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
Nothing changed today.
TERM DEPOSIT RATE CHANGES
The Cooperative Bank raised their TD rates for terms 1 year and longer. None are market-leading.
INFLATION HITS BUSINESSES MUCH HARDER THAN CONSUMERS
Producer prices rose a sharp +8.8% in the year to September, but that was down from a +9.7% rise in the year to June and 9.8% in March. So perhaps the peak has passed? However, capital goods prices rise more than +12% again, but that was due largely to construction costs. On the farm, things are very tough with input costs (other than livestock) rising more than +16% in the year to September, up from +14% in the year to June, and less than +5% in the year to September 2021. Farmers are the main sector being hit the hardest. Dairy farmers face operating cost rises over +17%. Consumer prices are 'only' up 7.2% over the same period.
SKEWING OLDER
Our population rose by a minor +12,500 in the year to September to 5,127,400. That seems to indicate that the pandemic low occurred as at March 2022 of just +500. The median age of our population is now over 38 years, the highest on record. (Twenty years ago it was under 32 year.) Twenty years ago, 66% of our population was of working age, and 11% were 65 or older. Today those proportions are 65% and 16½%. The big change is that the population under 15 is shrinking. There are now 845,000 over-65s, and 203,000 are over 80 years, about the total population of Auckland's Waitakere (204,000), or Wellington City (216,000). There are only four urban areas larger (Christchurch, and the other three Auckland quadrants.)
DEMOGRAPHIC RELIEF COMING?
The ageing pressure may about to ease however. Overseas worker numbers and international student arrivals are rising strongly again. The number of overseas workers coming to NZ could be back up to pre-pandemic levels by the beginning of next year.
2022 FUND MANAGER GONGS
Passive fund manager Smartshares has taken out the annual Research IP overall Fund Manager of the Year Award held overnight. Separate winners were announced in fifteen categories. In addition there were four Advisor Choice awards, and one Investor Choice award (to Generate Investment Management). A full list of finalists and category winners, is here.
RUSSELL JONES TAKES ON WESTPAC CIO ROLE
Westpac NZ has appointed Russell Jones, the former long-term ASB executive who also spent three years at BNZ, as its Chief Information Officer. Jones has been acting in the role since May having succeeded Andrew Henderson. His appointment is subject to Reserve Bank non-objection.
SOLID AUSSIE JOBS DATA
Australia added +32,000 jobs in October and their jobless rate dipped to 3.4% from 3.5% in September. Better yet, there were +47,000 new full time jobs, and a fall of -15,000 part-time jobs here. These better-than-expected and solid labour market results will likely mean the RBA will add another +25 bps to their official rate in early December, taking it to 3.10%. Markets have priced in slightly less than that prior to this jobs data release.
UNINSURABLE
And we should note that in the middle of the inland floods in Australia's eastern state, insurers have had enough, advising residents who live on floodplains (most of the good agricultural region) that their insurance won't be renewed.
LOG IN STILL AN ISSUE
We still have a known issue for readers logging in via Press Patron, which affects ad-free access. We are working on a fix, although don't have a resolution yet. Apologies
SWAP RATES LOWER AGAIN
Wholesale swap rates may be slightly softer today, but the real action comes near the close. Our chart will record the final positions. The 90 day bank bill rate is up +1 bp at 4.16%. The Australian 10 year bond yield is now at 3.65% and down -5 bps. The China 10 year bond rate has risen to 2.85% and back up +2 bps. The NZ Government 10 year bond rate is now at 4.18%, and down another -5 bps and now above the RBNZ fix for the NZGB 10 year which down another sharp -6 bps at 4.13%. The UST 10 year is now at 3.73% and down another -5 bps from this time yesterday.
EQUITIES ONLY RISE IN NZ
The S&P500 ended its Wednesday trade down -0.8% and slipping back to Monday's level. Tokyo has opened down -0.2%. But Hong Kong has opened sharply lower, down -2.7%. Shanghai has opened down another -0.8%. The ASX200 little-changed in early afternoon trade. The NZX50 is up a modest +0.3% late in the Thursday session, and led by an Investore (IPL, #37) recovery, and F&P Healthcare (FPH, #1).
GOLD STAYS FIRM
In early Asian trade, gold is at US$1768/oz and down -US$7 from this time yesterday. It's been hovering at this level for basically two years now.
NZD HOLDS
The Kiwi dollar is marginally lower than this time yesterday at 61.3 USc. Against the AUD we are little-changed at 91.2 AUc. Against the euro we off slightly at 59.2 euro cents. That all means our TWI-5 is now at 70.2 and very little-changed from this time yesterday.
