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
ASB said today that its Better Homes Top Up, offering a low 1% fixed interest rate for three years, can now be used to buy an electric car. The original program was for a mortgage-secured loan to $80,000 for "eligible improvements such as heating and insulation, solar panels or double-glazing". The EV extension is the new bit.
TERM DEPOSIT RATE CHANGES
Kookmin Bank and Liberty Financial both raised term deposit offer rates today.
JOB AD LEVELS STAY HIGH
The latest job ads data from BNZ/Seek suggests ad numbers may have peaked, even though they are still at very high levels from an historic perspective. The number of applications per ad are still normal, but they are rising. Most changes are in the regions; main city activity is little-changed.
BANK COST OF MONEY APPROACHING 6%
ASB is looking for another $100 mln "plus unlimited oversubscriptions at the Bank's discretion" in a four year unsecured unsubordinated bond funding. This will be a rinse-and-repeat for similar bonds that mature in 2023, 2024, 2026 and 2027. "The indicative margin is 0.85 – 0.90% per annum", so if the four year swap rate is its current 4.92%, then they will be paying about 5.77% pa. ASB offers retail investors 4.60% at present. (Retail investors rarely choose commitments longer than 1 year, whereas institutional investors are happy to.)
INTENSIFYING
Cost increases from grocery suppliers to supermarkets have continued to accelerate in October, as the largest number of items in five years increased in cost. The Infometrics-Foodstuffs New Zealand Grocery Supplier Cost Index (GSCI) shows rises at a 10% annualised rate in October 2022, intensifying the pressure in retail supermarket prices. As valuable as this survey is (and it has been prepared properly), it is promoted by Foodstuffs to deflect direct criticism from them toward their suppliers, many of which are New Zealand employers.
NO NEED TO WORRY
Westpac released its annual results for the year to September 2022. For the first time its annual profit in New Zealand has topped NZ$1 bln, but this was helped by a gain from sale of Westpac Life, and write-backs on earlier loan impairments. Westpac's New Zealand operations delivered 22% of their Group results. Of note for recent home loan borrowers, the NZ CEO said these customers "shouldn't be worried" even as some house valuations fall.
COST OF DOING BUSINESS
In what will be a continuing string of announcements from authorities in Australia, the Victorian Government has fined Crown casino AU$120 mln for ignoring its earlier promises to reform. Big announcements are expected this week from Austrac on casino money laundering. These sorts of penalties give the appearance of "the cost of doing business" by casinos. No authority seems prepared to suspend any licenses for any breach.
THE CANADIANS REVERT TO TYPE
New Zealand is pushing ahead with its CPTPP trade dispute with Canada, pressing the Canuks to open their dairy markets in line with the treaty commitments they gave when they signed up to the TPP. Canada has a deep history of protecting its domestic dairy industry, especially against the US with who they have been intransigent for a long time. The Canadian's gave the US slightly a better deal on dairy in the USMCA than the CPTPP, but it was minor, and they also are making the US fight for that access.
CHINA'S RESTRICTIONS BITE
Apple has warned it will ship fewer premium iPhones and customers will face longer waits for products after strict COVID-19 curbs disrupted production at a key factory in Zhengzhou, China, which is operating at "significantly" lower capacity as pandemic-related restrictions affected assembly of the premium iPhone 14 Pro and Pro Max. Key supplier Foxconn has had to run the facility under tighter restrictions, including daily testing and limitations on staff movements.
SWAP RATES UNCHANGED
Wholesale swap rates may be little-changed today. Our chart will record the final positions. The 90 day bank bill rate is unchanged at 4.17% for a fourth day. The Australian 10 year bond yield is now at 3.90% and unchanged. The China 10 year bond rate is down -1 bps at 2.71%. The NZ Government 10 year bond rate is now at 4.59%, and also down just -1 bp from this morning but well above the RBNZ fix for the NZGB 10 year which was down -7 bps at 4.51%. The UST 10 year is now at 4.15% and little-changed.
