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.
ANOTHER +50 BPS OCR HIKE
The RBNZ didn't surprise, and hasn't missed a beat in its campaign against inflation. At today's MPS review it set aside the expected impacts from Cyclone Gabrielle on the grounds that policy response implications are still unknown as is the Government's fiscal response. They said the OCR still needs to increase, as indicated in their November Statement, to ensure inflation returns to within its target range over the medium term. While there are early signs of price pressure easing, core consumer price inflation remains too high, employment is still beyond its maximum sustainable level, and near-term inflation expectations remain elevated, they noted.
DANGEROUS SPLURGE ON IMPORTS
Our imports in January rose al almost twice the rate our exports rose. And almost no-one is noticing. Imports rose almost +26%; exports rose almost +14%. A +14% rise is pretty damn good, and for the year to January exports are up +13%, the best annual rise since . But we are buying imports are a completely other level, like we are a wealthy country. This pretending will undoubtedly catch up with us at some stage, but not yet, it seems. Anyway, our January merchandise trade deficit blew out to -$2 bln in the month, the largest ever January shortfall.
KOREA A BIGGER SUPPLIER
Interestingly, while our trade surpluses in our trade with China, Australia and the US are shrinking (and with Japan, we have always run deficits), what is new is the surge in our deficit is the huge increase in imports from South Korea.
GOING
In a surprise announcement, Auckland Council's CEO has handed in his notice. Jim Stabback joined the council on 1 September 2020 and will remain in the role until 25 August 2023. He is walking away from a $630,000 salary for "personal reasons". He replaced Stephen Towne ($698,000) who replaced Doug Mackay in 2013 ($797,455).
CASH COW
Meanwhile, the Ports of Auckland has raised its profit forecast after a strong first half. Auckland Council wants then to deliver a $52 mln profit in 2023/24. This year they say they will have it up to at least $42 mln. Based on the rising first half, Auckland Council will get an interim dividend of $15 mln, with a similar final dividend likely as well.
GOING BACKWARDS
Xero's monitoring of their SME clients shows that sales were flat in January, with the largest year-on-year declines in agriculture, (-7.2%), retail trade (-5.1%) and professional services (-2.4%). But it’s not just spending that has slowed, wage growth has also slowed to 4.6% in January on the same basis, the smallest rise since March 2022 (4.4%).
ANZ NEXT TO RAMP UP DISASTER SUPPORT
ANZ said it will donate $3 mln to flood recovery initiates in the Hawke's Bay and elsewhere. This involves $1 mln to support businesses and communities through local relief funds and Iwi organisations in affected regions, $1 mln to support horticulture and agriculture sector groups; and $1 million to the New Zealand Red Cross Disaster Fund through a special fundraising event with NZ Cricket. This comes after BNZ released a $1 bln Recovery & Resilience Fund, and a $250,000 donation to the Salvation Army.
SOLID GAINS BEFORE THE STORMS
Prior to the January/February weather disasters, Infometrics reported that the all regions where performing 'solidly' at the end of 2022.
CHALLENGING THE 'ESG SCAM'
A NYU professor it pointing out that Russian businesses who support their Government's war on Ukraine are mostly able to score highly on ESG measures. It is peak 'greenwashing', he claims. More here. on the endemic mismeasurement. Savers beware. (H/T AM and ResearchIP)
SWAP RATES HIGHER AGAIN
Wholesale swap rates are likely up quite a bit further, after the OCR. But the real action in swap rates comes near the close. Our chart will record the final positions. The 90 day bank bill rate is up +3 bps at 5.03%, but that was before the OCR change was released. The Australian 10 year bond yield is now at 3.89% and up another +4 bps. The China 10 year bond rate is little-changed at 2.94%. The NZ Government 10 year bond rate is now at 4.54% and up +9 bps and above the earlier RBNZ fix at 4.49% and up +13 bps (before the OCR decision). The UST 10 year is up +8 bps at 3.94%. It was last over 4% in October/November, and prior to that in 2007.
EQUITIES MOSTLY DOWN
The S&P500 ended down 0.3% on Wall Street over the long holiday weekend. Tokyo is very slightly down in morning trade. Hong Kong is down by 0.6% at its open. Shanghai is up 0.4% at its open. The ASX200 is down 0.3% so far in early afternoon trade. The NZX50 is following up Monday's down-with-a-thump fall of over 2% with some further, slightly more modest, easing, down 0.6%.
