What happened Tuesday

Business / news

A review of things you need to know before you sign off on Tuesday; no retail rate changes, regional sentiment poor, real estate agents lose, service sector barely expanding, milk price under threat; swaps steepen, NZD holds, & more

24th Jan 23, 3:59pm by David Chaston

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
None to report today. So far, no other bank has followed ASB with an inverted rate card.

TERM DEPOSIT RATE CHANGES
None today here either. And SBS Bank's 6% one year TD offer stands alone.

THE HOLIDAYS DIDN'T IMPROVE OUR MOOD
The Westpac MM Regional Confidence survey reveals the holiday break just reinforced negative sentiment about 2023 - and everywhere, no exceptions. Waikato had the biggest fall as confidence dived in both farming and urban communities. But the least confident were Northland and Auckland. They say the pressure will remain while households are squeezed by cost of living pressures and lower house prices. They identify tourism and agriculture as the likely sectors to lead us out of the current funk.

POOF! GOES -$¾ BLN
Total real estate agency commissions are estimated to be down by almost a third last year compared to 2021. That means the housing slump has shaved -$740 mln off real estate agent commissions last year.

SERVICE SECTOR SLIDE
The BNZ-BusinessNZ service sector review (PSI) wasn't negative in December, expanding at a modest level. But the slide from October has been worryingly fast. If there is a flicker of positiveness among the slide, it is new orders/new business which is holding up.

WHY NOT JUST GET THE REAL THING?
Newly listed Moolec Science is inserting pork and beef genes into soybeans and peas to create hybrid proteins that are both plant- and animal-based. It is part of an attempt to get 'plant-based meats' to taste like real meat.

THE REAL THING TO RETURN LESS
Fonterra's implied $9 milk price forecast looks under threat. Two major bank economists (ASB and BNZ) have lowered their milk price forecasts as dairy prices hover near two-year lows. Perspectives for other analyst estimates is here (at bottom of that page).

THE FMA COUNTS ITS WINS
The FMA released its 2022 Annual Report today, and claimed their highlights for the year were: Cancelling the MIS manager licence of Fund Managers Otago, after finding inadequate compliance and governance arrangements had resulted in continued material breaches of its licence obligations; Filing civil High Court proceedings against Matthew Geoffrey Hill, now the former CEO of NZX-listed New Talisman Gold Mines Limited, for alleged information-based market manipulation and making false and misleading representations, which were made on an online forum; Directing property development and investment company Du Val to remove advertising materials likely to mislead or deceive investors; Filing High Court civil proceedings against Kiwibank for making false and/or misleading representations in relation to 35,000 home loan customers who did not have fee waivers applied to their accounts and were overcharged a total of $1,172,639; Directing Simplicity NZ Limited to remove advertising materials that breached fair dealing provisions, and ensure future advertising is compliant. More here.

STAKEHOLDERS RATE THE FMA
The FMA also commissioned a stakeholder survey. It covers a lot. But at the end of the day, 41% of those surveyed say they are "very confident" in NZ's financial markets, and 33% says they are "very confident NZ's financial markets are well regulated". To be fair, much larger groups say they are "fairly confident". And the report writers bundle up all groups better than "slightly confident" to score the organisation. But the proportion "very confident" has been falling over the past few years.

SMALL STEPS INTO CONTRACTION
The New Zealand service sector might only be expanding modestly, but at least it is still expanding. The Australian services sector is contracting. The best they can say is that it contracted less in January than in December. And the Aussie factory PMI has dipped slightly from a tiny expansion in December to a small contraction in January.

SLOWING CONFIRMED
The NAB business sentiment report in Australia 'improved' in a very marginal way in December from a small negative in November. This was disappointing because it was expected to shift into positive territory. But it didn't. NAB is claiming inflation has now peaked in Australia.

SMALL STEPS INTO EXPANSION
In Japan, the small steps are going the other way. Japan's factories contracted slightly slower in January, and their services sector expanded slightly faster to a good moderate pace.

