What happened Friday

Business / news

A review of things you need to know before you sign off on Friday; minor rate changes, green bond expensive, corruption conviction, huge AIA investment, swaps firm, NZD firm, & more

17th Mar 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
NBS raised some fixed rates. Bank of China raised their floating rate by +50 bps to 7.49%.

TERM DEPOSIT/SAVINGS RATE CHANGES
None here today. A review of the TD market is here.

A BIG CORPORATE LOAN ISN'T MUCH CHEAPER THAN A HOME LOAN
Kiwi Property's (KPG, #21) 6½ year green bond raised the full $125 mln and will pay a yield of 6.24% after the successful book-build process. (A home owner would pay about 6.50% for a five year mortgage loan.)

GUILTY OF CORRUPTION
Two former public servants who used official information to seek to profit from the Christchurch earthquake rebuild have today been found guilty on corruption charges. Gerard Gallagher was found guilty on three charges of corrupt use of official information. Simon Nikoloff was found guilty on one charge of corrupt use of official information and not guilty on one charge. The defendants were employed as Investment Facilitators by the Canterbury Earthquake Recovery Authority (CERA), which was set up to encourage the rebuild and regeneration of the city.

AUCKLAND AIRPORT'S NEVER-ENDING DEVELOPMENT
Auckland Airport (AIA, #2) is starting a major rebuild of its terminal to integrate the domestic services. It will cost $2.2 bln (with some other related projects) and part of an overall $3.9 bln development plan. Overall its a six year project.

FMA WARNS ON FAKE SBS TD OFFER & FAKE HSBC BOND OFFER
The Financial Markets Authority (FMA) is warning of a fake term deposit offer in the name of SBS Bank, and a fake HSBC NZ bond offer. The FMA says investors received email offers claiming to be from senior SBS staff. However, SBS has confirmed it's not associated with the offer or email addresses using the "sbs-am.com" or "sbs-clients.com" domains. Meanwhile, the FMA says NZ residents have been approached by individuals claiming to be from HSBC NZ offering an "HSBC New Zealand ESG Bond." Fake product disclosure statements have also been emailed from the esgbonds-nz.com and hsbcnz.com domains. HSBC has confirmed it wasn't associated with this offer, email domains or the individuals purporting to work for them.

A TOSS-UP
In Australia, there is a week to go in the NSW State election. At this point, it looks like a flip from Liberal to Labor, but it could be quite close and after prefences and with the minor parties Labor may not be able to form a government on their own.

EXPORT SLUMP
Singaporean exports fell -8% in February from January, much more than anticipated. Year to date they are down -16%.

SWAP RATES TURN BACK UP
Wholesale swap rates are probably up today after yesterday's drop which swelled at the end of trading. However, 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 +13 bps at 5.14% and now only +39 bps above the current OCR. The Australian 10 year bond yield is now at 3.43% and recovering +6 bps from this time yesterday. The China 10 year bond rate is little-changed at 2.88%. And the NZ Government 10 year bond rate is now at 4.43% and up +3 bps from this this time yesterday and almost matching the earlier RBNZ fix at 4.44% which was up 16 bps from yesterday. The UST 10 year yield is higher today at 3.59 with a +10 bps rise from this time yesterday. It started the week at 3.70%. The ECB's decision to hold its course on fighting inflation has markets seeing the Fed doing something similar next week (Thursday NZT).

EQUITIES STABILISE AT WEEK'S END
Wall Street ended its Thursday session up +1.8%. That means for the four days this week they are up +2.5% so far. The NZX50 is little-changed in late trade today and if that holds they will be down -0.4% for the week. The ASX200 is also flat in afternoon trade, but heading for a -2.6% weekly retreat. Tokyo has opened up +0.5% and on its way to a weekly fall of -2.6%. Hong Kong has opened up +0.8% heading for a minor weekly gain. Shanghai has opened up +0.7% and that will also be the weekly gain if it holds.

GOLD FIRM AGAIN
In early Asian trade, gold is up +US$10 from this time yesterday at US$1920/oz.

