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
The Police Credit Union raise two fixed rates today.
TERM DEPOSIT RATE CHANGES
The Police Credit Union raised its 90-day Notice Saver rate to 3.75%
TRACKING SIDEWAYS AT A HIGH LEVEL
The August level of new building consents suggest residential construction will remain strong, commercial construction will be even stronger. The number of new dwellings being consented is flattening with the first decline in townhouse consents in three years. But there's still strong growth in residential alteration work and the commercial building work pipeline.
LITTLE-CHANGE
ANZ reports that their September survey (with Roy Morgan) shows consumer confidence was unchanged in September at 85.4. The proportion of people who believe it is a good time to buy a major household item, the best indicator for retail spending, fell -8 points to ‑25, where it was two months ago. Inflation expectations were little changed at 5.1%, versus 5.0% last month.
BINANCE LAUNCHES IN NZ
Binance, the world's largest cryptocurrency exchange, has registered with New Zealand's Ministry of Business, Innovation and Employment on the Financial Service Providers' Register under the name Investbybit Ltd. Binance says this allows it to offer a range of financial services in NZ including spot trading, staking and NFTs. Binance NZ will be led by general manager Ben Rose, who has a sales and marketing background. Rose says Binance will offer access to the lowest trading fees, plus many exciting global product and service innovations. Registered in the Cayman Islands, Binance has been the subject of interest from regulators in several countries over the past couple of years. Just this month Reuters reported that US federal prosecutors asked Binance for extensive internal records about its anti-money laundering checks, along with communications involving its CEO and founder, Changpeng Zhao, in late 2020 as part of an ongoing Justice Department investigation into the firm's compliance with US financial crime laws.
FEWER COMPLAINTS OVERALL, BUT MORE SCAMS
The Banking Ombudsman reports that they handles nearly -2% fewer claims in the year to June 2022 and investigated -15% fewer due to a new triaging process. But they also reported that complaints involving scams are rising quickly, up +63%.
BETTER DIVERSIFICATION
Fonterra reported that its milk volumes are running almost -4% lower than the same period last year. This is not unlike more other dairy exporters, except in the US where production is rising. They also reported that August imports of dairy products were down a startling -25% in August to be -15% lower for the full year. But they are selling much more into Latin America, non-China Asia, the Middle East and Africa. These are more than making up for the China shortfall.
EQC COVER UPDATE
From October 1, 2022 insured homeowners will be covered for $300,000 of EQCover if their home is damaged by a natural hazard. This doubles the current EQCover building cap of $150,000 and takes effect when homeowners renew their policies or take out new ones. At the same time there is a reduction in the rate of levies from 20c to 16c per $100 of EQCover.
FOR UNDERPAID CLAIMS AVERAGING $1078 EACH, AIA GETS FINED $1828 EACH
The Auckland High Court has ordered life insurer AIA to pay a pecuniary penalty of $700,000 for making false and/or misleading representations to some customers. AIA admitted to the conduct last year in court. The FMA and AIA agreed a penalty of $700,000 reflected the seriousness of the breaches. In his judgment, Justice Michael Robinson was satisfied a penalty of this amount was appropriate, taking into account AIA’s admissions, self-reporting, cooperation during the FMA’s investigation, thorough remediation in compensating customers, and system errors being unintentional. The FMA said it wanted to denounce the misconduct, and hold AIA accountable for the breaches and any harm caused to the 383 affected customers, who were overcharged (or had claims underpaid by) more than $413,000. The FMA also wanted to deter financial institutions from having deficient processes or systems.
HOUSEHOLDS LIKE TERM DEPOSITS AGAIN
Household deposits rose +$642 mln in August from July to be +$16.8 bln higher than a year ago. This is the sort of increase we have seen for many months now and households have $224 bln in bank accounts. But term deposit balances rose almost +$2.6 bln, the same pace as the prior two months and taking TD balances up to $96.4 bln and the highest since September 2020. Most of this investment is a shift from savings accounts (-$1.2 bln) but current accounts shrank -$0.7 bln too.