EQUITIES FIRM
The NZX50 is up +0.4% in late trade today to kick-start the week. The ASX200 is up +0.5% in early afternoon trade. Tokyo has opened up +1.2%. Hong Kong has opened up +2.0% and Shanghai is flat, the weakest of the markets we watch. The S&P500 futures suggests Wall Street will open tomorrow very little changed from its Friday close.
GOLD SOFT
In early Asian trade, gold is at US$1674/oz and down -US$9 from where we opened earlier today.
NZD SOFT
The Kiwi dollar is a little softer at 58.9 USc and down -40 bps from where we opened this morning. Against the AUD we are factionally softer at 91.6 AUc. Against the euro we also marginally softer at 59.3 euro cents. That all means our TWI-5 is now at 68.4 and down -30 bps so far today.
BITCOIN SLIPS
Bitcoin is higher today that Friday but lower than this morning's open, now at US$20,933. From this morning it is down -1.5%. Volatility over the past 24 hours has been modest at just under +/- 1.2%.
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50 Comments
Stuff have an article today on "What to do if you listened to the Vested Interest Brigade and committed financial stupidcide".
https://www.stuff.co.nz/business/money/130399971/five-things-you-can-do…
They missed out:
- Cut back on the avocado on toast
- Declare bankruptcy and make it the banks problem
Covid restrictions have been very good for a number of people. Myself included.
Built up savings rates, reduced interest expense and elevated asset values.
One anecdotal example is that we were able to access a 1.9% interest rate for a brand new car. We traded our family car for the same price purchased.
With warranty and guaranteed servicing we were able to achieve this with only ~150/month total cost of ownership. I never thought I’d buy a brand new car based on turn of the century fundamentals.
During this time our income has markedly increased. Life is peachy.
We purchased our first home in 2011 and have subsequently ridden the gains. Many people will be in better positions than us based purely on timing. To Bernard’s point most people will be fine.
If she is smart she will have extracted a lot of cash out of them and make sure the trail is well fire walled so there are no overdrawn directors current accounts etc etc etc. However her non payment of GST implies a little bit of oh shit how did that happen. The rule of law applies no matter how distasteful the result. (current ads are a sign of desperation tho... as are the step it down staircase ones.....).
The tear full ending is now only 2-3 quarters away.
Every asset class has its accumulation stage, I think residential NZ property is perhaps 3-5 years away from being a great buy. However if DTI is introduced then you are better with traditional business investments. Cant hurt to hold a few % in gold here IMHO
The big question is whether Bitcoin investors actually want a stable alternative to fiat or if they really just want wild speculative gains. My gut feeling is that if it stays stable for a while eventually everyone will bail and that will be the end. But who knows really.
Exactly my thoughts and posted that weeks ago. Bitcoin only exists for speculative gains, the longer it stays at $20K the higher the chances it will fail. Its only being kept going by new suckers entering the market so once that stops what have you got left.
OK. So you need to watch acquistion of BTC and proportion of long-term holdings to understand what's going on. If more buyers are entering the market and these is less BTC for sale, there is potential for fiat prices of BTC to rise. On the contrary, if the exhcnages start being flooded with BTC and buyers backing off, then the fiat price will fall.
What are you seeing?
there is potential for fiat prices of BTC to rise
"Potential" being the operative word. If what you are saying is true, that the buyer count for BTC is always increasing, but the value is staying the same or dropping, those buyers are only funded or motivated to buy ever decreasing amounts of Bitcoin.
If I were going to gamble, we won't see Bitcoin jump unless the money printing resumes and low interest rates return. Bitcoins rise is off the back of people having too much money and having nothing better to spend it on.
I'd have thought things like art and classic cars would hold more value, even in down times.
Apple has warned it will ship fewer premium iPhones and customers will face longer waits for products after strict COVID-19 curbs disrupted production
I'd actually heard their sales were lower than expected on the high end so that's why they'd curtailed production.
The slaves aren't happy with their working conditions...
https://www.theguardian.com/technology/2022/nov/07/apple-warns-iphone-s…
"Its main Zhengzhou plant in central China, which employs about 200,000 people, has been rocked by discontent over stringent measures to curb the spread of Covid-19, with many workers fleeing the site."
https://www.bloomberg.com/news/articles/2022-10-31/aapl-iphone-worker-a…
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