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
None today.
TERM DEPOSIT RATE CHANGES
BNZ increased its term deposit rates and their new 9 month 3.30% rate is notable as now the best of any main bank for this term.
HOME LOAN AFFORABILITY NO BETTER
First home buyers must navigate between the swings and roundabouts of lower house prices and higher mortgage interest rates. Nationally, it still takes 47% of take-home pay to service a mortgage for a lower quartile house purchased in June 2022 with a 10% deposit. It's much worse in Auckland which remains a hideously expensive place for first home buyers.
VULCAN STEEL ACQUIRES ULLRICH ALUMINIUM
In 1961 an aluminium importing company was founded in Auckland, Ullrich Aluminium. It quickly morphed into a farbricator. Then it expanded fast both here and in Australia where it became substantial. Now it has been sold by owner Gilbert Ullrich of Manukau City for $165 mln to Vulcan Steel, also an Auckland company, and also with a strong distribution base in Australia.
PRICE HIKES FOR CUSTOMERS, MORE PERILS, LOSS ON SHAREHOLDER FUNDS
The big Australian general insurance giant IAG (even more dominant in New Zealand) has reported group results for 2022 and the outlook for 2023, a release that never mentions New Zealand. They are riding higher gross written premiums and a AU$347 mln profit (compared to a -AU$427 mln less in 2021). They expect premium growth will be higher in 2023. They also report much higher natural peril costs requiring a strengthening of provisions, and their shareholder funds have been pushed lower by -AU$105 mln. The annual report might release some transparency on their New Zealand operations when it is released on August 12, 2022
JAPAN FINALLY GETS SOME SUSTAINED INFLATION
Japan reported June CPI inflation today with their headline rate now at 2.4%, down fractionally from 2.5% in May, and still above the Bank of Japan's target of 2%. It's been above that target for three consecutive months now. It's been seven years since they have had inflation like this and that was because of a GST hike. Excluding that, is been 32 years.
SWAP RATES FALL
Wholesale swap rates may have suffered some retreat today, maybe about -7 bps on global forces. The 90 day bank bill rate was down -2 bps to 3.14%. It was 3.10% this time last week. The Australian 10 year bond yield is now at 3.49% and down -8 bps from this time yesterday. The China 10 year bond rate is now at 2.80% and up +1 bp. The NZ Government 10 year bond rate is down -7 bps at 3.73%, and now just above the earlier RBNZ fix for this bond which was down -7 bps to 3.72%. The UST 10 year is now down at 2.90% and an -11 bps retreat from this time yesterday. A week ago it was at 2.96%.
EQUITIES FIRM
The S&P rose another +1.0% on Wall Street earlier today, building on the prior day's big gain. So far this week this index is up +3.5%, basically on healthy earnings reports and positive outlooks. Tokyo has opened +0.3% firmer and heading for a +4.0% weekly surge. Hong Kong has opened up +0.7% today and heading for a weekly rise of 1.2%. Shanghai is up +0.5 in their early Friday trade and heading for a weekly +1.7% gain. The ASX200 is flat in afternoon trade but heading for a +3.0% weekly rise, most of it on Wednesday. The NZX50 is also flat in Friday late trade heading for a weekly rise of +1.4%.
GOLD RECOVERS
In early Asian trade, gold has risen +US$24 from this time yesterday, now at US$1,717/oz.
NZD FIRM
The Kiwi dollar has held 62.4 USc from this time yesterday. Against the AUD we are soft at 90.1 AUc. Against the euro we are still at 61.2 euro cents. That means our TWI-5 is still just under 71.1 and will end the week up +40 bps.
BITCOIN HOLDS
Bitcoin is now at US$23,115 and down another -0.7% from this time yesterday, so really still holding its recent gains. Volatility over the past 24 hours has been moderate at +/-2.2%.
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36 Comments
For those interested, my new equity and crypto portfolios are each 10 weeks old (roughly).
Equities are down 2%. Top pick is Square Inc and Berkshire Hathaway - each on +8%. Worst is XOP (oil and gas ETF - down 15.5%.
Crypto is up 4%. Top pick is Ethereum - up 60% (for one purchase at least). Top return on a single token (on all buys averaged) is Avalanche - up 38%. Worst is Synapse -1.5% (but only bought yesterday).
Nice work Wolfie. I'm quite stunned by the resilience of BTC in particular. It seems like every kitchen sink available has been thrown at it. And here we are. Sitting at USD23K. Stories from the water cooler community would suggest it should be closer to zero by now.
Having a good week with Tesla and Micro Strategy, seems the Giga factories are money burners when not fully operational.
Witnessed one of the anti-crypto cult (who are becoming increasingly deranged) spit tacks about Michael Saylor calling him a loser, luddite, and failed businessperson.
What is behind this behavior?
Saylor may ultimately be wrong about BTC, but that doesn't make him the devil.
On the technical side of the anti-crypto cult, you have some strange people like Stephen Diehl. Watched a few interviews with him and while his narrative is good, he doesn't go far enough to convince me that his view is correct. I'd imagine he'd be crushed by Saylor in a debate.
