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
Specialist community lender Paraloan raised its home loan rate to 5.19% for 3 years fixed.
TERM DEPOSIT/SAVINGS RATE CHANGES
None here today.
'SMALL PERCENTAGE' OF LATITUDE CYBER ATTACK VICTIMS ARE KIWIS
Latitude Financial, which says it's battling a well-organised, malicious and ongoing cyber attack, says it has engaged "all relevant" New Zealand and Australian authorities. A NZ Latitude spokeswoman says "a small percentage" of the estimated 330,000 customers and applicants who've had personal information such as copies of drivers licences, drivers licence numbers and copies of passports or passport numbers stolen, are New Zealanders. The Department of Internal Affairs says more than 1300 New Zealanders have had their passport details stolen, Newshub reports. Latitude has a help page for those impacted by the cyber attack here.
'WE'LL BE FINE, BUT WE DON'T THINK YOU WILL BE'
More New Zealand small businesses think the economy will shrink than grow in 2023 despite most expecting to their own business to grow. That’s the surprising finding from a new survey by CPA Australia. Their 2022-2023 Asia-Pacific Small Business Survey found just 40% of Kiwi businesses surveyed expected the national economy to grow. This was the second lowest result among the 11 Asia-Pacific economies CPA Australia surveyed. However, 66% expect their own business to grow in 2023. Last year, 56% were expecting growth. The number of small businesses here that reported growth in 2022 (60%) was well up on 2021 (33%).
TRADE DEFICIT HOLDS
Stats NZ said we had a trade deficit of -$714 mln in February, little changed from the -$715 mln in February a year ago. Goods exports went up +0.8% to $5.2 bln from higher dairy exports. Imports were up +0.7% to $5.9 billion, led by oil products.
SPLURGING ON KOREAN IMPORTS
In February we got a boost to our trade surplus with China. But for the full year, the surplus with China is now only +$640 mln, barely a quarter of what it was in the February year in 2022. Our situation with Australia is also getting worse, with a merchandise trade deficit of -$800 mln, up from -$250 mln the prior year. With the US our annual surplus is only +$100 mln, down from +$626 mln. With Japan were are little changed in a big deficit (-$963 mln). And with Korea we are in a huge deficit relationship with them. For the year we sold them $2.7 bln of goods but bought $6.3 bln from them (mainly cars and machinery). That is an annual deficit of -$3.6 bln, our largest with any country.
SERVER DOWN
We were going to report on the February credit card transaction and balance activity for February, but the RBNZ's servers are down that handle these updates. We will update this item later if the data comes through by 4pm, otherwise tomorrow. (OK, that data is through now and we are working on the analysis now. In the meantime, this is the RBNZ analysis for February.)
TURNING THE WRONG WAY AGAIN
The proportion of credit card balances that incur interest rose in January from December to 52.8%. It is usual for this to happen 'after Christmas'. But the rise this year was notable in one respect - it was the biggest rise since 2007. Still in 2007, the proportion incurring interest back then was 67.3% so we have actually made quite a bit of progress in those 16 years avoiding credit card interest.
DEGRADED SERVICE
Global shipping giant Maersk is to cut back its shipping service to New Zealand, degrading it to its Polaris service that re-routes much of it via Australia for full connections. Maersk made super profits during the supply chain problems of the past few years but container shipping rates have moved sharply against them in the past few months and they are now walking back their coastal service promises. Regional ports will feel the pinch, not to mention exporters.
A LOGIC TRAP FOR THE GREEN SHIFT
Research IP's useful RIPPL Sluice summary is pointing to some UBS research that shows China has a lock on the production of clean energy metals at the moment. This isn't necessarily where those materials are mined however, but where they are refined. China does the dirty work so we can buy 'clean energy' products. It's going to be hard going trying to convince China to de-industrialise but keep supplying us our green products.
SWAP RATES TURN DOWN FURTHER AS BOND YIELDS DIVE
Wholesale swap rates are probably down further today. 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 unchanged at 5.13% and now only +38 bps above the current OCR. The Australian 10 year bond yield is now at 3.23% and down a sharp -12 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 4.18% and down another hard -15 bps from yesterday and the same as the earlier RBNZ fix at 4.18% which was down another -12 bps from yesterday. The UST 10 year yield is a little higher today from this time yesterday at 3.50% with a +2 bps rise but it has been volatile in between.
