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A review of things you need to know before you sign off on Wednesday; many retail rate changes, commercial consents rise sharply, record concrete pour, ASB reports record profits, swaps stop falling, NZD firm, & more

Business / news
A review of things you need to know before you sign off on Wednesday; many retail rate changes, commercial consents rise sharply, record concrete pour, ASB reports record profits, swaps stop falling, NZD firm, & more

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
Five banks revised carded fixed rates today, and all of the changes were reductions. That involved China Construction Bank, ICBC, the Cooperative Bank and SBS Bank. Our rate tables have all the changes updated.

TERM DEPOSIT RATE CHANGES
Five institutions revised selected carded term deposit rates today, including BNZ, Kiwibank, SBS Bank, the Cooperative Bank, and Unity Money. All these changes were increases. More here. You have to be sceptical about how long TD rates can rise when home loan rates are falling. (Also, a reader has pointed out that existing customers can often get slightly higher rates than those advertised. You should ask for them.)

LOW-INTEREST PERSONAL LOAN FOR EVs & eBIKES
Westpac has launched a new lower-interest car loan for electric vehicles, including EV cars, e-bikes, e-scooters and e-mopeds. After a $100 application fee, the interest rate is 6.99% pa (a floating rate) and is available up to $50,000 for a term of up to 5 years. If you borrowed the maximum over the full five years, your monthly repayments would be $992 and you would pay $9,420 in fees and interest. Westpac also has a discounted Warm Up loan, and a Sustainable Agribusiness loan. Westpac's normal car loan is 14% pa variable.

COMMERCIAL CONSENTS RISE
The value of new office and warehouse buildings being consented is now running at record levels with nearly $800 mln for this type of construction consented in the second quarter alone.

RECORD CONCRETE POUR
New data out today from Stats NZ shows that record amounts of ready-mixed concrete was poured for a June quarter, more than 1.2 mln m3 in the quarter and the first time ever it has exceeded that level. Auckland activity drove the result, but the levels poured in Otago/Southland are notable for their rise as well. Notable for being weak is the Wellington region. Nationally, almost 4.6 mln m3 was poured in the past year, also a new record.

FALSE & MISLEADING
Insurer Cigna has admitted to making false and misleading representations over its communication of inflation adjustments to its insurance cover. Its a self-reported error after the final report of the FMA and RBNZ life insurance conduct and culture review. It involves more than 50,000 policies and more than $13 mln in overcharges from 2013 to 2019 averaging $258 per policy it affected..

RECORD PROFITS - AGAIN
ASB's profit pushes towards NZ$1.5 bln for its June year. CEO Vittoria Shortt says 'we are here to help'. These results were part of the CBA Annual Report release, which shows CEO Matt Comyn earned AU$7 mln (page 92), and up +35% from 2021. Page 93 reveals Shortt earned AU$3.7 mln, up +27% from 2021. She is the fourth highest paid manager in the CBA group.

CHINA'S CPI UP, BUT NOT AS MUCH AS EXPECTED
China's annual inflation rate rose to 2.7% in July from 2.5% in June, but this was below market forecasts of 2.9% for July. Even so, this was the fastest rise in consumer prices there since July 2020, mainly due to a surge in food prices with cost of pork bouncing back sharply. Beef prices held, but sheep meat prices fell sharply. Milk prices are stable.

CHINA'S PPI INCREASES EASE
Meanwhile, China's producer price inflation eased to a 17-month low of 4.2% in July, an easing from 6.1in June and less than market consensus of 4.8% for July. The latest figure represented the 19th straight month of slowing producer price rises from a drop in raw material costs as construction activity slowed. 

A FINANCIAL STABILITY RISK
In China, their National Audit Office is now investigating loans by their shadow-banking Trust industry to property developers. These loans are now in jeopardy, and that risks the US$3 tln trust industry and financial stability in China. It might be a background reason the Taiwan issue has been raised, as a diverting crisis that can't be blamed on Beijing's economic management.

A BIG GRAIN HARVEST DUE
In Australia, they are preparing for a record winter grain harvest. This comes at a lucky time for them as international demand and prices are high because northern hemisphere conditions are not good for food production.

SWAP RATES STOP FALLING
Wholesale swap rates are probably higher today, reversing some of yesterday's retreat. The 90 day bank bill rate firmed a minor +1 bp to 3.24%. The Australian 10 year bond yield is now at 3.23% and up +3 bps from this time yesterday. The China 10 year bond rate is now at 2.76% and unchanged. The NZ Government 10 year bond rate is now at 3.33%, up +1 bps from this time yesterday, and matching the earlier RBNZ fix for this bond which was down -2 bps at 3.33%. The UST 10 year is now at 2.79% and up +3 bps from this time yesterday.