SWAP RATES HOLD BUT SIGNALS STAY FIRM
Wholesale swap rates likely steepened today but little-moved for the 2 year. The real action comes near the close however. Our chart will record the final positions. The 90 day bank bill rate is up +1 bp at 4.88%. The Australian 10 year bond yield is now at 3.48% and up +2 bps from this time yesterday. The China 10 year bond rate is at 2.96% and unchanged of course. The NZ Government 10 year bond rate is now at 4.14% and up another +4 bps, and still above the earlier RBNZ fix for the NZGB 10 year which is up +4 bps at 4.09%. The UST 10 year is up +4 bps to 3.51%.

EQUITIES RISE
Earlier, the S&P500 closed up +1.2% as part of a positive day on Wall Street. The Nasdaq recovered +2%. The NZX50 is up +0.3% in late trade today. The ASX200 is up +0.2% in early afternoon trade. Tokyo has opened up +1.3% and continuing its strong run for three days now and now more than +3% over that time. Hong Kong and Shanghai are closed of course.

GOLD HOLDS
In early Asian trade, gold is steady, now at US$1933/oz and unchanged from this time yesterday.

NZD HOLDS
The Kiwi dollar has slipped marginally to 64.9 USc from a day ago. Against the Aussie we are now down more than -½c to 92.3 AUc. Against the euro we are little-changed at 59.7 euro cents. That all means our TWI-5 is still at 71.8 and still touching its 2023 high.

BITCOIN INCHES UP
The bitcoin price is up marginally from this time yesterday, now at US$22,991 and up +0.9%. Volatility over the past 24 hours has been modest at +/- 1.4%.

Daily exchange rates

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Source: RBNZ

Source: CoinDesk

Daily swap rates

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Source: NZFMA

This soil moisture chart is animated here.

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48 Comments

by IT GUY | 24th Jan 23, 4:08pm 1674529687

MediaWorks to lay off up to 90 staff.

I assume we will be hearing less property spruiking adverts on the radio.

by J.C. | 24th Jan 23, 4:38pm 1674531507

I assume we will be hearing less property spruiking adverts on the radio.

So where does the revenue come from?

by Von Metternich | 24th Jan 23, 4:39pm 1674531580

Who listens to the Radio now anyway? Podcasts + streaming exists.

You can pay 7 dollars a month through a telco, for 12*7 per annum of streamed music and not have to listen to the boring and dry radio personalities or shitty ads? For the cost of time wasted on terrible opinions and irrelevant ads, it is damn good value for money.

Let's hope Stuff is next on the chopping block.

by HouseMouse | 24th Jan 23, 4:41pm 1674531688

The only radio I listen to is Concert FM and National Radio, and the only time I listen to them is when driving.

by Rob Reid | 24th Jan 23, 8:02pm 1674543778

Yeah, driving only here, too. And pretty much exclusively the BBC for the international news and science reports. I avoid all its other crap and refer to the BBC as WokeWave.

by HouseMouse | 24th Jan 23, 4:40pm 1674531613

I never listen to any of their radio stations. Who are their main advertising clients? From what you wrote, a lot of property and real estate advertisers?

by HouseMouse | 24th Jan 23, 4:43pm 1674531814

If so, this shows the influence of property across many areas of the economy. One wouldn’t automatically link a property decline to large staff lay offs at a media company.

2023 is gonna be one ugly year for the economy.

by IT GUY | 24th Jan 23, 4:50pm 1674532252

property where paying be bucks to ZB. used to get a propellor then staircase then prop aprentice ad back to back on peak drive time, day after day.

by Officebound | 24th Jan 23, 4:53pm 1674532436

Adrian's dual mandates are going to be pulling against each other soon...

by dumbthoughts | 24th Jan 23, 5:12pm 1674533555

Media companies are going to be in a terrible position for the foreseeable future IMO:

Advertisers will likely wind back spending both online and offline (see what has happened to Meta with declining ad revenue, or in the digital publishing space CPMs - the effective measure of the $ per view of your content - are declining across most ad networks from what I can gather while the CPM costs for advertisers are typically increasing, meaning that the ad networks are skimming more off the top).
Industries like property - which have typically been high $ value in terms of advertising because the value of a customer is potentially greater - will have an outsized effect on media revenues if spend is pulled back.
On the digital front, privacy technology and the rise of ad blocking tools will decrease the effectiveness of digital ads - which the likes of Stuff, NZ Herald etc depend on selling. If the ads are less effective, advertisers will not want to pay as much, so revenue to the publisher decreases.
Content consumption preferences continue to change. Why would I want to listen to some tedious radio show full of ads and self-important presenters when I've got the likes of Wondery producing amazing podcasts with far less advertising? Why bother with TV when there's better content on YouTube from many creators?

Legacy/name-brand media (and I include the likes of Stuff in this) are in a tight spot because there are so many better alternatives and channels to seek content online. Anyone with a cheap device and an Internet connection can publish a blog and share their own news, or start a YouTube channel. This means more competition for the same limited eyeballs and attention spans, at a time when ad revenues per eyeball are declining and business costs are rising.

Think about how much Stuff, NZME and so on must spend on offices, so-called journalists, and all the attendant extra costs - compared to the "hobbyist" who creates better content in their spare time and for whom the ad revenue is an added bonus, or even the niche, more streamlined publisher who has a loyal following and lower costs, plus perhaps the ability to sell memberships or subscriptions (like Interest.co.nz)

I recall reading an article on Wolfstreet, where the author said that the only way for him to run that site profitably now was to get rid of any staff, slash all costs and effectively become a "one man band" as the digital ad revenues received kept decreasing even though readership grew. It isn't going to get any better any time soon either.

Radio, TV, print etc won't die - but the "fat" in the business model will need to be trimmed aggressively for these businesses to survive.

At least in NZ they can always sell their journalistic integrity to the government for some totally-not-influencing-the-discourse PIJF money.

by HouseMouse | 24th Jan 23, 5:05pm 1674533151

Great post.

I cancelled my NZ Herald subscription. There are a handful of good journos there, and I miss reading their work, but I will hunt down a hard copy at a cafe if I really want to read it.

I couldn’t justify the subscription when the quality stuff is so sporadic, and when so much garbage dominates. Plus I don’t want to support an outfit that publishes OneRoof.

by nktokyo | 24th Jan 23, 5:32pm 1674534728

I cancelled it when they turned into Women's Day with a high number of articles about the royal family.

by HouseMouse | 24th Jan 23, 5:45pm 1674535528

Haha

Yeah there’s lots of trash. I couldn’t justify paying for that and OneRoof for the sake of 2-3 good journos, with maybe one decent article every two days.

by HouseMouse | 24th Jan 23, 5:49pm 1674535789

I really like Thomas Coughlan, and Audrey Young is quite good. Matt Hooton is great but only writes pieces for them sporadically.

by Foxglove. | 24th Jan 23, 6:03pm 1674536608

Kate! Kate MacNamara. Top investigative and disclosure journalist in New Zealand.

by HouseMouse | 24th Jan 23, 6:04pm 1674536642

Yep she’s good too.

by Halfway To Paradise | 25th Jan 23, 12:51am 1674561109

I always struggled with the financial advice from Mary Holm. It was aimed at the brain dead, and repeated on a regular basis for them so it would sink in.

by dumbthoughts | 24th Jan 23, 6:08pm 1674536888

The garbage dominates because they need the brain-dead clickbait shite about Megan and Harry, or which type of breakfast danish you are, or how many swingers parties you should attend per year for optimal relationship health and/or outrage bait shite about property investors pulling themselves up by rich daddy's jockstrap, or some deranged pink-haired academic claiming we should be banned from speaking in English and only talk in Te Reo, because that's what gets clicks and eyeballs and pays the bills.

The problem with NZ Herald et al is that their content is broad in appeal and so this tends to lower the relative value of a visitor to the site. There is effectively an inverse relationship with breadth of content and value that each eyeball on the content is worth (because a "niched-down" website or other media platform is easier for an advertiser to ensure tighter focus on a relevant audience with their ad spend)

This means NZ Herald are forced to play a traffic volume game to drive enough lower value impressions to generate required revenue.