NZD FIRMER
The Kiwi dollar is a little firmer than where we were this time yesterday, now at 62 USc and up about +¼c. Against the Aussie we are also a little firmer at 93.1 AUc. And against the euro we are up slightly at 58.4 euro cents. That means the TWI-5 is up to 70.4 and a +20 bps rise from yesterday.

BITCOIN RISES
The bitcoin price has moved up a little more today, a third day up, now at US$24,994 rising +2.5% from this time yesterday. Volatility has been moderate today at +/-2.0%.

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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38 Comments

by Audaxes | 17th Mar 23, 4:16pm 1679022971

I do hope he and his boss have finally moved on from blaming Putin to accepting that primary responsibility for high core inflation above target almost always rests with whoever sets monetary policy. In latter day NZ that is the MPC. Link

by J.C. | 17th Mar 23, 4:46pm 1679024804

Two former public servants who used official information to seek to profit from the Christchurch earthquake rebuild have today been found guilty on corruption charges.

I would personally like to see these individuals serve prison time. Will set an example and send a warning to the public sector.

by Norm | 17th Mar 23, 5:33pm 1679027618

I hope your day job isn't Minister of Police??

by IT GUY | 17th Mar 23, 5:39pm 1679027968

ex min police now number 20 on cab list and dropping fast on final, final, final, final, almost last warning.

by Foxglove. | 17th Mar 23, 6:30pm 1679031020

Sure, a clumsy and impetuous series of utterances but mitigating that I would suggest caused by a real sense of frustration with the dead hand of bureaucracy that reaches into all of our daily lives. I’m hardly a fan of this government but as an electorate mp he was trying to prevent his constituents from losing a valuable medical ability and quite honestly the other two thoughts would echo the majority of pub & table talk anywhere in NZ. Ok he didn’t follow protocol, and mps must do that of course, but at least he stood up and spoke his honest opinion.

by IT GUY | 17th Mar 23, 9:00pm 1679040025

He prob did this as his own min immigration was missing in action ?

by J.C. | 17th Mar 23, 5:06pm 1679025984

The bitcoin price has moved up a little more today, a third day up, now at US$24,994 rising +2.5% from this time yesterday

Actually we've punched much higher and closer to USD26K. Prior to the global banking meltdown, many in the technical analysis space were suggesting that there was nothing but blue skies over USD25K up to the next resistance levels around USD35-40K.

IMHO, pretending to understand the TA patterns is fruitless, unless you're highly skilled, experienced, and spend most of your working hours understanding the space as it relates to ol' ratty.

by Rob Reid | 17th Mar 23, 5:02pm 1679025742

Yeah, I just watch an interview with Gareth Solway if I'm contemplating crypto and he tells us what he thinks the charts say.

by J.C. | 17th Mar 23, 5:05pm 1679025950

Yeah, I just watch an interview with Gareth Solway if I'm contemplating crypto and he tells us what he thinks the charts say.

Gareth's thinking is interesting and useful. Even if you're not a trader, if you buy into his thesis and the price goes to USD6K, you won't be emotionally wrecked.

by IT GUY | 17th Mar 23, 5:08pm 1679026101

I like it when TA meets fundamentals meets fiscal policy, multiyear momentum breakout moves. This occurred just after the fed raised rates for the first time, it was why i sold in Glendowie.... every star was alligned. I prefer metals over crypto as a insurance policy, crypto prob more an active trade,

by J.C. | 17th Mar 23, 5:11pm 1679026273

I prefer metals over crypto as a insurance policy, crypto prob more an active trade,

Why not both? It's not binary. I still think most normies should go into BTC with <1% of their net worth anyway.

by IT GUY | 17th Mar 23, 5:28pm 1679027327

Thats a fair call, but I like to hold the asset in my own hand.

by J.C. | 17th Mar 23, 5:45pm 1679028310

Thats a fair call, but I like to hold the asset in my own hand.