EQUITIES SOFT
Wall Street closed slightly lower today in lightish trade, with the S&P500 down -0.4% from yesterday. Tokyo has opened down -0.8%. Hong Kong has crashed lower at its opening, down -2.1%. Shanghai is down -0.6% in early Wednesday trade. The ASX200 is down -0.2%. And the NZX50 is also down -0.2% in late trade, not helped by a -7.5% dump of A2 Milk (ATM, #10) shares. More here. Meridian (MEL, #6) is also down -1.6%. Going the other way, notable gains are from Ryman (RYM, #12), ANZ #35, and Vector (VCT, #25), all with gains exceeding +2% on the day.

GOLD FIRM
In early Asian trade, gold is up another +US$9 from this time yesterday, now at US$1,794/oz.

NZD FIRMISH
The Kiwi dollar has firmed again slightly today to 62.9 USc from this time yesterday. Against the AUD we are firmer at just on 90.4 AUc. Against the euro we are unchanged at 61.6 euro cents. That means our TWI-5 is now up at just on 71.4.

BITCOIN FALLS
Bitcoin is now at US$22,811 and down -4.1% from this time yesterday. Volatility over the past 24 hours has been moderate at just over +/-2.7%.

Daily exchange rates

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Source: CoinDesk

Daily swap rates

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This soil moisture chart is animated here.

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

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45 Comments

First trip along the Waikato Expressway in a while at 110kph today, and the amount of concrete pour going on along that road is staggering. New houses under construction as far as the eye can see.

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And a market that seems to have forgotten about supply problems. Demand low, supply high, price is still confused. 

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"Notable for being weak is the Wellington region" - 8 degree high in the Capital today...

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Uber driver told me yesterday Wellington had one sunny day in July. Any Welly people here? Is that true?

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Eastern suburbs had average 1/week. I left Monday on a long planned 3 week trip to see family in Oz, they can't understand why I'm in shorts tshirt and bare feet. Negligible <5% mask wearing anywhere here including in airports Coolangatta & Brisbane.

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Yeah I think we are the only country in the world still worried about covid. Amazing to think we only just reopened the border and we still have to wear masks and have daily updates, when everywhere else has forgotten about Covid ages ago. Come on labour, when is the big date where we go back to normal? Or is this the new normal, for NZ only? 
I see covid is now debatably the second highest cause of death in NZ behind heart attack - but no one carries a defibrillator into the supermarket. 

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Why would they? Most supermarkets should have a defibrillator installed. There are over 1,000 in Christchurch.

https://aedlocations.co.nz/

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What if you don't want to be defibrillated?! Not always good outcomes after that...

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You need someone to show paperwork saying you don't want it. Apparently DNR tattooed on your chest isn't enough. 

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I guess you ask them to turn up the voltage and have another go at you until you're dead again.

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You must do what you're told. You must comply. 

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Train from Bradford to Manchester last week - I was the only mask wearer on crowded platforms and trains.  Zero masks in supermarkets and shops.  Will NZ be te same when there is summer warmth and sunshine?

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I was there about 6 weeks ago. I don't want to catch it  even fully vaxed plus one booster (age and some co-morbidity) so still wore the mask on the bus and in the supermarket.

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Wouldn't say that too loudly.

There are some stuck in the muds here that still think anybody without a face nappy is Hitler.

 

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I love leaving, been to Aus, and a couple of pacific islands in the last couple of months, mask wearing outside of the hermit kingdom is close to nil. Time to get on with it.

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I went down for the weekend in Welly and had two sunny days, so 100% sunny day in Welly for me.

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Whew! Crisis averted, the future is looking rosy and I'm looking forward to the RE market resuming its upwards trajectory in the very near future! Hugs for TTP, Brock come back home soon - let's have some fun and lynch 2022.

https://www.oneroof.co.nz/news/41988

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The guy has totally lost it.

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Tony Alexander seems to be too cowardly to provide a disclaimer about how much property he has a vested interest in.

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What are the chances that this article was written before National's latest FUBAR revelation or should that be revelations. While what TA is saying is logical it is relying on a few things happening over which no one has control and that is not even counting what could happen overseas. I would argue - lacking in nuance and understanding.  