BITCOIN DIPS
Bitcoin is now at US$16,650 and down -1% from this time yesterday. Volatility over the past 24 hours has been modest also at just over +/- 1.8%.
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96 Comments
There are now 845,000 over-65s
Thats a lot of super every week
Qualifying as
Weekly rate
Single (living alone) $463
Single (sharing) $427
Married, civil union or de facto couple one partner qualifies (and the other is not included) $356
Married, civil union or de facto couple: both partners qualify $712
Married, civil union or de facto couple: one partner qualifies and the other is included $677
Yes like their libertarian principles that when applied to eductions means: No school zones! Freedom of choice! Good schools will grow! Bad schools will fail!
But then to into the specifics of their policy, there's a big carve out for Epsom, no changes to school zones! no freedom of choice! Only existing Epsom property owners shall for eternitiy have the right to send their kids to Grammer and Eggs.
Act even have the policy that when a land title is subdivided in Epsom, the newly created section would not be part of the grammer and eggs school zone.
Change it to a ubi instead. Problem solved. Otherwise don't worry, it all gets recycled back into the economy. Not banking on receiving it by the time I qualify so taking measures to provide for myself but don't penalize me for doing so and hand it over to those who havnt.
One of the many reasons I vote ACT, is that they would index the retirement/super age to median life expectancy.
The average life expectancy in the 70s when compulsory super was abolished was 72. Today it's 82.
Back then the retirement age was 60. So the retirement age should be lifted to 70 immediately in line with the increase of life expectancy.
It's better now than never. Can always grandfather those who are already drawing a pension, and set the cut off date at end of Q4 Fiscal.
Sure, there's going to be some people who have to wait until they're 70, but that's life isn't it? No different than young people having to wait another 10 years to buy their first home. The "tough as nails" "bootstraps" generation will manage just fine if they have to wait another 5 years before going on the old person's benefit.
The costliness of NZ Superannuation is that it goes to those who have no need of it.
It ought to be a tax-free benefit universally available at 65: but those who apply for it should be taxed at a high rate on all other income, a rate high enough to deter those who don't need it from claiming it. Susan St John and Clair Dale have the right idea, but governments are too timid to offend their rich, ageing electors.
https://cdn.auckland.ac.nz/assets/business/about/our-research/research-…
It depends on who those well paid people are. I know plenty of well paid sales reps driving around in full personal use company cars that have hit 65, so get the pay rise courtesy of the tax payer and no motivation to put in 100% at work. Meanwhile anyone working in internal sales that may want to move into external sales will just have to wait until their successors drop dead before they can "move up the ladder".
I am retired living with my working de facto partner for the last 18 years. We will be getting married rather belatedly next month. So for the last five years if I had declared myself as single (sharing) I would have received $71 more per week. Is this fair? Do readers suggest I divorce the day after my marriage?
I think it's about time we made kiwisaver compulsary for everyone in NZ turning 18 from the 1/1/23. Perhaps a 7% contrib and try to get employer contribs up to 3%. in fact a great new tool would be a variable contrib rate instead of blunt tool OCR, we could take heat out of retail spending but you would get it back at 65 plus interest
Agree that Kiwisaver needs to be made compulsory. I'd even prefer to see a "two speed" system e.g. compulsory 3%, with the variable inflation control able to take that up to say 5% (plus employer 3%) and then an option to be able to contribute more if you like out of pre-tax income up to a certain point ... e.g. across the compulsory and optional contributions you can take up to 10% of your pre-tax income into Kiwisaver.
Yes I understand that will benefit those on better incomes more (because those on pressured incomes won't likely contribute extra because they can't afford it) but what's more immoral - that, or having wealthy people who could have saved their own way through retirement getting super anyway?
OCR should still be used, but save $800k, a lot of hot air and a whole load of hassled trees and have some guy off Upwork program an Excel macro that just looks at the inflation rate and adjusts the OCR accordingly, factoring in the effect of the Kiwisaver rate.
At the end of the day we need to get real that having so many people dependent on the state - and a shrinking pool of net tax payers - is not sustainable.
And that isn't a dig at 'dole bludgers'; it's a dig at dole bludgers AND retirees who could save for their own living costs AND public servants doing nebulous, overpaid management work etc.
We either get real and ahead of this, or we wind up like Greece and have a whole lot of pain when the system inevitably breaks.
"insurers have had enough, advising residents .... that their insurance won't be renewed."
Whatever the re-sale price of those properties was deemed to be a year ago, it's probable close to $0 now.
Not many lenders will dole out a loan to an uninsured property, so only cash-buyers will be left.
