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
No changes to announce here today.
TERM DEPOSIT RATE CHANGES
ASB has raised term deposit rates for all terms to 12 months. Its new 6 month rate is now 4.70%, up +15 bps. And its new 12 month rate is now 5.30% up +5 bps. That means it now has the highest rate offer for these two key terms of any of the main five banks, matching BNZ, but is still a long way below Co-op Bank and TSB at 5.00% for six months, and SBS Bank's 6.00% for one year. Unity Money raised its TD rates too today.
NEW "HIGH INTEREST" CALL ACCOUNT
Squirrel Money has launched a new 'high interest' call account. It pays 3.50% pa, making it the highest “no strings attached” interest rate of any savings account in the New Zealand market. Which is true, just. BNZ's Rapid Save account pays 3.45%, although it does have a 'string' - only one fee-free withdrawal per month.
GOVT BOOKS IN GOOD SHAPE
Treasury released the Crown Accounts for November 2022, and they revealed a rather better improvement that was forecast in the HYEFU. Net debt fell to 19.2% of GDP when the HYFEU forecast it would be 20.2% at this time. The Operating Balance for the month exceeded +$3 bln, and the OBEGAL was +$351 mln, both better than expected (although November is traditionally when revenues exceed expenditure).
EARLY SIGN OF STRESS
Those same Crown Accounts show that the sky-high employment is boosting taxes from payrolls which were up +21% in November from a year ago. But interestingly, we are seeing a rather sharp falling away in taxes collected from "Other Persons" which includes taxes from trustees and unincorporated small and micro businesses. These tax collections were -36% lower in November 2022 than November 2021. We should also note that GST collected was up +12% on the same basis (no doubt boosted by inflation).
NEARLY $1 BLN PA IN EMERGENCY HARDSHIP GRANTS
Ministry of Social Development data shows 592,000 hardship payments were made in the December 2022 quarter. That is up +4% in volume terms from a year ago, and up only +3% from the same quarter before the pandemic. But in value terms, these grants are up +40% from Dec-19 (ie pre-pandemic) driven by a +70% value rise for emergency housing grants (but these were actually lower overall in dollar terms from a year ago). From a year ago, the emergency housing grants are down -21% in value terms. For 2022 $935 mln was paid out in all types of hardship grants, +9.0% more than in calendar 2021.
WORST AFFORDABILITY FOR FHBs
Getting into home ownership at the lower quartile level is now its most unaffordable in the history of interest.co.nz's Home Loan Affordability Report. The decline in house prices has been more than offset by rising interest rates, pushing home ownership further out of reach for most aspiring first home buyers.
MTF UPDATES ITS TECH VIA ACQUISITION
MTF Finance has bought fintech online brokerage, Lending People, as it moves to grow "revenue and volume while offering a ready-made solution to transforming our digital product offer and technology platform." Lending People is surprisingly large. It has processed over 230,000 loan applications through its proprietary origination software and generated hundreds of millions of dollars in loan advances for its lending partners.
A CAUTIOUS START
The Fair Pay Agreement system came into effect on 1 December 2022. However MBIE notes that as at yesterday, no applications to initiate bargaining for a Fair Pay Agreement have been approved by MBIE. Is the cautious start because 2023 is an election year?
AUSTRALIA ON HOLIDAY
It is Australia Day so their financial markets are closed, and most people are not working. Likely most will stretch it into a long weekend, so tomorrow will be quiet too there.
SHORT SELLER TAKES ON A TITAN
In a rare foray outside the US, a 'respected' short seller is taking on the India-based Adani Group, claiming it is an empire built on a con-job. Adani obviously reject the 'research' behind the claim. You can read the research here. The company making the claims have taken some big scalps with prosecutions resulting from prior research. But none as big as Gautam Adani. In the day following its release, Adani has lost NZ$8.5 bln. Shares in his company are down -NZ$17 bln. This will be fun to watch.
SWAP RATES EASE FURTHER
Wholesale swap rates likely slipped today. They in fact fell sharper than we indicated yesterday, but today's fall will be less. The real action comes near the close however. Our chart will record the final positions. The 90 day bank bill rate is down -5 bps at 4.85% - which is actually its largest fall since early August 2022. The Australian 10 year bond yield is now at 3.49% and up +4 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 4.09% and down -2 bps, but still above the earlier RBNZ fix for the NZGB 10 year which is up +4 bps at 4.08%. The UST 10 year is unchanged at 3.45%.
