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
There are no changes to report today.
TERM DEPOSIT RATE CHANGES
None here either.
LOSSES MOUNT
CoreLogic says more homes are being resold at a loss with apartments being particularly badly hit.
COST ESTIMATES START TO APPEAR
Insurer Tower says the January flooding will cost it to $125 mln with Cyclone Gabrielle costs yet to be assessed. It has lowered its annual profit guidance by up to -$14 mln after the North Island weather double whammy.
"THE INFLATION BATTLE WILL BE WON"
In their survey of consumers run by Research NZ, the RBNZ reports that households still feel inflation is running over 7%, and is unlikely to shift lower over the next year. But in two years these same households see it turn back to 3%, and down to 2% in five years. The same group don't see house prices rising more than 4% in five years.
GUERILLA LEGAL TACTICS
Activist lawyers are adopting an English initiative to get "climate change clauses" inserted into regular commercial contracts. This group has taken these foreign clauses and "Aotearoaised" them, and want like-minded lawyers in legal firms to embed them into new contracts. If you get contracts from these firms: Anderson Lloyd, Anthony Harper, Bell Gully, Buddle Findlay, Chapman Tripp, DLA Piper, Knapps Lawyers, Lane Neave, MinterEllisonRuddWatts, Russell McVeagh and Simpson Grierson, you will likely find them in your contracts, whether you asked for them or not. They are likely to be adopted swiftly because these are all heavy-hitting law firms.
MISSING LISTING TARGETS
Short-term, unsecured Aussie lender Latitude has reported a -23% fall in profits on "challenging" conditions to December 2022. But they reckon things are improving again. High profile supremo Ahmed Fahour is on the way out, to be replaced by an internal manager, Bob Belan.
PROFITS HIT
Local finance company Geneva Finance is also reporting lower profits and warned they will be lower in the future too. They said "following the recent weather events in Auckland and its impact on our insurance operation, the expectation is that the pretax group result will be between -28% and -33% down on last year. The after tax profit is expected to be down between -33% to ‐37% by March 2023. The company’s half year after tax result to September was -21% down on prior year".
WHINERAY QUITS FONTERRA TEAM
Fonterra said its Chief Operating Officer, Fraser Whineray, intends to resign at the end of this financial year on 31 July, 2023. He has been in the role only since 2020, having moved from the CEO role at power company Mercury where he had been since 2008 and CEO since 2014. No word on where he is going yet but it is likely to be in the venture capital sector.
TO BE LEGAL IN CHINA SOON?
A2 Milk reckons it is close to getting final approval to sell its infant formula product in China directly. A key audit of a key Synlait plant is about to take place.
HERE COMES BIRD FLU MKII, AND ITS WORSE
The highly pathogenic avian influenza (HPAI) known as H5N1 is now rampant around the world (but not New Zealand yet). Chicken prices are likely to rise sharply soon. Chickens may all need to be vaccinated. The virus is jumping species, with now large mammals like mountain lion, bear and skunk having been killed by it. Humans can be infected too, but risks are still considered low.
SWAP RATES LIKELY STAY UP
Wholesale swap rates likely rose but probably not by much. The real action in swap rates comes near the close. Our chart will record the final positions. The 90 day bank bill rate is down -9 bps at 4.95%. The Australian 10 year bond yield is now at 3.84% and up +5 bps from yesterday. The China 10 year bond rate is still little-changed at 2.92%. The NZ Government 10 year bond rate is now at 4.41% and up +3 bps, and still above the earlier RBNZ fix at 4.35% which was up +2 bps. The UST 10 year is now at 3.89% and up +9 bps from this time yesterday.
EQUITIES TURN LOWER
The S&P500 ended its Thursday session down -1.4% on Wall Street today in a rather sharp sell-off at the close. That wipes out all the earlier gains of the week so far. Tokyo has opened down -0.5% in morning trade and heading for a flat week. Hong Kong is down -0.4% at its open and also heading for a flat week. Shanghai is essentially unchanged at its open and heading for a weekly dip of -0.3%. The ASX200 is down -0.7% so far in early afternoon trade and if that holds, they will be down -1.0% for the week. The NZX50 is down -0.2% in late trade and heading for a -0.4% weekly loss.
