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%.
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Keep abreast of upcoming events by following our Economic Calendar here ».
48 Comments
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.
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.
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.
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.
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.
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.
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.
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'....
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
"On the lighter side" - best pun so far this week:
https://www.nzherald.co.nz/nz/end-of-an-error-auckland-farmer-mows-trol…
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.
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.
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)
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