Good. And you or anyone else should not buy BTC then until you understand the why and how of self custody.

by J.C. | 17th Mar 23, 6:00pm 1679029237

Anyway, if there is an ensuing Bitcoin rally, it will be one of the most hated ever.

Normies and the establishment will think "how can Bitcoin and the crypto markets in general rally sharply after all the bad things that happened in 2022? Didn’t people learn Bitcoin and those associated with it are scumbags? Aren’t people afraid of the narrative that Bitcoin caused the failure of large banks, and almost consumed the US banking system?"

by Pa1nter | 17th Mar 23, 9:02pm 1679040154

I still think most normies should go into BTC with <1% of their net worth anyway.

This is an insignificant amount of net worth to put aside. Even if you had a million bucks, 10 grand isn't going to save you from inflation/financial apocalypse.

by Galloleous | 18th Mar 23, 4:58am 1679068715

then perhaps you might like some maths behind the reason why :)

https://seekingalpha.com/article/4453516-bitcoin-the-asymmetric-bet

by Pa1nter | 18th Mar 23, 6:21am 1679073672

End of the day whether it's gold, Bitcoin or buttons, the relative value of an inflation hedge is unlikely to go to the moon. I.e. if 10 grand of Bitcoin today will buy you half a new Suzuki Swift, it's not going to be able to buy 50 of them if the value of fiat deteriorates down the line.

by Fossil Lover | 18th Mar 23, 8:09am 1679080147

In a world of de-globalization, a little livestock, big garden, some chickens, are much better investments. I find metals too hard to chew and crypto's too hard to find and not very nutritious.

by Pa1nter | 18th Mar 23, 8:27am 1679081270

Yep, you want to secure the sorts of things you want to spend money on, rather than guessing which form of currency is going to prevail.

by Juzz | 17th Mar 23, 6:01pm 1679029274

I'm quite happy to unload some BTC and other cryptos if we get a pump up to $35-40k USD. I'll be using it to secure leverage on property in the coming months to a year. I can see a bit of a flush down soonish so will just hodl for now

by J.C. | 17th Mar 23, 4:54pm 1679025240

Brilliant interview with Marc Cohodes (legendary short seller and exposer of fraudulent corporates).

"People fall in love with the shiny object, and in the case of FTX it turned out to be a fake," says legendary short seller Marc Cohodes. "The world right now lacks people's ability to actually think. The more I dug in on Silvergate's clients, one was worse than the next [Signature Bank]," he tells Daniela Cambone. "I told people Silvergate is a publicly traded crime scene and the CEO needs to go to jail," Cohodes says. "I'm very proud of the work I did here and the time I put in because two really bad outfits are now out of business," he continues. "I had three bullets in my gun and all three hit the target... I'm also short Helen of Troy. It's headed for big-time trouble," Cohodes predicts. "The cost of living is out of control and the CPI does not capture how expensive it is these days to live," he continues. "The Fed has really messed things up over the past decade and a half with the generation of easy money," Marc states. "It's why these banks are all in trouble. They borrowed all of this cheap money with low interest-rate investments... It's all coming home to roost," he argues. "The Fed is in a real box and they need to take interest rates way up and absolutely kill inflation," Marc continues. "[The Fed] really needs to slow things down hard and break inflation... We are in a zombie state," he concludes.

https://www.youtube.com/watch?v=X538TJSsaHM

by IT GUY | 17th Mar 23, 5:03pm 1679025797

I think this week, this Banking Crisis has finally made Kiwis admit we have a House Price Crash.

by J.C. | 17th Mar 23, 5:08pm 1679026109

Or entertain the idea that NZ has a property ponzi that is the be-all-and-end-all of socio-economic outcomes.

by Pa1nter | 17th Mar 23, 8:16pm 1679037412

Probably a little bit too much Kool-aid there.

People that do well usually do own houses though.

by J.C. | 17th Mar 23, 8:22pm 1679037725

People that do well usually do own houses though.