GOLD DROPS
In early Asian trade, gold is now at US$1829/oz, and down another -US$7 from this time yesterday.
NZD RETREATS FURTHER
The Kiwi dollar is at 62.4 USc and down -¼c from this time yesterday. Against the Aussie we are marginally softer at 91 AUc. Against the euro we are a further -¾c weaker at 58.6 euro cents. The TWI is now at 70.2 and down -20 bps from a day ago.
BITCOIN TURNS DOWN
The bitcoin price was up sharply yesterday, but now it has turned lower, now at US$23,754 and down -3.7%. Volatility has been very high at +/- 4.0%.
Daily exchange rates
Select chart tabs
Daily swap rates
Select chart tabs
This soil moisture chart is animated here.
Keep abreast of upcoming events by following our Economic Calendar here ».
33 Comments
https://www.nzherald.co.nz/business/the-debt-explosion-that-led-to-ryma…
“Critically, we believe a large part of the operations remains a black box.”
Rymans last cash flow positive year was 2014.....
Mmmmm sounds like a P....
What happens to a right to occupy if the operator liquidates... Clearly there are rates and maintenance to pay. Would make it difficult to sell the occupation right to the next boomer.....
Oh my. Across the Tassie, it appears that 45% of mortgages issued by Westpac are based on an assumption that the cost of servcing would be much lower at the end of the hiking cycle. The serviceability buffer is between 2.5-3% (applied to mkt interest rate at the time of issuaunce) but forecast it to peak at 3.85%.
Westpac has warned that almost half of its $471 billion in home loans were written using interest rate buffers that are set to be exceeded, in an update on Friday morning.
The bank said $212 billion of its home loans, or 45 per cent, were made assuming interest rates will end up at a lower level than they will be once the Reserve Bank finishes its rate rising cycle.
https://www.afr.com/companies/financial-services/nearly-half-of-home-lo…
https://thedailyblog.co.nz/2023/02/17/the-privatisation-two-step-is-thr…
“Is there anything in this legislation to prevent Iwi corporations from entering into agreements that could ultimately facilitate the privatisation of one or more of the four Three Waters entities?”
From across the Tassie again, an interesting take on how the financial sector is not contributing as much to the economy as as it takes out. Of course, this applies to Nu Zillun as well.
With the exception of a brief spike in engineering investment during the mining boom, business investment has been declining steadily since the advent of financial deregulation. (Note: That means from the 70s-80s).
https://www.theguardian.com/commentisfree/2023/feb/15/australias-banks-…
It was another example of someone trying to be a "big clever know it all" without all the facts. An error of judgement would be a miscalculation of the scale of risk, not flippantly blowing it off because you think you know better than the experts.
"What storm" when there's a cyclone on the way is the equivalent of people going to the beach after an earthquake to watch the Tsunami.
More Pōhutukawa chopping for views. wonder if they added a million to the value:
https://i.stuff.co.nz/national/131260125/more-protected-phutukawa-chain…
HouseMouse
Despite your past assurances to be objective, you really do seem to love to play the man.
What goes around comes around, so don’t get triggered and spit the dummy as you do. I recall when taken to account, twice you spat the dummy and said you were out of here - reflective of immaturity and inflated ego.
Welcome back old man haha.
I notice you only come back to troll me which is pretty sad and pathetic. Isn’t it?
Yvil deserves the mockery - he’s consistently insensitive, nasty and hypocritical. And borderline racist on several occasions. And never sorry.
I am no angel but have put my hand up several times, at least. Maybe that says something about me versus him.
good night
CoreLogic says more homes are being resold at a loss with apartments being particularly badly hit.
In an illiquid market the exits are very narrow so as soon as a negative event happens people get trapped because not only did they want out of property but banks want out of loans. This is part of George Soroses ideas about reflexivity, feedback loops amplify outcomes until they break the relationship.
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.