EQUITIES UNREMARKABLE AGAIN
The NZX50 is heading for a +0.4% gain today. The ASX is closed for Australia Day. Tokyo has opened little-changed again. Hong Kong and Shanghai are closed all still of course, but Hong Kong will reopen tomorrow. Singapore is up +0.3% in early trade. The S&P500 ended on Wall Street earlier essentially unchanged too.
GOLD FIRMER
In early Asian trade, gold is firmer, now at US$1945/oz and up another +US$7 from this time yesterday.
NZD MARGINALLY LOWER
The Kiwi dollar is little-changed from this time yesterday, still at 64.8 USc. Against the Aussie we are now down more than -½c to 91.2 AUc. Against the euro we are little-changed at 59.3 euro cents. That all means our TWI-5 is still at 71.4 and -20 bps lower.
BITCOIN RISES
The bitcoin price is up from this time yesterday, now at US$23,226 and up +3.1%. Today's rise started happening at 9am this morning. Volatility over the past 24 hours has been high at +/- 3.2%.
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76 Comments
Not a great fan of Michael Cullen but nevertheless he hit the nail fair and square when he said something like - it’s bad enough when the property market is going up a ladder but it’s even worse when the rungs for that are being taken from the bottom of the ladder. Look it’s fair enough to say that no single government has caused today’s drastic circumstances, not this century anyway, but why in heaven’s name during a pandemic was it seen as necessary to crash dive interest rates to unprecedented levels and resultantly cause the switch, on a grand grand scale, of investment from equities and term deposits etc into property and catalyse probably the greatest property boom ever recorded here. This must go down in NZ’s not all that long history as the dumbest most thoughtless and self destructive financial policy that has ever been implemented. Well at least from the point of view of first home buyers that is, but obviously they weren’t considered to be a factor of any significance.
but why in heaven’s name during a pandemic was it seen as necessary to crash dive interest rates to unprecedented levels and resultantly cause the switch, on a grand grand scale, of investment from equities and term deposits etc into property and catalyse probably the greatest property boom ever recorded here
Fear and incompetence.
Good thing or bad thing, not really for me to judge. But pretty clearly there's an affordability slider that encompasses the price, mortgage costs, and peripheral costs that is hard to escape - unless there was a more significant intervention from the powers higher up.
Why are all term deposit rates across the board from all banks all lower than the current rate of inflation?
After tax is taken off the real return on a term deposit investment is negative. Why should banks be not even providing the rate of inflation as the interest rate?
Where is the incentive to put money on term deposit if the real value of the money is not maintained by the investment?
... that has always been the way : inflation is the government's dirty little secret ... they love it ... inflation erodes away all the debt they've racked up ... the fact that Mom&Pop term deposit holders get their life savings eaten away is of no consequence to the finance minister ... their fault for being too trusting of the government , & too financially illiterate ...
The claims against Adani are astonishing and quite extraordinary. The largest con in corporate history is no reckless claim if much of this sticks. Highly recommended read. If you have time.
https://hindenburgresearch.com/adani/
3 of the 15 most expensive stocks on the MSCI Asia Pacific (nearly 1500 stocks total) are Adani stocks. Adani Enterprises is trading at nearly 100 times earnings.
Adani Green: Forward P/E: 331
Adani Transmission Forward P/E: 177
Inflation looks like its here to stay some people can’t afford food and rent for family buying a house is just a dream for most young family’s, people with no hope have nothing to lose this would be one of the reasons for crime explosion, we will see many more problems unless population can afford food and somewhere to live.
Inflation looks like its here to stay some people can’t afford food and rent for family buying a house is just a dream for most young family’s, people with no hope have nothing to lose this would be one of the reasons for crime explosion, we will see many more problems unless population can afford food and somewhere to live.
Not Ardern's problem anymore. Her timing is immaculate.
In any responsible job if you foul it up, ie injure someone, it could be that an aggrieved party could hold a grudge.
Take for example the designers/ constructors of a building which falls down too easily during an earthquake....... You would be looking to your security too.