Stephen Diehl got burnt trying to get his own crypto start up and failed. I'm told he is now extremely bitter about the experience and blames crypto
I was aware that he was building an institutional payment solution on blockchain as opposed to a crptocurrency. But you're correct in that it didn't cut the mustard.
So yes, I think you're looking at a mix of bitterness, resentment, and quite possibly envy.
I'm a bit of a nerd as well and have nerd mates. But Stephen has that uncomfortable-in-his-own-skin nerd factor. Not particularly articulate. Potential axe murderer.
Totally with the Tesla news yesterday. I'm surprised by how well the non-BTC cryptos are doing. ETH is nearly up 100% on its low
Gamestops new NFT marketplace will be helping a bit with that possibly? They've had a pretty good uptake for it's beta launch.
Ah, another ape. What I can't understand is why are the media so quiet about the DRS (direct share registration) going on? The apes can see how highly the stock is shorted and how many synthetic shares there are, so they are registering their shares with Gamestop's transfer agent. They have registered around 50% of the free float (the next update will be on the company's earning report. The 50% of course, doesn't include shares tied up with brokers who won't DRS, those in retirement accounts and 401K accounts. As the supply of shares is drying up, the borrow rate has risen. I love it.
Yep I see mine have split in CS. I’m just sitting back watching it all happen now.
I'm quite stunned by the resilience of BTC in particular.
I'm quite stunned by this comment.
Equities are down their Covid levels almost? I think within 12%. Gold is nearly down there too.
BTC was $4000 at the Covid crash level, still $23,000. So a wild difference. ETH much more so
Why's that?
You don't think it's remarkable that BTC has had five 80%+ drawdowns and come back to higher highs each time?
Regardless sof what you think of BTC, it is remarkable that it has been 14 years and multiple massive drawdowns, and yet it continues to plug along, and has never come close to collapsing (yet).
If your definition of resilient is "it hasn't collapsed yet", then sure, BTC is just as resilient as anything else that happens to still be around. Multiple 80%+ crashes certainly is remarkable though, I'll give you that.
Stunned mullet Cheebo?
Nothing goes to hell in a straight line, as they say
Were those water cooler stories talking about how the intrinsic value of BTC is 0? If so, they were right.
The fact Mr Market doesn't see it, doesn't make it not so.
I'm with you on Ethereum, bought the dip and love this new movement higher.
🚀🚀🚀
Some fascinating insights from Aussie about mortgagees:
-- Westpac research shows 29% are 1 year ahead on payments. That's impressive. But a massive 50% are less than 1 month ahead. Paycheck to paycheck in action.
-- CBA research shows that if the OCR goes to 2.5%, household debt servicing costs will go to 2008 levels when the cash rate was 7.5%.
Don't say you weren't warned.
Yep. And quicker flow through and pain for the Ockers given most of them are on floating.
There will be some good employment options for kiwis in Aus, but just be careful, especially if you are thinking of moving over for a job in anyway connected with property and residential construction…
But that year ahead presumably means in principal repayments. How is it accounted for as the first year of a 30 year table mortgage is only measure in thousands while the final years are tens of thousands?
The excellent Chris Joye on the useless RBA (read RBNZ for us):
https://www.macrobusiness.com.au/2022/07/joye-the-geat-aussie-housing-c…
When Chris goes all DGM, you know it's time to pay attention. One of the sharpest pencils in the case.
Yep.
The Aussie commentariat isn’t much better than here, but their larger population naturally throws out a few more quality commentators than the paucity we have here in NZ.
Chris Joye is like a brother in arms
I don't like to say I told you so (well OK I do :) ) but mandatory masks are on their way back...
I'm not suggesting masks are particularly great at stopping the virus (although even a small reduction in transmission can help), but I still think they'll be making a comeback as life gets disrupted by people isolating and being sick.
If, as reports suggest, you can get reinfected after 4 to 6 weeks (with one report last week saying that the after effects seem to be cumulative) then something will have to give
Awful for children like mine, with a sensory processing disorder 🙁.
And it seems so heavy-handed, considering the fact that most kids in their classes have already recovered from covid.
One for PDK...
Saudis are alos buying cheap Russian oil...
Yep won't that be a classic the Saudis buying Russian oil and on selling it to the USA at a profit. The world's gone mad.
Could be worse. Could have bought the tanks out like china has done recently in henan province. Banks taken everyone’s savings and calling it “investments” now. I feel lucky to be in NZ as much as I complain about inflation
You could see why there is demand for the ol' rat poison
The BNZ rate maybe listed as 3.3%, but if you try setting it up online, the rate is 3.5%. So that is a good surprise.
The tide has turned, ex Pres D Trump is now in a corner. Walls closing on his ardent supporters, Steve Bannon will be jailed if the jury delivers a guilty verdict. Senator Josh running away from Capitol rioters, featured in YT, laughter. A motion was filed to disqualify Fulton county DA from leading the grand jury investigation. A defendent vs prosecutor event. The Secret Service is now under the spotlight for deleting texts during Jan 5 and 6.
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