contraction. But they were up +7.4% from year ago levels which was better than expected. Analysts suggested that Japanese firms could be delaying spending due to rising energy and raw material prices that have been aggravated by soaring import costs due to a weakening yen. We get the more recent (and more important?) machine tool order data later tonight.
UNHAPPY BANK DEPOSITORS
A large crowd of angry Chinese bank depositors faced off with police yesterday, some roughed up as they were taken away, in a case that has drawn attention because of earlier attempts to use a COVID-19 tracking app to prevent them from mobilising. Hundreds of people held up banners and chanted slogans on the wide steps of the entrance to a branch of China's central bank in the city of Zhengzhou, Henan Province, about 620 km southwest of Beijing. Video taken by a protester shows plainclothes security teams being pelted with water bottles and other objects as they charge the crowd. The protesters are among thousands of customers who opened accounts at six rural banks in Henan and neighboring Anhui Province that offered higher interest rates. They later found they could not withdraw their funds after media reports that the head of the banks' parent company was on the run and wanted for financial crimes.
SWAP RATES FIRM
Wholesale swap rates have risen again today, maybe by more than +7 bps. The 90 day bank bill rate was up +3 bps to 2.93% today as Wednesday's OCR review gets closer. The Australian 10 year bond yield is now at 3.56% and up +1 bp from this morning. The China 10 year bond rate is now at 2.85% and down -1 bp. And the NZ Government 10 year bond rate is now at 3.71%, up +7 bps from this morning and now above the earlier RBNZ fix for this bond which was up +2 bps to 3.69%. The UST 10 year is now at 3.09% is a gradual firming today.
EQUITY PRICES MOSTLY LOWER
The NZX50 is down -0.3% in late trade today. The ASX200 is down -0.5% in early afternoon Monday trade. Tokyo has opened up +0.9% this week. Hong Kong is down a startling -2.5% in early trade. Shanghai is down -1.3% in their early trade. The S&P500 futures suggest Wall Street will open -0.6% lower tomorrow.
GOLD GOES SIDEWAYS
In early Asian trade, gold is down -US$2 from this morning's open, now at US$1741/oz.
NZD LITTLE-CHANGED
The Kiwi dollar is about -20 bps softer from where we opened this morning at 61.7 USc. Against the AUD we are still at 90.4 AUc. Against the euro we unchanged at 60.8 euro cents. That means our TWI-5 is little-changed at 70.5.
BITCOIN SLIPS
Bitcoin is now at US$20,515 and down -1.8% from where we opened this morning. Volatility over the past 24 hours has been moderate at +/-2.5%.
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33 Comments
A glad welcome, Rebecca. Lovely to have you on board. An eclectic lot of posters to encounter. Generally good jousting, humour & the chaff usually soon gets separated from the wheat.
Or they get a good thrashing
:)
Who knows? I joined here to bring the true (Limits to Growth, energy-underwrites everything to what I thought was the best econ-journo in the country. I worked on him hard. Politely - as always - but hard. More than a decade later, he partook in an RNZ Two Cent's Worth with Giles Beckford and Jenee Tibshraeny, re Doughnut Economics/Raworth. For their pathetic (unjournalistic by several orders of magnitude) comments late in that piece, both the former should hang their heads in shame.
RNZ currently is base-jumping down a woke rabbit-hole, as are most Govt-associated entities. My posit is that this is subconscious denial-slash-virtue-signalling (and orders-of-magnitude away from real truth-seeking journalism.
If this person is happy to learn, fine. Here's hoping....
threshing?
Unless I was mis-stook, there were only two.
And are the unhappy bank customers in China because the West doesn't understand the Chinese way of thinking - I suspect not.
Chinese bankers, Chinese military. Very similar animals.
Dutch protests would be funny to witness.
"Vee vill nort tohhhhlerate zeez schanges!!!!"
Heaps of people can grow all the food we need. A small minority are trying to stop them, and have found an excuse. Ask the Russians what it was like having consistent food shortages for years on end, because the conditions under which plenty of food could be grown for Russian consumption were artificially taken away by their government. It is something that we cannot put up with.
Nice nice, I was just saying that their accents combined with anger would be funny to witness en masse.
I have a couple of South African colleagues, and they're funny enough.
So trivialise their concerns because they don't have a classy Wairarapa accent like Nzdan?
Well I spent the first 30 years of my life in Christchurch. But lighten up dude, one would think you're Dutch.
Let me help you: "Wij zullen deze veranderingen niet tolereren!"
A large crowd of angry Chinese bank depositors faced off with police yesterday, some roughed up as they were taken away, in a case that has drawn attention because of earlier attempts to use a COVID-19 tracking app to prevent them from mobilising.
They had their health passes turned red, preventing them from travelling and trying to withdraw their money.
If the implications of government tracking and monitoring weren't clear before, they should be now.
That’s the country and government that some here fawn over…
It'll be the one we get if we're not careful.
From The Economist:
Low economic growth is a slow-burning crisis for Britain
It must arrest its economic decline
Britain’s productivity problem is long-standing and getting worse
Many culprits and few easy answers
Jeff Snider discusses the situation.
Maybe the Brits can learn a thing or 2 from us Kiwis on how to grow the economy without worrying about productivity gains:
- dish out tertiary charters to anyone wanting to run an institution, never mind even if it is a barn on a berry farm
- provide 2-3 year working rights to everyone graduating and several points towards PR
- reduce the minimum term spent in the country to gain PR down to zero
What about locking down everyone with a 'non essential' job (most of Auckland) paying them with printed money to stay at home, in fear of them catching a mild cold. Then promise the people 'freedom', if they take the 'free' experimental gene therapy.