So most responsible jobs are a tightrope. And when you retire without any issues: bliss.
... of course it's not ... but , so long as they're allowed to hide behind fake names on social media platforms , this sort of appalling behaviour will not get better ...
At the very least , the lady who hated Steven Joyce fronted up in person to deliver a dildo across his face ... loved the personal touch ( hope she had washed it first ! ) ...
Now the Ukraine will get lots of tanks, so they are asking for fighter jets... I guess if you want to win.... ukraine only trying to expel the Russians from the original boarders, but so much could go wrong quickly here, personally i think Putin is a dead man walking.
I read that the former Ukraine get 10 tanks from UK, 6 from Germany, 31 from USA etc, might add up to 100. Russia has 2,000 in theatre and the capacity to manufacture the ammunition for them. Russia firing 60,000 rounds a day, NATO don't currently have the capacity to manufacture munitions at that rate. This is becoming embarrassing for NATO, people are dying daily, why is no one interested in making peace?
Any ceasefire with Russia would likely only be a chance to rearm. There is no general agreement on territory between Ukraine and Russia that peace might be built upon.
Also Russia has substantially cut its ammunition use indicating their stockpile is now depleted: https://www.cnn.com/2023/01/10/politics/russian-artillery-fire-down-75-…
If Russia has 2000 combat ready tanks then why the hell haven’t they deployed them en masse by now. Good god they have the battle plans and tactics of one of the greatest generals ever Zhukov, to fall back on, fought on exactly this same territory. If Russia had that vast armoured superiority available they should have swept through to the Polish border ages ago. Hells bells they couldn’t even take Kharkov from right next door, whereas the Wehrmacht accomplished that twice in WW2, even with hugely stretched,mostly horse drawn, supply lines.
Current Russian generals probably ignorant of what happened in the 2nd WW. Wave upon wave of human infantry is no longer viable or politically correct. No penal battalions either. Anti-tank measures have improved dramatically since WW2. The 2000 tanks is just a number. Wouldn't be surprised if half weren't serviceable and the other half breaking down shortly after use. With corruption endemic in Russia minister and generals creaming off from fictitious maintenance and spares contracts.
Don’t think politically correct ever even reaches the surface in Russia and the media in any form is controlled so that that and the truth never will. The Russians have economised on the value of the lives of their combatants since before the Bolsheviks and then they didn’t relax that much either. The strategy that undid Napoleon and Adolf was twofold, scorched earth and an overwhelming number, and endless supply, of infantry being pushed forward remorselessly, regardless of casualties. The new conscription measures signal the same is about to be employed as Ukraine is the exact territory where the tactics has always succeeded, as far as their history. The Russians like the Wehrmacht before them 80 years or so ago, are building a spring offensive except this time it will be westward and unbelievably, even more of a bloodbath.
I'm not convinced about that FG. I think wide scale human wave attacks have largely had their day. Modern pinpoint ground proximity fused artillery shells can make wide areas quickly unviable for unprotected humans. Aiming systems of WW2 artillery used against these waves on the steppes in WW2 and later in North Korea was quite crude by comparison with modern systems and the instant real time communications available to gunners today.
RU is using wave attacks. UA forces at Bakhmut are astonished at the repeated throwing of groups of 30-50 conscripts against their entrenched defenders, with only a handful each time making it close enough to engage. Small territorial gains are being made by Russia but that's not the objective - it is about bogging down the Ukranians to buy enough time to build an offensive capability. Tanks are being conserved for the coming main game by both sides. Much is (justifiably) being made of the Leopard and Abram cavalry being on its way but the Bradleys will in the meantime have a considerable and more immediate impact. These bad boys took out more Iraqi tanks than did the Abrams in the yanks ME wars. They are equipped with guided missile systems of a similar range to a T72 cannon but more reliable and accurate. In a hull down ambush position with only their missile launcher exposed they are hard to spot at distance.
Tks MM & happy New Year. Good to hear from you again & valid points alongside. My suggestion is that the Russians have not only run out of frontline armaments but more importantly, ideas as you touch on. Perhaps they never really had any modern ideas and are as well simply thick. What else are they capable of deploying other than what they have shown to date and that then introduces the old theory of throwing in more bodies than the incoming bullets. In other words apart from tactical nukes, what else have they got because it should have been over by now if they had enough firepower.