“residents that live on flood plains” yet here we have this government enforcing the development near to Napier, of a 700 odd house suburb on a known flood plain despite the warnings from both regional & local councils and the fact that two years ago it was up to 2 metres deep in water, for a long period of time. Minister Parker reassures that he doesn’t think that it will happen again. Go figure. Prospective buyers beware, insure before you buy!
Will be interesting to see how many are still standing this time next year. There will be a fair few still standing but at much reduced capacity, some decent sized developers have already been shedding staff big time.
The residential construction sector is a ticking time bomb, which hardly anyone has been talking about or writing about. That is quite astonishing.
Costs up 15% bare minimum, I reckon more like 20-25% over past 18 months. And the other things you mention plus demand falling off the cliff as mortgage rates have surged higher.
Anyone with investments or careers highly exposed to residential construction should get out quickly. Well you should have got out a year ago, but better late than never.
Depends what you call a ‘good player’? When bad shit colludes, it’s hard for any one to come out the other side strongly.
There’s one or two very reputable developers currently in a bit of strife.
Frankly, I don’t think I am scare mongering or being paranoid at all. Although there are lots of differences, it feels in some ways eerily like 2006-2007.
But people can feel free to ignore my advice if they wish.
What is 'reputable'? Notorious?
In every industry you have a range of players. Some are poorly organised, barely profitable, with terrible cashflow. But they manage to scrape by from one job to the next. They're usually first to go and can be of significant size.
The guys with modest but sound fundamentals or the right partnerships and connections are usually fairly resilient.
I guess until something significant happens it's not really news.
Interestingly, I've noticed a lot of articles from all around the world citing how crappy build quality has become since covid for new housing - inexperienced labour and inferior product substitutions.
Conundrum isn’t it. NZ has labour shortages simultaneous to a fairly generous proportion of the population that are not working. Perhaps simplistically, this government decided these two dynamics could be married off. If so the premise was at best optimistic but unfortunately, naive in reality.
I find the opposite.
Actually I'd really struggle to take someone on under 50, as a general rule. And I'm not even that old.
Oldies are usually more reliable, and if they're experienced they'll pump out 2-3x more work in the same time than a 25 year old.
Maybe it depends on the job. Probably not call centre.
Good for her. I'm sure she'd still be entitled even if we were to means test the pension, given she's scraping along on $70k.
Who knows, she might even receive $20k after tax per year if the savings from means testing are redistributed among those who need it more? But that would take a huge upheaval of the collective entitlement mentality of our Old Person Benefit recipients.
I'm just a net tax contributor that would like to see our taxes spent more wisely. We are talking about an area of gross frivolous spend that is not allocated to people based on need, but based on the arrogance of previous generations entitlement mentality.
It has nothing to do with what I can get out of it, my family is more than comfortable, but the country just cant afford to firehose money at people over 65 regardless of need when core services are falling apart and those who truly need it can't afford to heat their homes in winter.
Curve inversions have gone nuclear. It's one after another (after another), getting bigger and bigger (and bigger). These are serious and deepening warnings that you have to understand because officials and the media don't.
Unprecedented inversion in the German market got more unprecedented. Eurodollar futures are just epically upside down. Even the Treasury yield curve has gone nuclear, with the 10-year benchmark rate well below the Fed's RRP. Huge warnings everywhere, but why? What's the message? Let's go through them.
Well DT in a normal market it costs more interest if you borrow money longer, ie a 5year fix on your BNZ mortgage is more expensive then say a 3 year... now imagine if in NZ the 6 month cost 1% more then the 5 year, what would that signify..... short term borrowing was expensive vs long term.
This says the market is expecting bad sh&t to happen and that fed and ecb rates are going to come back down....
curve inversions have happened before most bad sh&t events in the past, i would not be fixing long term here myself i would refix on the 6 month rates only
https://www.investopedia.com/terms/i/invertedyieldcurve.asp
See the video on the above page.
Ardern's speech at Women's Summit in Saigon slammed by local CEO:
From Linkedin:
The key moment of the event was the New Zealand’s PM speech but to be honest, I had to leave the room, again, after 5 minutes. The speech was not drafted for this particular event and audience. I think she has presented this multiple times before in front of other audiences and hence, it had no impact on me as a guest who came to the Women Summit and expected something, you know, different.
Aussie taking the bull by the horns.
Australia could become a global leader in crypto regulation after the government pledged to introduce custodial and exchange legislation that aims to prevent the crippling losses suffered by local customers in the collapse of the FTX cryptocurrency exchange.
Treasury has signalled it will open consultations to safeguard crypto custody arrangements and regulate exchanges next year, following the current “token-mapping” consultation process suggested by Liberal Senator Andrew Bragg last year.
https://www.afr.com/technology/treasury-pledges-crypto-regulation-next-…
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