EQUITIES MOSTLY MOVE UP
In New York, the S&P500 ended up +0.9% in some sort of confidence vote - but what for is a puzzle. Probably that the Fed won't raise rates on Thursday morning (NZT). Tokyo has today off (Vernal Equinox) in a temporary reprieve after yesterday's big drop. Hong Kong has opened up +0.9% probably on the same sentiment as New York. Shanghai has opened up +0.3%. The ASX200 is up +1.3% in afternoon trade in a good recovery. These are such different signals to the ones the bond markets are delivering. But the NZX50 is down -0.3% near the end of trading and not getting any halo gains.
GOLD FIRMS
In early Asian trade, gold is up +US$12 from this time yesterday at US$1981/oz.
NZD SLIPS
The Kiwi dollar has eased from this time yesterday, now at 62.3 USc and down almost -½c. Against the Aussie we are a tad softer at 93.1 AUc. And against the euro we are down -½c to 58.1 euro cents. That means the TWI-5 is down to 70.3 and a -60 bps drop in a day.
BITCOIN HOLDS HIGH
The bitcoin price has moved sideways again today, now at US$27,957 and up the minor +0.6% it fell yesterday. Volatility has remained moderate today at +/-2.4%.
This soil moisture chart is animated here.
Keep abreast of upcoming events by following our Economic Calendar here ».
68 Comments
https://www.oneroof.co.nz/news/warnings-of-liquidation-and-horrific-cos…
Warnings of liquidations, ‘horrific costs’ as Wellington new-build projects hit pause.
At the height of the market many developers were overpaying, she says.
“We got up to $1500 per sqm at the peak of the market and now we’re probably about $800 or $900 per sqm, so it’s a huge difference in price.”
In Auckland it got over $4000 per sqm
“The thing is if you're on normal bank finance at the moment and it's a commercial loan you're paying 8 or 9%,” he says.
“If you've then got mezzanine finance on top of that you're probably sitting at 14 to 18% - no one’s making any money. How long do you keep paying 14 or 18% to a mezzanine finance funder on something you can't build, can't construct, with no income.”
How are your predictions for the S&P500. Down and out?
The predictions, not the index
I see A2 milk is now down a buck since they have stopped buying their own shares.
And fonterra rising
If company executives get a bonus for the share price rising, of course they will recommend share buybacks. Nobody else would be dumb enough to buy their shares at the buyback price. As shown by the post buyback share price tumble. Didn't that used to be illegal? Not sure.
-25% by end of year
banking shares down 50 pct, the rest steady
Please stick to commenting on the above today HW2
Re S&P500 Same as JP Morgan
https://www.afr.com/markets/equity-markets/sell-into-rallies-jpmorgan-a…
“We stick to our call that [the first quarter] will likely end up the high point for [US] stocks this year, and see the strong rally since October, that was driven by our views of CPI peaking,
No why are you spruiking a different message now. Bear market over, range trading, that's the one I agree with
Interesting that a 687m² empty section that someone has paid $1m for has 3 bedroom freehold houses across the road for around $600k.
This was a train crash that was easy to spot more than a year ago, and we both did.
We will start hearing a lot of bleating.
i mentioned to some key people in government ministries that this was coming, and maybe they could be proactive in readying for it. This was just over a year ago. They were in total denial, saying there would only be a minor dip rather than a big dip, and pointing to building consent data as the basis for that position. And these are senior staff in agencies such as MBIE, Kainga Ora, MHUD.
Unbelievable.
No wonder this country is the state it is in.
I was happy to accept $4050 per sqm........ and it was a disaster waiting to happen.
Now let it unfold, overshoot then play your cards. Looking for a Hilux real soon....
Hurry up and cough up for the hilux. If you really do have millions you can afford new.
Sometimes the humour sound like there's an underlying angst...
I think HW2 is actually not that experienced in trading and just pays up for assets vs waits and gets a bargain.
Fake stories it guy.
Only sensible people buy Hiluxes. Tradies masquerading as self employed business people all drive Rangers. Which they can't fit in the garage as it has the Harley and the jetski in it!
It usually the boss that drives a hilux, Pretenders drive Rangers. Real tradies drive a HiAce
Dr Andrew Wilson is doomie gloomie on aust interest rate forecast and right up your alley. You and IT GUY can chew the fat in Noosa https://youtu.be/LBHohin4nEw
What you will not like is what he said is the changing trend in aust house prices. The figures don't lie. Prices are only down because of interest rates slamming up but rates will eventually settle, or drop. And don't forget what I said that over the long term during high inflation, house prices climb faster.