The only way to do this at the scale required to sustain a sizeable operation is with through titillation, outrage-inducement or otherwise "lowest common denominator" crap.

By contrast, I'd imagine Interest.co.nz - with a more focused readership around finance and business - enjoys a much higher "$ per eyeball" on its digital advertising and so can be more selective about content (although even here we get the Jekyll & Hyde breakfast briefing headlines to keep the readers coming back ... said slightly in jest to our esteemed editors)

Even further down the spectrum you have specialist industry publications, e.g. something like this - https://www.marinelink.com/ (NB I just Googled that, don't actually know much about it) which will have a relatively tiny readership BUT because of its focus can command premium advertising rates.

The big issue now is anybody can do the mass-market, Buzzfeed-esque content (whereas it's much harder to pass yourself off as a credible maritime and shipping news publication without actual industry knowledge) and so NZME, Stuff etc are competing to win the clickbait audience attention against these nimble upstarts with far lower costs.

by JimboJones | 24th Jan 23, 7:09pm 1674540567

The worst Herald articles are the anecdotes off tictoc or similar. The last one I had the pleasure of accidentally clicking on was about some chick in America who was upset that her tinder date dumped her because she had hairy armpits. Apparently that is sexist. Top quality journalism.

by HouseMouse | 24th Jan 23, 7:06pm 1674540388

Great insights!!

by False economies | 24th Jan 23, 6:08pm 1674536899

Libraries get all the main papers and magazines. You can read them for free. I use them for looking at Consumer reviews.

The libby app also has most of them (but annoyingly not Consumer :( )

by nzforall | 24th Jan 23, 7:23pm 1674541399

I canceled mine when they went maori

by Sluggy | 25th Jan 23, 7:17am 1674584223

What does that even mean. I cant believe how triggered so many NZers are by the rise in use of Te Reo. Personally I embrace it, its who we as a nation, are.

by Rhumline | 24th Jan 23, 7:48pm 1674542914

I cancelled it too, mostly for their total failure to mediate between good journalism and diatribe. Having Simon Wilson as a sole defender of the left (to the point of diatribe on occasion) is a pitiful response to the bias of this rag.

I'll miss Mary Holm's agony aunt columns, but she's been saying the same things to people who don't listen for years.

Now, I buy a good red with my Granny Herald ex-subscription.

Tonight a wee French number.

by HouseMouse | 24th Jan 23, 7:53pm 1674543226

Yep

Brian Fallow is much missed. Their business articles are mostly garbage.

Also deeply missed are (going way back) TJ McNamara on art, and Graham Reid and Russell Baillie on music.

by singautim | 24th Jan 23, 10:24pm 1674552285

I'm happy with my subscription. Somehow I feel less guilty taking it to the loo whereas using an electronic device while contemplating in the smallest room in the house feels weird. Must be my age. Like the Sudoku and daily quiz.

by Retail shop | 25th Jan 23, 7:07am 1674583640

Thank you for your service.

by Rob Reid | 24th Jan 23, 8:07pm 1674544054

Yeah, according to one of the Youtube channels I follow, Youtube is paying out way less for content, presumably because their advertising revenue is taking a hit.

by nzforall | 24th Jan 23, 7:21pm 1674541304

Kapiti council so called road safety adverts need to be totally band. Lord knows how much the paying ratepayers have been charged over the years for them.

by J.C. | 24th Jan 23, 4:10pm 1674529850

Newly listed Moolec Science is inserting pork and beef genes into soybeans and peas to create hybrid proteins that are both plant- and animal-based. It is part of an attempt to get 'plant-based meats' to taste like real meat.

One of the issues with plant-based meats from actual unbiased longitudinal sensory research (Auckland Uni pro-meat industry propaganda doesn't count) is that people who switch to plant-based meats tend to show a lower level of satisfaction on taste, flavour, and texture over time. What that means is that when they first try plant-based meats, they're quite satisifed. However, that level of satisfaction deteriorates over time.

by King of the whiners | 24th Jan 23, 4:22pm 1674530537

WHY NOT JUST GET THE REAL THING?