WHIMPER
Housing debt rose +6.1% in the year to August according the latest RBNZ data. But the July to August rise was only +$951 mln, the second lowest since July 2017 (pandemic excepted). This confirms the weak end to the winter real estate selling period.
SWAP RATES BACK UP
Wholesale swap rates are probably back to where they were tow days ago, perhaps recovering +10 bps. But the key action comes near the close. Our chart will record the final positions. The 90 day bank bill rate is up +3 bps at 3.85% settling in as we are now only two business days away from the RBNZ OCR review. The Australian 10 year bond yield is now at 3.97% and up +7 bps since yesterday. The China 10 year bond rate is up +1 bp from yesterday at 2.76%. The NZ Government 10 year bond rate is now at 4.31%, and up +99 bps and now well above the earlier RBNZ fix for this bond at 4.24% which was up +6 bps from yesterday. The UST 10 year is now at 3.79% and up +3 bps from this time yesterday.
EQUITIES ALL LOWER
Wall Street ended its Thursday trade down -2.1% on the S&P500 and a late steadying of the losses. Tokyo is down -1.4% in early trade today and heading for a -2.7% weekly loss. Hong Kong is down -0.5% at today's open and heading for a weekly loss of -4%. Shanghai is also down -0.5% at its open and heading for a -1.3% fall. The ASX200 is also down -0.6% in early afternoon trade today on the way to a -0.9% weekly fall. And the NZX50 is down -1.8% near the end of trade and about to book the worst weekly result of -4.5%
GOLD FIRM
In early Asian trade, gold is at US$1662/oz and a rise of +US$6 from this time yesterday.
NZD IN MINOR FIRMING
The Kiwi dollar has firmed slightly since this time yesterday to be just over 57.2 USc. Against the AUD we are up +20 bps at 88 AUc. Against the euro we are now at 58.3 euro cents and down more than -½c. That all means our TWI-5 is at 67.4 and down -20 bps from this time yesterday.
BITCOIN HOLDS
Bitcoin has risen today and is now at US$19,501 marginally lower than this time yesterday. Volatility over the past 24 hours has been moderate at just on +/- 2.2%.
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44 Comments
Stubborn owners delaying the inevitable hit hoping some other "investor" will climb back in.
Many people don't really understand BTC. Very little of it is actually on exchanges in proportion to total supply. Does that mean the price can't go to the mythical zero? Well it can get closer to zero. But the supply is not sitting on exchanges.
You mean like shares, property, bonds, and most other types of investments?
Yes. But I think there is a lack of understanding surrounding BTC. The majority of it is not for sale on exchanges. Futhermore, compared to other asset classes, there is no huge derivatives mkt bigger than the asset class itself.
Yes. But I think there is a lack of understanding surrounding BTC. The majority of it is not for sale on exchanges.
Do you understand that the majority of units in other "investments" (Property/Shares/Bonds) are also not currently listed for sale?
If you do, why do you keep mentioning it as if it's unique to Bitcoin?
Do you understand that the majority of units in other "investments" (Property/Shares/Bonds) are also not currently listed for sale?
Yes. I get your point. But investments bundled as "funds" have underlying assets that do not really belong to you. For ex, a REIT or even a GOLD ETF (real goldbugs own physical gold). Or even units in Smartshares. You do not have ownership of the shares of the companies in say Smartshares NZ Dividend. Even the Grayscale BTC fund. You do not own the BTC.
Disclaimer: I own NZ DIV and PMGOLD but understand the limitations of ownership.
You keep saying over and over how people don't understand bitcoin (or crypto in general), as if there's some sort of secret sauce or detail that'll make it stack up, yet never really elaborating.
Most good technology is fairly self evident.
Howd you like to order and pay for a cab on an app, instead of having to hail one on the side of the road?
How'd you like to have a place you go online where you can order pretty much anything and it turns up in a few days?
Howd you like to have a small computer in your pocket that can connect you to the rest of the world, play music, message people, etc?