GOLD SLIPS SLIGHTLY
In early Asian trade, gold is softish around US$1838 and down about -US$4 from this time yesterday.
NZD UP SLIGHTLY
The Kiwi dollar is marginally higher after the OCR change, but still not back to yesterday's level. It is now at 62.3 USc. Against the Aussie we are marginally higher and now at 90.9 AUc. Against the euro we are a little-changed at 58.4 euro cents. That means the TWI-5 is now at just under 70.1 and up after its slight dip below 70 last night.
BITCOIN SLIPS BACK -US$600
Bitcoin has retreated -2.5% from yesterday to be now at US$24,404. Volatility over the past 24 hours has been moderate at +/- 2.2%..
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60 Comments
Banks still have targets to keep writing business into a falling market..
“Banks are not meeting sales targets, so they are lending not at the advertised prices, but it’s behind-the-scenes stuff,” Alexander said.
And offering 10% deposit to boot...
Mortgage brokers are celebrating Westpac’s return to offering loans to first-home buyers with deposits as low as 10%. Wellington mortgage broker Michael Anastasidis posted a celebratory video on Youtube about the Westpac move.
He said the bank was issuing pre-approvals for such loans which were valid for 60 days.
Surely this is predatory lending - attracting FHB into a falling market with a nearly zero buffer to weather any furter declines. But property never goes down, and you will be glad you bougt now. Right?
https://www.stuff.co.nz/business/131300030/secret-mortgage-war-bnz-offe…
It always bugs me when banks discount to get new customers. They do the same with credit card deals.
But they don't incentivise current customers to stay with loyalty retention programmes.
I have a year more of mortgage then I'm ending my relationship with the big banks. They haven't been loyal to me.
But we are buying imports are a completely other level, like we are a wealthy country. This pretending will undoubtedly catch up with us at some stage, but not yet, it seems
Will catch up but not anytime soon. Expect the deficit to swell further as tourists stay away from affected regions and merchandise exports originating in these areas dwindle.
Imports will rise with more materials and labour coming in to rebuild our infrastructure after the severe weather events.
Suggest it’s worse than that, from a consumer’s aspect that is. Because a lot of that buying is on credit cards without any recognition that the purchases are not actually owned but are being financed by a third party. There is a very large percentage of our population that, when spending money, are unable to distinguish whether it is being made from money earned or money borrowed.
I wonder if the count isn't affected by large families. If you are poor and have ten children then benefits are mainly tied to the first child (eg accommodation benefit) so the family sinks under whatever the poverty level is but gets counted ten times in the stats.
The NZ benefit system is skewed towards separating parents to maximise benefit so instead of having two parents with two children just above your poverty level they end up with two children living in poverty.
Problems solved by a universal benefit for all children. They have one that provides education and subsidises health for all children but not their food and housing.
The Xero data roughly aligns with what I'm seeing in my client base (and from their feedback from their networks). Even anecdotally, at least here in Chch I'm seeing retail typically slower - both from what clients are saying and my own experiences going into shops - while many restaurants and cafes are still pumping.
My view is that it's the combo of pent-up post-Covid demand to eat, drink and be merry and reconnect in person, as well as the fact that grabbing a $20 lunch or a takeaway meal on a Friday night for the family is typically much less expensive than buying higher ticket retail items. People want "little luxuries" to make life feel better.
On a side note, did anybody see the truly woeful school attendance/truancy figures that were recently published? Unless I interpreted the data wrong, less than half of school kids are regularly attending and the rate of chronic absence is through the roof.
On a side note, did anybody see the truly woeful school attendance/truancy figures that were recently published? Unless I interpreted the data wrong, less than half of school kids are regularly attending and the rate of chronic absence is through the roof.
The definition of "regularly attending" is that someone is at school on 90% or more of the days required in any given term.
Terms are 10 weeks long, which is ~50 days M-F. That means if you're absent for 6 days in a term, you are suddenly no longer "regularly attending school".
As you can easily be off school for a week if you get COVID (or are isolating due to family or whatever), it's very easy to fall into those stats.
In 2022 schools opened up but didn't bring in proper measures to improve ventilation for students or staff and there has been a lot of COVID around. The results are hardly surprising.
National has been blowing the trumpet on this because most people don't understand the measure at all, and just hear the term "regularly attending school" and naturally think it means something like being away from school 1/2 the time. When actually only a measly 6 absences in a term is enough to hit that threshold.