All that non productive fiat money creation will stimulate the economy and nobody even needs to work!
Love me some quality Facebook content in the morning.
Swaps from 1-10y now basically flat. Not sure anyone is really predicting that particular scenario, but I guess the market as a whole can't decide which way this is going to go!
A high level of liquidity preference, the low level even lack of economic growth to provide opportunity causes investors to seek refuge in what they consider to be safe liquid assets. The consequential rise in sovereign bond prices reduces term interest rates, which in turn increases the discounted present value of cash flows associated with all assets and liabilities, but not much else.
This is what Milton Friedman called the interest rate fallacy, and it indeed refuses to die. We can tell what monetary conditions are in the real economy, as opposed to financial liquidity, though the two can be linked, by the general level of interest rates. When money is plentiful, interest rates will be high not low; and when money is restricted, interest rates will be low not high. The reason is as Wicksell described more than a century ago:
"[The natural rate] is never high or low in itself, but only in relation to the profit which people can make with the money in their hands, and this, of course, varies. In good times, when trade is brisk, the rate of profit is high, and, what is of great consequence, is generally expected to remain high; in periods of depression it is low, and expected to remain low.
When nominal profits are expected to be robust, holders of money must be compensated for lending it out by higher interest rates. Thus, the same holds for inflationary circumstances, where nominal profits follow the rate of consumer prices. During the Great Inflation, interest rates weren’t low at all, they were through the roof well into double digits and higher by 1980. At the opposite end in the Great Depression, interest rates were low and stayed there because, as Wicksell wrote, the rate of profit was low and was expected to be low well into the future. High quality borrowers were given as much money as they could want while the rest of the economy was deprived of funds; liquidity and safety being the only preferences in what sounds entirely familiar.
Friedman pointed out the basic, non-trivial distinction between a liquidity effect and an income effect. Low rates can be stimulative in the short run (the liquidity effect), but over the long run their persistence means something far different. A yield curve is supposed to be upward sloping given the core time value of money and investing. That arises from opportunity cost, meaning the more plentiful the opportunities the greater the time value and the steeper the curve (the income effect). Yield and/or money curves (the eurodollar curve and even the history of the OIS curve) that collapse and remain that way unambiguously demonstrate that "stimulus" deserves only the quotation marks.
The more only the government can borrow, the more only the government does borrow. And the more the government does borrow, the harder it is to get the economy growing The more difficult it is for meaningful growth, the more banks will only lend to the government. Link
Oh good. A very long and largely irrelevant quote.
Not to this trader cohort.
It's a very bad sign..... the market thinks recession is coming and the fed will have to cut again. Recession will mean companies make a lot less, money will flee to the USD and treasuries. The strong USD will mean that offshore profits will be worth less to US companies, and will lower profits more. Lower EPS means a lower S&P 500, meaning we will all feel poorer as our retirement savings fall... so we will spend less, especially us 50's who are nearing retirement - youngsters cant spend anything its all on the mortgage... tends to take a few years to run its course.
Recently the FED has simply taken rates negative , printed and blown up the bubble again to recover, you can print and blow up asset prices, but you cannot print energy or food (energy you can eat perhaps....).
If they cannot get energy prices back down they cannot fix this, you cannot make people less hungry with higher rates.... maybe a deal with Putin to stop once he has Ukraine.....
Matt Taibbi did a fascinating deep dive into stablecoin USDC and some of the findings are interesting. It's a long read and you will see some of the tradfi players such as Blackrock and Fidelity involved as strategic growth partners. Now, to many, that would sound good as these are generally orgns that people trust. But as Taibbi discovers, all is not as groovy as it may appear. Remember, USDC is perceived as one of the trusted stablecoins so what is uncovered is startling.
I noticed that Circle Internet Financial CEO Jeremy Allaire took to Twitter not long after this article and they have revamped all their disclosure statements and comms to the public.
https://taibbi.substack.com/p/the-financial-bubble-era-comes-full
The lesson of the day is that we do not have a health system crisis until the minister says we do.....
this Rhymes with
We do not have a house price crisis.
and
We do not have a cost of living crisis.
seems to me we do not really need a media just 1pm podium lectures....... here endeth the lesson
In the 1980s we had on TV “Whoops Apocalypse.” Forty years later, in the same vein, we have here the 6th Labour government.
Wouldn’t it be nice to here the truth from politicians for a change?
Just say there’s a healthcare crisis for God’s sake. It’s ok if you say it’s due to the failures of successive governments, we know it’s not just because of you ( the current government).
Acknowledging the crisis is the first key step to resolving the crisis…
Acknowledge the crisis and then announce an urgent, ambitious but realistic plan to start turning it around.
Once the whole "we're all going to die!" argument stopped working, they started using "we must protect our healthcare system!" in order to justify the harsh restrictions. The problem is that they shot their scapegoat dead in doing so, and now they can't blame COVID for the sorry state of our hospitals.
They could try to blame Putin for it somehow, I suppose.
It is not a healthcare crisis. The crisis is a western world population full of obese diabetics, with poor lifestyle choices and the belief Big Pharma can cure it with a pill. It is not a failure of the government but a failure of each individual, who literally do not know what 'health' is.
Remember when WHO told us it wasn't a pandemic too... took an unbelievable length of time for them to admit (Yess admit) it.
chinese masters.....
She's back. And they love her. God help us.
Ms Media & their layers of liars are part of the problem. Big part of the problem. Not that you'd know that by listening to them. So don't. No news is good news. They should be called noise media not news media.
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