People with the ability to think do better as Cohodes refers to above. House ownership is somewhat irrelevant.

by Pa1nter | 17th Mar 23, 9:03pm 1679040216

Thinking is usually worthless until manifested in reality. Plenty of smart people suck at making bank.

Having a split family is 10x worse than not owning a house, your affirmation is pretty empty.

by J.C. | 17th Mar 23, 9:24pm 1679041454

Thinking is usually worthless until manifested in reality. Plenty of smart people suck at making bank.

Having a split family is 10x worse than not owning a house, your affirmation is pretty empty.

You think you are smarter and more wealthy than Marc Cohodes? I doubt that.

by Pa1nter | 17th Mar 23, 9:29pm 1679041779

It's interesting how many discussions with you end up with you pitting me against whatever soothsayer you're following this week.

I'm just saying your affirmation regarding property and socio economics is wrong. There's correlations there, but the "property ponzi" window you're viewing wider societal and economic issues through doesn't encapsulate how things are really playing out.

by J.C. | 17th Mar 23, 9:49pm 1679042951

It's interesting how many discussions with you end up with you pitting me against whatever soothsayer you're following this week.

I wouldn't call Cohodes a "soothsayer". If you don't know who he is, why would you claim as such? F'more, I very much doubt he wants to battle with you.

by Pa1nter | 17th Mar 23, 9:53pm 1679043200

Again why are you pitching me in a battle against this friend you bought to your argument. I have no idea who they are. Sounds like they're successful. I'm not debating anything they've said, I'm addressing a post you made yourself.

At no point do you ever seem to address things directly.

by J.C. | 18th Mar 23, 2:19am 1679059176

There is no battle. It is a figment of your imagination.

by Pa1nter | 18th Mar 23, 6:30am 1679074240

It's your imaginary friend, not mine. I replied to your post and your only defense seems to be I'm not as credible as this person you look up to. They're not even making the same point as you.

Pretty dangerous way of thinking.

by HouseMouse | 17th Mar 23, 5:37pm 1679027839

Friday question IT Guy as I really respect your opinions and you seem in the know in terms of housing development - are you as pessimistic as me with regards to prospects in this sector?

To quantify my views a bit more, I think Building Consent approvals will be down at least 50% YOY by late 2023, and by mid 2024 I think completions will be down 40-50% YOY.

I see unemployment in the sector (and related areas) rising a lot by mid 2024, and a key contributor to an overall unemployment rate north of 7% by then.

by HouseMouse | 17th Mar 23, 5:56pm 1679029004

Btw this might sound drastic, and it is. However between mid 2004 and mid 2006 in Auckland, building consent approvals fell about 50%, and then fell about another 30-40% between mid 2006 and mid 2008.

by IT GUY | 17th Mar 23, 6:14pm 1679030077

Out for dinner with friends chat tomorrow, have thoughts, not positive.

by aucklandproper… | 17th Mar 23, 7:28pm 1679034532

I agree with you.

Based on my discussions with friends and ex-clients, there's been massive cancellations and freezes on projects that have not kicked off ground. Lots of plans on hold. Architects, valuers and other trades and professionals are starting to get less busy without a long pipeline to be looking at.

Developers are selling up if they can, and willing to get out at large losses because the alternative is to borrow more at high cost, develop (the joys of dealing with council!) and lose even more money after all that jazz.

And Auckland Council's budget, which is heavily dependent on development contributions and fees related to development/consenting, is about to take a massive hit - at a time when their other costs have blown out. See for e.g. the crown jewel City Rail Link.

by HouseMouse | 17th Mar 23, 8:24pm 1679037865

Thanks for your thoughts.

Also throw in others at the front end of the process, civil engineers, surveyors and planners, starting to see work drying up.

Resource consent application volumes down by more than 50%.

by bw | 17th Mar 23, 8:11pm 1679037114

Ah. This explains the bailout.?

Peter Thiel said he had $50 million in a personal account at Silicon Valley Bank when it collapsed

That's a tad more than the statutory guaranteed $250k per depositor. South Canterbury Finance all over again.