"...if you get COVID (or are isolating due to family or whatever), it's very easy to fall into those stats."
Have you any actual numbers to support your latest strawman argument ?
"After sitting on the data for two months, the Minister has finally released attendance data for Term 3 of 2022. Here’s the key points:
Only 46% of students attending regularly, compared to 60% in 2019
13% of students are attending less than 70% of the time, compared to 7% in 2019
Only 33% of Maori And Pacific students attending regularly, and 22% are attending fewer than 70% of the time
Regular attendance for Decile 1 schools is just 30%
So one in eight students are chronically absent from school, missing at least 12 weeks a year"
https://www.kiwiblog.co.nz/2023/02/the_latest_school_attendance_data_is…
The "occasional" absence numbers make actually make quite good sense based on Lathantide's explanation (I can see how you might rack up six days off in a term relatively easily)
My partner teaches at school with a lot of kids with wealthy parents, and there'd be plenty of them taking at least a few days off a term in the winter months to go skiing, for example. Add on a couple of sick days and you hit the magic six mark. My parents used to take me overseas during term time sometimes, so I'm guilty of this too.
However, the more chronic absence numbers do look bad. And if they aren't bad, why the hold up in releasing the data and why the need for what seem to be very expensive truancy officers?
If I think back to when I left high school, there's no way that one in eight of my classmates were chronically absent from school. You'd have some kids who were a bit prone to pulling a sicky or bunking off for a Friday afternoon, but nothing to the extent that seems to be more normal now.
Certainly talking to Mrs dumbthoughts and some other family and friends who are teachers, they are complaining of kids' attendance typically being worse. The exact reasons vary - Covid being a big factor, but also a generalised atmosphere of there being little impetus to attend, and few consequences for absence.
Both sides will play politics with this, to the detriment of children's education.
Secondary teachers gave themselves eight extra teachers only days last year. Do the unions negotiate teacher only days in lieu of pay rises? Another eight days of education lost.
"When the OECD began testing education systems around the world in 2000, New Zealand was one of the top performers. Our results were above the average of the world’s most developed countries. We came out third for maths and fourth for reading in a group of 41 countries.
...(Pisa) results came out, in 2018, the decline had progressed substantially. In science and reading, New Zealand was only marginally above the OECD average. In maths, we are now below. Out of the larger group of 78 participating countries, New Zealand only ranked 27th."
https://www.nzherald.co.nz/business/rebuilding-better-once-world-class-…
It's not a strawman argument at all, its the facts - you only have to be absent 6 days in a 50 day term to be no longer "regularly attending school".
It's quite clear you don't know the definition of a straw man argument.
Look up the ministry's definition yourself (and the definition of a strawman argument while you're at it).
Lanthanide- are you seriously implying that these statistics aren’t a concern?
I feel genuinely sickened that our kids are failing in our education system. If we can’t sort this out crime, poverty, health outcomes will deteriorate even further.
Surely you can take off your red eye patch for a moment and acknowledge we must do better for the sake of our whole country.
I never said they weren't a concern, I said the explanation is COVID and that National is banging the drum on this to make it sound as if kids are wagging school etc.
National has *not* said "so many kids are absent from school because this government isn't managing COVID in schools properly" - which is what is actually going on here.
The S&P500 ended down 0.3% on Wall Street over the long holiday weekend.
Walmart had a whopper of a Christmas season. But it wasn't because consumer spending was robust, because consumers are struggling and have been looking for just the cheap groceries Walmart sells. So, why isn't Walmart greedily counting its money for 2023?Walmart had a whopper of a Christmas season. But it wasn't because consumer spending was robust, because consumers are struggling and have been looking for just the cheap groceries Walmart sells. So, why isn't Walmart greedily counting its money for 2023? Link
Nice win for NZ company Immersve.
A partnership between Web3 payment protocol Immersve and payments giant Mastercard will allow users to make crypto payments on digital, physical and the metaverse worlds. Once the transaction is successful from the user’s end, USD Coin (USDC) tokens — a United States dollar-backed stablecoin issued by Circle — will get converted to fiat and be used to settle transactions on Mastercard’s network.
Users will be able to use their existing Web3 wallets to make direct crypto payments without relying on a third party for collateral.
https://cointelegraph.com/news/mastercard-to-allow-crypto-payments-in-w…
Finance and Expenditure Committee meeting and Robbo is asked which proportion of households fall into the 'low income' bracket with no savings (approx -49:10).