Perhaps a more considered view

https://www.oneroof.co.nz/news/latest-news/when-the-good-news-is-actual…

 

EDIT - added link to another One Roof article. 

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I don’t think it is logical at all. 
I struggle to see how he can arrive at house prices rising by 5-10% in 2023, when by all accounts the OCR will rise to 3.5-4%. 
Assuming cuts to the OCR in mid 2023 (which I expect), I think prices will stop falling and might even rise ‘a little’ in late 2023. But across the whole calendar year of 2023 I expect price falls of circa 10%.

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I don’t remember any mention of supply in Tony’s article. I know interest rates have been the main driver of house prices, but that is mainly due to short supply. But no one is going to pay $1mil for a below average house in Auckland if trademe has thousands of listings and no buyers, regardless of interest rates. So many houses are being built, so few people are being built / imported. Although I think Tony is right about what could happen if national are elected, what a disgrace that would be. 

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Agree. 
But if National are elected that’s a house price story for 2024 and beyond.

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These comments relate to this stuff article featuring TA:

https://i.stuff.co.nz/business/money/300657857/firsthome-buyers-should-…

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“As a first home buyer, wouldn’t you like to take advantage of the current buyer’s market before these older people get active again and the migrants return” - wow, is that his opinion as an economist or an attempt to get young people back into the market. It really feels like the latter, absolutely shameful. 

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12

That does come across desperate, even for TA... Clearly scaremongering for his sponsors/bosses.

 

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And kind of pointless, how many FHBs are even looking at housing articles right now. If they weren’t put off by the crazy prices, they would be by the crazy prices going rapidly down 

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Good ol' TA is trying to get FOMO back up and running... if he's not reaching FHBs he's reaching their parents/family.

How many startling headlines will it take to get the sheep get panicked...

 

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Anyone concerned about FOOP should open this chart and drag out the timescale all the way to 1974 through to present.

If the downside risk potential doesn't scare you, then the exponential growth pattern (i.e. vertical element to it of recent years) should.

Anything that has traded this way in the history of any market, has always come crashing down. Should NZ housing be any different - could be...but I wouldn't bet a million dollar mortgage on it. 

 

Corelogic house price index | interest.co.nz

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Yvil adores him.

Enuff said.

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Reading the life insurance conduct and culture report I noted the very high sales commissions paid in NZ. It is about 20% of premiums compared to 10% in Australia and much lower again in a lot of European countries. 

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Another simple example of everything wrong with NZ Education 

https://i.stuff.co.nz/national/education/129523275/teacher-who-removed-…

 

 

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No disrespecting the teacher in my day or the cane would come out. (I had a woodwork teacher throw boomerang style a large metal set square the length of the classroom at me..to be fair he did make sure I was watching so I could duck.)

Those kids will go into the workforce with no respect for authority...that will work out well for them.

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are you sure you ducked?

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Go back a few generations before and you may have been thrown into the guillotine, now those were the good old days. 

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LOL our 5th form tech drawing teacher used to do that with this improvised blackboard duster (chunk of timber with carpet nailed to it).  Lucky he was a good aim.

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Enjoy the decline.

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You didn't need the word education at the end.

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In other news olde radio nu zeelando today (global- market- chaos- knocks- billions- from- kiwisaver) reports 5 Billion wiped from kiwisaver in the last 1/4....they could of had the decency to play a snippet from D:ream's song... 'Things can only get better' ....in announcing such...

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Dude it's a cycle - TA says so

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Don't worry all the fund manager's still got their fees.

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Yes Oz is still the lucky country, a record wheat harvest in this market, along with digging money out of the ground with the mining. Big trade surpluses to continue for them. US inflation number tomorrow will still be high I reckon.

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I wouldn't bet against a China Crisis (financial) striking this year.

there's Big Trouble in Little China.

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Good article on Xi’s repeated own goals. China’s future does not look rosy.

https://foreignpolicy.com/2022/08/04/xi-china-unemployment-jobs-economy…

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Banks continue to do great. Low capital costs and high interest rate. Interestingly if a large chunk of NZ did evacuate as per below link, would you want to be leveraged up the proverbial...?

https://i.stuff.co.nz/national/explained/129530294/the-story-behind-the…

Govt is going to have to make changes to incentives working and living in NZ vs just boosting debt speculation and bank profit. Continuing our status quo will increasingly see an ever larger part of our internally generated working youth in Aussie. Just when we need them most to look after the ever increasing wave of retiring boomers....

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