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
Kiwibank raised all its fixed home loan rates today. More here. Bank of China and Nelson Building Society also came in with subsequent increases.
TERM DEPOSIT RATE CHANGES
Westpac changed its rates up +5 and +10 bps late yesterday. Bank of China did so today.
UP BUT FLATTENING OUT
The November use of credit or debit cards to pay for retail and service transactions either in shops or online rose a rather remarkable +$885 mln or +10.5% to $9.3 bln in November compared with the same month a year ago. But of course November 2021 was a troubled semi-lockdown month, so the extreme gains in the hospitality sector (+44%) need to be seen in that context. On a seasonally adjusted basis, the November rise was just +0.3% above the October 2022 level, so rising at less than +4% and far less than recent inflation.
WAGE INFLATION GETS SERIOUS
Stats NZ reports that total gross earnings for the year ended September increased by +$13.9 bln (or by +10%) from the same year in 2021. Public service employees in the healthcare and social assistance sectors won the largest rises. Gross earnings were up +$2.2 bln (+14%) from the previous year in this industry. Professional, scientific, and technical services was the next largest increase, up +$2.0 bln (also up +14%). Gross earnings in the construction sector were up +$1.5 bln (+13%).
DOES HISTORY TELL OUR FUTURE?
Stats NZ also release a whole set of business activity data for the September quarter, all component parts of what will make up the Q3-2022 GDP result due out next Thursday. Most of it was underwhelming (although mostly better than Q2 data), so analysts are now able to firm up their expectations. A +1.1% rise in Q3 from Q2 seems to be what is expected. But as all these analysts will be well aware, getting Q3 data now makes it reasonably irrelevant from a policy-moving perspective. And the main policy-makers interested are the RBNZ, and they are more focused on the future and economic and inflation expectations for 2023. But we reckon we should all watch out for the size of the current account deficit. ANZ says it could touch -8%, the largest since the 1980s. Wellington seems to think it is a temporary blip and will self-correct. A brave (or reckless?) assumption.
CARTEL CONVICTION
NZ Steel's parent BlueScope has suffered a major court loss in Australia, convicted of price fixing in the Australian Federal Court in a case brought by the ACCC.
SWAP RATES FIRM
Wholesale swap rates were likely firmer today. The real action comes near the close however. Our chart will record the final positions. The 90 day bank bill rate is up +2 bps at 4.49%. The Australian 10 year bond yield is now at 3.34% and unchanged from this time yesterday. The China 10 year bond rate is at 2.93% and up +2 bps. The NZ Government 10 year bond rate is now at 4.11%, and up +5 bps and still well above the earlier RBNZ fix for the NZGB 10 year which was up +1 bp to 4.04%. The UST 10 year is now at 3.47% and up +2 bps from this time yesterday.
EQUITIES MIXED
The S&P500 ended its Tuesday session down -1.4% on Wall Street. For their first four days, they are -2.7% lower, so a down week faces them. However Tokyo has opened its Friday session up +1.2% and is heading tor a +0.5% weekly rise. Hong Kong has opened up +0.7% and has had an amazingly volatile week. If it stays like this they will book a +1.9% gain. Meanwhile Shanghai is down -0.2% in its opening session and heading for a modest +0.3% weekly gain. The ASX200 is up +0.3% in Friday afternoon trade, and if that holds it will limit their loss for the week to +1.5%. The NZX50 is little changed in afternoon trade and may end down a minor -0.3% for the week.
GOLD UP AGAIN
In early Asian trade, gold is at US$1794/oz and up another +US$10 from this time yesterday.
NZD FIRMER
The Kiwi dollar is firmer, now at 64.1 USc and up +½c from this time yesterday, up even more from this morning. Against the AUD we are soft at 94.3 AUc. Against the euro we are still at 60.6 euro cents. That all means our TWI-5 is now at 72.4 and up another +30 bps from this time yesterday.
BITCOIN RISES
Bitcoin is now at US$17,259 which is a +2.5% rise from where we were this time yesterday and an unusual advance in the perspective of the past few weeks. Volatility over the past 24 hours has been modest at just over +/- 1.6%.
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33 Comments
"WAGE INFLATION GETS SERIOUS"
Well, it's about to, anyway. 14% seems to be spookily mentioned quite a bit in the figures. So a 5.5% terminal OCR, we reckon? We'll see about that.
Yes RBNZ has put out the housing fire, but not the wage/food inflation spiral, which is very strong in NZ. On this data the next OCR rise is another 0.75%
And we are yet to see the local impact of fertiliser costs on food so more to come.
Maybe we should just buy canned tomatoes in winter instead of trying to grow fresh ones.
I think it is very obvious that the food and materials costs are from everyone taking profits.
Example - the Yellow food shop has plenty of fresh fish fillets between $20 per kg & $30 per kg. Compare this to the Green guys or the Red guys almost all fresh fish is $45+ per KG. Yet the product is coming from the same boats, simply marked up 200% instead of 100% with team Yellow.
It's always fun to see prices increase by 40% to 70%, and the justification is "inflation".
Never fear - Winter is coming.
But isn't Team Yellow just a subsidiary of Team Red anyway?
Good business sense - "If you have to compete against anybody, compete against yourself"
(And buying from Sanford's processing outlet store was always better than any of the coloured shops. But somehow, that seems to have come to an end. Life)
It's all about the general narrative. They can get away with huge price hikes if general consumer sentiment is inflation.
Some clever accounting probably comes into it between their distribution and retail arms.