He has no idea.
https://www.newshub.co.nz/home/politics/2023/02/cyclone-gabrielle-grant…
Asked by Luxon in parliament question time today , what level of spending the government was comfortable with ...
PM Hipkins responded that Labour are spending a smaller % of the nation's GDP than when they came to power in 2017 ...
... infact , it was 27 % then : 30 % now ... woefully incompetent government , lazy & stupid ...
The question was about taxation as a percentage of GDP, not spending as a percentage of GDP. Hipkins' answer was wrong.
But if you look at the evidence, NZs taxation as a percentage of GDP has only varied a little bit over the past 15 years, and it's pretty much in line with the OECD average.
https://www.oecd.org/tax/revenue-statistics-new-zealand.pdf
Oh well, better just believe yet more spin from National about how this government is so terrible and not bother to look at the actual facts and judge for yourself.
Individual tax take up 55% in 5 years. I for one feel like more and more has been taxed with virtually nothing to show for it.
https://i.stuff.co.nz/business/money/300726868/individuals-tax-bill-up-…
The only part of that that is actually of concern is the inflation component, which is the article already highlights:
He said a Treasury tax calculator indicated the Government had earned about $2.3b extra since 2017 due to more income falling into higher tax brackets thanks to inflation
It's a pity that National didn't support Michael Cullen's plan to index tax thresholds to inflation back in 2005, if they had, this problem would not exist.
With the amount of printing and spending coming down the pike, 50 basis points isn't going to stimulate international demand for bonds/NZD.
Usually the go to line is, "it's good for exporters".. well, have you heard of Cyclone Gabrielle?
Give it 3 weeks and the RBNZ will be wishing they went 75 basis points - they'll be counting down the days to their next OCR meeting.
Surely that kind of thing is pretty obvious to see through?
I am genuinely interested in this question, we have the bright line test for a supposedly good reason.
Maybe I will write to the IRD and ask.
I heard a dude bragging to someone in a lift last year about not paying tax, might be quite common?
HouseMouse
Tax evasion is a criminal act.
In property transactions, there are obligations on one's lawyer (or conveyance agent), real estate agents, and bank to report any action that is at risk or suspicious of evasion activity. It doesn't take much nous to appreciate that you are going to be dealing with at least two of these who at the risk of severe financial penalty or loss of license they won't be red flagging evasive activity by you.
You'd also be pretty naive to think that IRD are not data sharing with the Land Information NZ, or that their own algorithms are not picking up real estate trading.
Always wondered where you got your information from. As you call the well qualified teams of bank economists "fools", have no confidence in economists, and no confidence in the Monetary Policy Committee members, I now know . . . . its some unknown dude in the lift. That seems about right.
My understanding is that one can buy and sell two properties within a two year period provided they are used and can be demonstrably shown to be the main residence then they are exempt the Brightline Test. Yeah, no doubt there are some dumb ones who will push beyond this but there is high risk of being caught and not only suffer a financial penalty and/or prosecution but also have the IRD on your back for life.
HouseMouse
I'm calling you out.
by printer8 | 3rd Mar 21, 11:35am
. . . I think that most are now seeing current price rises as unsustainable.
And that sentiment was repeated three or four times over 2021.
In 2022 you claimed I said 18% increase for 2022 - that was a blatant untruth.
If you value personal honesty then front up and prove otherwise otherwise you are being called out.
I have already previously called you out on this false assertion so you are well aware that is not correct.
Today I was listening to a podcast and learned something that was quite shocking.
Multiple markets at or near an ATH.
Notably the ASX and FTSE.
Its extraordinary. By comparison the SNP500 looks weak, and NZX50 looks like death.
Apparently there are other markets on fire and some are saying the liquidity injection / QE from Asia is doing this.
I'm still buying US stocks but damn I may have to put some money into an ASX index fund or something
If Peter Zeihan is to be believed, the US/China bing bong has got to the point where US companies are pulling their people and money out of China, if they can still escape, and China (with it's demographic collapse) is thoroughly in the poo.
Does not bode well for Oz and the ASX when China is it's top export destination by far (27%).
Here's my reckon: Buy Gold and miners - Central banks are having a big buy up of bullion, and when the BRICS move more strongly to cut use of the USD and float their own currency for trade, there is a fair chance it will be at least partly backed by commodities incl gold.
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