I'm still waiting for the penny to drop with crypto, but it's all fairly underwhelming. The average user doesn't care about how amazing the blockchain is, just as they couldn't care how electricity moves around in their mobile phone, or how Amazon's distribution centre and website backend works. They only really care if it's a noticeably better alternative version of something that already exists.
There's some scope there for some sort of digital value exchange as a service, but I still can't grasp why that needs to also come as a specific "currency".
You keep saying over and over how people don't understand bitcoin (or crypto in general), as if there's some sort of secret sauce or detail that'll make it stack up, yet never really elaborating.
Yes I do believe that. If you've put in say 100 hours of studying and reading, then it is likely you have a better understanding of what BTC is; how it works; and how it is exchanged. Many people also own funds comprised of equities. They also don't understand how those funds are managed. Many even don't know in detail what's in those funds.
I have a fairly decent understanding of what it is, I just don't understand what the real world business case for it is, as an alternative for the masses to using fiat currency.
What is the hook that'll bring common adoption? I feel like it'd need to be a cheaper, more convenient alternative to traditional money, but that doesn't appear to exist yet.
Can't see why that'd need 100hrs of study to determine.
I have a fairly decent understanding of what it is, I just don't understand what the real world business case for it is, as an alternative for the masses to using fiat currency.
Yes, but this is beside the point. The reality is that the majority of BTC is not on the exchange and adoption is increasing over time. Perhaps start with the white paper as a springboard. It outlines why BTC has come into existence.
The majority of fiat currency is not currently listed for sale on the fx markets either.
Yes. This is true. You can buy pretty much an "unlimited" supply of forex through an intermediary like a bank. The whole banking system is like a distributed ledger, similar to BTC.
For the first time since the start of 2021, 5y breakeven dropped below 10y. TIPS inversion uninverted. A good sign for the end of "inflation", but a bad sign in every other way because of why. #recession #deflation Link
With another big Tbill auction, you can just feel it coming. SOFR at 2.98%, too. There's a third wave of deflation building all across the global marketplace. TIPS breaks lows since before the supply shock. And stocks. Diverging from rates today. Link
The BoE seemingly believe that by raising interest rates, inflation will be controlled. Of course, this is not true. Raising interest rates does not slow the economy just as lowering rates does not stimulate economic growth! See @ProfessorWerner
paper: https://sciencedirect.com/science/article/pii/S0921800916307510
Is it just me, or have central banks forgotten their main job of price stability over the last 10 years? Its almost like they took it for granted that there would never be inflation ever again. Seems a bit crazy to forget your main purpose (especially in hindsight).
The NZ government raised ~$74.47 billion in deposits via sovereign debt issuance over calendar years 20, 21 and 22. $50.035 billion was created in 2020 and probably spent into the banking system by way of transfer payments to authorised beneficiaries.
Gloriavale received nearly $5m of govt money in 2021, court hears
Rates follow nominal growth, which was boosted dramatically & artificially by massive money creation for consumption in 2020, on purpose, by policy makers, causing the present massive inflation. Rates follow, they aren't leading indicator. For latter, need to see credit creation. Link
For the year ending Mar 22 NZ nominal annual GDPE growth was recorded at 8.1778%. Jun 22 recorded at 5.0643%.
They were trying to pump inflation for the past decade hence the borrow and spend idiocy. Investors piled into more property and FHB's loaded up on max debt weren't going to be spending a whole lot more in the real economy. And along came covid and the dopey policy responses.
Financial stability is their main mandate and they forgot that one 20 years ago. When institutions become too big to fail they've failed on that mandate. What do you regulate though - debt creation or peoples greed for unearned wealth?
I agree. Problem is interest rates are the ambulance at the bottom of the cliff. There needs to be a better fence around credit creation. Fractional reserve banking is the killer and there's a reason ursary was illegal in the past. We think compounding interest is a wonderful phenomenon but are blind to compounding inflation. "Making money" is the problem.
How the f#%* does this happen???
https://i.stuff.co.nz/the-press/news/130033254/disgraced-chief-executiv…
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