And the same to you old chap. Overwhelming brute firepower no longer enough. This is not Aleppo where an unopposed airforce could be deployed. Technology is the decisive issue that turns many of the old military concepts on their head. You'd think the blockheads at the top of the RU army would have learned from their disaster in Afghanistan where a simple and cheap tool - the stinger missile - almost overnight paralysed the mighty Soviet army. Yet here we are again with Luke Bryan playing it again.
FG. That UA has encountered numerous T72 and even, incredibly, a large number of T64 tanks, is revealing. These are ancient unreliable and vulnerable designs from the 1960's. Either they simply don't have the volume of serviceable later model tanks available or they are holding them back as a tactical play, which seems unlikely. The Leopard and Abram M1 will be a significant game changer. Hopefully we'll see the Russians forced to deploy their latest Armarta T14 against them which is likely to expose the T14 as second rate. En masse deployment against entrenched defenders armed with long range manpad missiles would be suicidal. Even the slow learning RU army leadership have figured this out.
Soviet propagandists briefly elevated Zhukov to superhuman level (until Stalins paranoia cut in) but by the time he faced off against Paulus at Stalingrad the tide of logistics had turned markedly in his favour. Superior German tank kill rates at the later monstrous and decisive battle of Kursk would have seen him overwhelmed if the battle had been fought on a like for like resources basis. The 200,00 Studebaker US6 trucks delivered to the Soviets arguably contributed more towards final Russian victory than Zhukov's claimed superior strategic ability.
We could enjoy many hours discussing this but you echo the barely disguised disdain by Eisenhower, in a copy of a Life magazine of 1948, I have here re the unashamed, for want of a better word, waste of Russian troops lives by Zhukov and his fellow generals. The thing is, the latest massive intake of conscripts, untrained, unfit, unready to me signals more of the same. Anyway the land of nod beckons.
Russia likely has few operational modern tanks left, the supply of recommissioned T-72s and T-80s has slowed and older T-62s are now being pressed into service frequently. In theory Russia should have more operational modern tanks but in reality they may have been so poorly stored that they are scrap.
Air power, aircraft that is, seems an oddly less tactical feature in this war. By now Russia should have a vast numerical superiority in both aerial combat and ground attack. The only answer can be SAMs are now too deadly to challenge. If nothing else the battleground in Ukraine is redefining elements of warfare that have been accepted as text book up until now.
Zespri woes. Japan was undersupplied by more than a million trays because of qlty issues.
Kiwifruit growers are missing out on expected cash after a shock announcement from Zespri.
Growers of green and green organic kiwifruit won’t be getting February progress payments from Zespri because fruit quality issues created extra costs in the 2022 season, an industry update on Friday said.
https://www.stuff.co.nz/bay-of-plenty/131057243/kiwifruit-payment-cut-a…
So minimum wage review is coming up. What do they do? Put up the minimum so people can afford to live but in turn create inflation so they can’t? Or just make a token increase? I see Nicola Willis is saying the min wage is already too high so we know what National would do.
Most people on the left particularly unionists still believe, or want to believe, that the minimum wage should be brought up to the living wage eventually.
In 2021, it was reported that the living wage is 84.3 per cent of median hourly earnings from wages and salaries of $27.00
So, the government should continue raising minimum wages until the lowest paid workers are making only 15% lower than the median earner hourly and then maintain it at that level.
Seems a recipe for a "cost of living" disaster in an economy dependent on labour-intensive sectors.
How can people argue that it is all good for someone working 40 hours per week in NZ to not be able to afford basic food and shelter and a few dollars for something nice now and then? What are we - a third world country? Should the servants be sleeping in the parks and cow sheds? Even the Living Wage is not really a living wage - it assumes Govt will top-up with accommodation supplement, in-work benefits etc.
The problem we've got is that the tax and welfare system is having to increasingly compensate for the widening gap in income levels - with lower incomes being completely insufficient to live any kind of life in NZ. And, it's not just wages. Those fat corporate profit dividends and rental yields are flowing to the top few per cent of earners. A whopping 12% of all NZ income goes to the top 1% of earners (about 40,000 people getting an average of $625,000 each).
If you cut down on big Mac's the store shuts down and everyone's paid nothing.