- Retail puts a "small" markup on goods, claims the margins per item are slim, and then gets a nice juicy rebate cheque at the end of the year which goes against the general ledger.
- Distribution puts a large margin on, but calculates using an annual operating margin inclusive of end of year rebates "liabilities".
Shop smart and give the stick to the StickMan, at my Pak n Sav on a Thursday night they write the FROZEN Pork Ribs down to $8.99kg, got 4 x 1.5kg ribs last night for boxing day.....
Which country did they come from? Got to be careful with pork.
The demark pork ribs are great
but these ones say Product of New Zealand on the stick man label
No longer eat pork other than bacon, its sends my stomach totally haywire now and again.
Carlos is Halal
I think that an OCR peak of at least 6% is now inevitable. And with significant upwards risks too.
It pays to be a government employee. Under pressure govermentt gives large wage rises which the rest of employers just can't afford.
Grant "Afterpay" Robertson can just borrow a bit (a lot) more. And talk down to us as he explains how wise he is.
'“The private sector was the driving force behind the strong annual growth in both the LCI and QES wage measures,” Allan said.
Private sector average ordinary time hourly earnings increased by 8.6 percent to $36.09.
Meanwhile, the public sector hourly earnings increased by 4.3 percent to $44.76'
Private sector wages have grown at double the rate of public sector wages in the year to September. Sure pays to be a private sector employee.
https://www.stats.govt.nz/news/hourly-earnings-rise-7-4-percent/
Facts.
Pffft
The average private sector worker started from $34 an hour and the public sector worker started from $43 and hour.
Their is still and $8 per hour average wage gap. Who do you think works harder on average, public or private?
The S&P500 ended its Tuesday session down -1.4% on Wall Street.
????
Presumably means Thursday.
So this may be of interest.
I have DCAed into both US equities and crypto since roughly late May. Heavier buys during red periods. My US equities are passive holdings, my cryptos are actively managed but very limited trading (more like defi and yield stuff).
Results as of today:
Equities - down 6%
Crypto - up 30%
I have very high yields which are doing well and I am focusing on successful defi plays - especially in the Arbitrum chain which seems to be in bull run mode (with multiple tokens in the 50-100% gain territory this week - plus yield). For my main holdings, I have very little bitcoin - my key focus is Ethereum and its very layers and side chains (like Polygon). I also have substantial USD stable coins which are deployed into high yield defi plays.
(For completeness my liquid holdings are still 80% term deposits)
Too many new words in that for me Wolfie.
I have very high yields which are doing well and I am focusing on successful defi plays - especially in the Arbitrum chain which seems to be in bull run mode (with multiple tokens in the 50-100% gain territory this week - plus yield). For my main holdings, I have very little bitcoin - my key focus is Ethereum and its very layers and side chains (like Polygon). I also have substantial USD stable coins which are deployed into high yield defi plays.
Taking the bull by the horns Wolfie. Arbitrum is too next level for me at the moment as I'm time constrained but makes much sense as an L2 solution. I'm imagine those gains are in the more niche functionality cluster.
Yes it is probably niche - but my lord, a whale just moved a billion dollars of ethereum and deployed into smart contracts just now. Big times for Arbitrum (and they don't even have a coin yet). And lots of other Ethereum L2s coming up (Stark and Z-something).
Yes it is probably niche - but my lord, a whale just moved a billion dollars of ethereum and deployed into smart contracts just now. Big times for Arbitrum (and they don't even have a coin yet). And lots of other Ethereum L2s coming up (Stark and Z-something).
Things are not slowing down. People are too fixated on the FTX stuff, which I just find boring now. The SEC is an issue but I think they will have to back down eventually. They can focus on the scammy stuff and let everyone get on with it.
On a more speccy note, if BTC breaks 18K, we could see a short-term rally to 25K based on a trader I respect (Cheds). I'm a little sceptical of the TA but important to listen to the good ones if it lights your fire.
Things are not slowing down. People are too fixated on the FTX stuff, which I just find boring now.
You should be sitting up and taking notice. Now we have blockfi, and are seeing a pattern. Most of these crypto institutions have doubled down over the past few years and used leverage to make some extremely healthy returns.
As the cost of lending increasing and the value of crypto decreases, you'll see more fall over and with it more falls in confidence and lower values for crypto.
If there's a bottom it's likely got a while to run yet.
U.K. - Now the House of Lords has issued a paper setting out how you will be forced to follow the Agenda. By legislation to change your behaviour. First the nudge and then the stick. Lockstep looks like this. https://committees.parliament.uk/publications/3
ve haf vays ...
Very good idea Also having a crown, portcullis and chain on the from of your paper is way cooler than what we would have.
They dragged out Sir John Key for a quick property spruik. Isn’t this a conflict of interest with his new business venture in mind?
You'd have to assume he is the D, from the Bank of M&D, guaranteeing any liabilities of Max & Co in far-flung place like the Gibbston Valley. So perhaps a bit of self-interest, if not conflict of same.
And after all, what else are self-sufficient, ageing parents for?
A slight re-phrase is necessary.
"And after all, what else are self-sufficient, very wealthy ageing parents for?"
Just in time for mid-December, 4w *auction* high yield today was 3.65%! That's 15 bps below *current* RRP when there's supposed to be another rate hike in six damn days. Link
Come on David, you gave a balanced view on card spending, recognising that Nov 21 was a low baseline, but then reported on the wage / earnings data as if it is running away on us (despite Sep 21 being a really low baseline). Earnings growth is currently running at around 6 - 7% using various slices of the weekly data.
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