I frequently pass the freezing works and I see a bunch of sheep grazing on their last few mouth fulls of grass on a nice sunny day, little thinking that their impending last 30 minutes of their lives is going to be full of confusion and fear.....they are sentient after all..

I imagine it's thoughts like that which mean more people don't want to 'get the real thing'....

by IT GUY | 24th Jan 23, 4:27pm 1674530862

Home Kill so so much less stress for the animal IMHO ......

by Foxglove. | 24th Jan 23, 4:32pm 1674531160

It wasn’t for me as a child, if that counts for anything. Still get flashbacks when I see the seaweed on the beach.You know the slimey stuff with all the pods.

by IT GUY | 24th Jan 23, 4:51pm 1674532319

As a farmers son I am pretty relaxed about it. but it does freak out many people.......

by singautim | 24th Jan 23, 10:30pm 1674552631

Nobody should be permitted to eat meat unless they are willing to kill an animal. Should be a major rite of passage age about 15.

by waymad | 24th Jan 23, 5:25pm 1674534347

Or popping off a venison or three at 300m with a silencer. All happy-dead before the sound alerts numbers 2 and 3.

by Audaxes | 24th Jan 23, 4:40pm 1674531641

Economists tell you not to pay attn to curves even tho those told you what was happening as it was happening, incl the cliff drop to recession. Economists/central bankers will only be able to tell you what happened months even years after it happened. https://youtube.com/watch?v=TlwEs7BiNiA Link

by kiwikidsnz | 24th Jan 23, 4:53pm 1674532390

"On the lighter side" - best pun so far this week:

https://www.nzherald.co.nz/nz/end-of-an-error-auckland-farmer-mows-trol…

by Rhumline | 24th Jan 23, 8:45pm 1674546350

Wish I could down-vote you, but I can't so I won't.

by HouseMouse | 24th Jan 23, 5:02pm 1674532944

Wow, the NZD is proving resilient. Not only against the USD, but also against the JPY.

by IT GUY | 24th Jan 23, 5:05pm 1674533139

maybe some CPI positioning, expect it to go higher as CPI has a few surprises left I feel.

by Advisor | 24th Jan 23, 5:25pm 1674534325

Diesel RUC discount coming off on 31 January will push prices up for everything once again.

the return of Government taxes on fuels and the sanctions would increase the cost of running a 45-plus tonne truck and trailer travelling 100,000 km by $21,000 a year

By industry estimates, freight costs make up 12% of grocery retail costs.

by JimboJones | 24th Jan 23, 6:39pm 1674538745

Or to put it another way, the good old taxpayer is currently subsidising every truck by $21k a year (on top of their usual subsidy as they already cause more road damage than they pay for).

by Advisor | 24th Jan 23, 7:39pm 1674542348

Yet NZ National argues we need more roads across the country.

NZ has gone too far down the American route on its transport infrastructure, with only difference being we neither have a homegrown automotive industry nor a large O&G sector to make sense of our automobile obsession.

by J.C. | 24th Jan 23, 6:27pm 1674538064

Wow, the NZD is proving resilient. Not only against the USD, but also against the JPY.

Carry trade?

by bw | 24th Jan 23, 5:07pm 1674533235

Sir Humphrey couldn't have put it any better.

”We must conduct an audit, and if this is the case, and if this is true, we will find the people who signed contracts, clearly establish this, and conduct an investigation.” (Corruption probe begins in Ukraine’s defence ministry)

by IT GUY | 24th Jan 23, 9:22pm 1674548558

my god things must be dismal , not a single spruiker talking up green shoots.... alternate reality.... property recovery H2 nothing,,,,, its quiet... too quiet. is there a Queenstown spruiker convention on?

by malamah | 24th Jan 23, 10:12pm 1674551542

Been in Queenstown for the last week, a lot of for sale signs around. Other than that, as good as ever. Once you get off the beaten track and out into the mountains that is. Lake unusually low though…