Pay should be relative to the value of the output, not the expenses of the worker. Unless someone's messed up, they shouldn't be making a family while having no more aspiration than Macca's worker - not to knock working in fast food, but the barrier to entry is pretty low and something an individual should surpass within a few years of entering the workforce.
People keep complaining about increasing productivity on here, without realising they're the biggest benefactor in increasing their own productivity. Go and do something with your time that's of higher value.
There's 70,000 people on minimum wage. And many are part time.
If they want to have kids then they will likely want to improve their income and living situation, yeah. I'm not sure what WFF you'd get on minimum.
I dunno I find the evolved employee environment strange, because there's a commercial entity trying to deliver a market competitive good or service being mandated to fill this hybrid parental role over its workers. I guess it's going on with businesses with the environment and health and safety so why not.
Regarding your last sentence, you may also recall that half of NZ households pay no net income tax after credits and support & 12 per cent of individuals pay just under half of all personal taxation, and the top 3 per cent account for almost a quarter of all personal tax.
https://i.stuff.co.nz/business/opinion-analysis/114628351/an-inconvenie….
The other inconvenient truth is that the entire Govt bureacracy & public services, welfare & socialist redistribution etc depends ultimately on the capitalist profits generated by successful business ventures that go to support jobs, wages, salaries, income & corporate taxes, GST etc. Someone has to bake the pie before the squabbles over division.
"The problem with socialists is that they eventually run out of other peoples money". Maggie Thatcher
That's some top level idiocy there to be honest.
I know those tax income decile stats backwards. Income inequalities have got so huge that we now have a huge Govt machine correcting for the error - i.e. clawing back some of the income from the people that are rewarded for sitting on their arse milking assets (most of the top 1% are not waged, they are collecting rent or dividends) and giving it back to the people who have given their labour to generate the return on the assets owed by the top 1%.
That Thatcher quote is ridiculous - all money is debt - a zero sum game, a count of what people owe to each other.
Agree and I cannot stand people who keep bringing up the top xx% of net tax payers while looking down at those who pay no net income tax.
I consider myself privileged to earn enough that I do not have to rely on the Government to top up my income, and would never look down on someone earning minimum wage while trying to support a family. Maybe kiwikidsnz would like us to sterilize all minimum wage earners so we no longer have low income families.
Serious consideration could be given to offering anyone not supporting themselves without taxpayer funded charity welfare the opportunity to have a free vasectomy or IUD ( with $1000 bonus).
When did it become OK to avoid all permanent responsibility for your personal life choices & expect your neighbours to look after your as well as provide for their own families ?
I have worked in several. What destroys countries is inequality - the gap between the haves and the have nots. We increasingly have families struggling to put food on the table whilst brand new Range Rovers glide past towing jetskis to the beach. It is a recipe for disaster.
Most don't get destroyed though, they're simply living the sort of extreme lives our society had pre industrialization. It's not like most larger early societies were equitable or egalitarian, it has mainly been a case of a few profiting from the masses, because wealth always proliferates. We just have more wealth (or fewer people).
The West has benefitted greatly from a technological superiority that allowed for the benefits of industrialisation, and firearms which were used to hold the world to ransom and steal a bunch of its stuff. Then we had some big wars that built a consumer economy that everyone prospered from, for a time.
Now, fairly clearly the fruits of the average individuals' labour are of exponentially diminishing value as you have to compete with labour on a global scale. Central authorities will try and move sliders to hold things at bay, like higher minimum wages and supplements but there's as much moral peril there as the 'housing ponzi'.
GOVT BOOKS IN GOOD SHAPE
NZ is one of the few countries in the world where the Govt has a net positive financial worth (around $60bn). In other words the Govt is owed more by households and businesses than it owes to them (in bonds and other liaibilities). Grant et al cover all of this up with accounting trickery to give the impression that money is too tight to mention - but thankfully Treasury publish the whole balance sheet.
The Govt books are currently in 'good shape' because Govt claims on the private sector (mostly shares and investments) went up in value by around $5bn in 5 months to Nov 2022 (nice), and high corporate profits meant tax revenues were higher than expected (errrm, great). In fact, Govt basically spent next to nothing (net) between July and November - whilst Luxon rattled on about excessive Govt spending driving inflation.
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