Sure HW2
https://www.afr.com/property/residential/about-275-000-investors-could-…
An estimated 275,000 landlords could find it tough to refinance their fixed-rate mortgages, with those who own multiple properties under pressure as lenders impose strict borrowing criteria including a minimum rental return.
For investors rolling off fixed-rate this year, the rapid rise in interest rates has severely cut their borrowing capacity while falling prices threaten to tip them into negative equity, experts say.
This may force some investors to sell some of their properties if they are unable to switch to a cheaper loan.
More landlords could be forced to sell their investment properties once their fixed-rate loans expire this year. Joe Armao
Those who own multiple properties, in particular, face stricter lending assessments as some banks tighten their criteria on riskier loans, including meeting a minimum rental yield.
“We’re seeing some banks are actually imposing a minimum rental return to be achieved on a particular property in order for the investor to pass the serviceability test,” said Anna Porter, principal and founder of real estate advisers Suburbanite.
“It’s not affecting every landlord and not all lenders are doing it, but we’re seeing it happen a lot more in the last month or so.”
The minimum rental yield requirement varied, but lenders typically required about 5.5 per cent, Ms Porter said.
RateCity estimates that nearly one in three or about 275,000 of the 880,000 fixed-rate mortgages expiring this year are investor loans, based on the proportion of investor lending from April 2020 to December 2021 as recorded by the Australian Prudential Regulation Authority.
He’s a fake. To be ignored. He’s got a PhD, whoop dee doo
Mentions from both of the doomie gloomie spruikers. On point
Hard for an old spruiker like HW2 when Oneroof turns on him
Hard for IT "I have no debt, but still has debt" GUY. He cant remember his own fabrications, shame
Keep trying to hold those tides back houseworks. Spruikers gonna spruik.
The tide turns all by itself Amokk, slowly at first, then.....
You perfectly summed up the current house price falls. Well done houseworks, I'm proud of you accepting the irrationality of what was and the not small adjustment of prices downwards to align with fundamentals that is upon us.
Hard core credit card debt out turning at 52.8%. Improvement from 15 years ago certainly, but still hardly a positive indication that New Zealanders are handling their finances efficiently, or worse, perhaps an indication that many individuals and/or households are simply and worryingly over reliant on debt to survive, day by day? Believe the ultra low OCR during the pandemic/lockdown episode had very little impact on the interest rates being charged for the credit card negative balances?
You are right. High credit card interest rates ~22% didn't decline during the low interest rate period per se, but the appearance of many more 'low interest' cards ~12% was noticeable. However, the average overall effective rates didn't drop that much. But the 53% who do pay interest now is close to the lowest ever in a record that goes back to 2000. The actual lowest ever was 51% in December 2022, so very recent. It is a very positive direction even if some think it isn't positive enough.
David, do you think these rates are fair and just when a bank holds security over the family home?
What sort of moron is paying 22% on a credit card when they have a mortgage? Any sane person would have rolled it into a revolving credit facility when they got their mortgage if they managed to get a mortgage with any significant amount of credit card debt in the first place.
I think that's what you call a stupid tax.
Please don't use fair and bank in the same sentence.
Have been looking but can’t find a straightforward comparison to the same status in the usual comparable nations. Anybody got a link?
Surely the other big change is the proliferation of BNPL ? These services will have replaced credit cards for many people.
A lot of the deficit with South Korea is because people are buying the Stonic starting at $25,990 +ORC which is very reasonable for such a handsome vehicle. Seeing them everywhere.
How many do you have for sale?
you see more MG's than Stonics.
The real reason for the huge jump in the deficit with Korea is because we purchase petrol and diesel from them.
MG is mostly made in China innit? So it wouldn't have much impact on our deficit with South Korea.
My point on that was that the Stonic isn't that big a seller.
(Stonic 423 sold in Jan - Feb, by comparison 545 MG ZS or 813 Suzuki Swifts)
The competition is coming thick and fast, and certainly isn't the heinous things that first hit the market (I guess someone must think a Prius is good-looking!)
Given the choice between the Stonic and the Venue, I'd take the Venue every single time.
Guyon Espiner doing something really strange and unique over at RNZ today, something you never really see in the mainstream news media anymore. Apparently, they call it "journalism":
https://www.rnz.co.nz/news/lobbying/486382/prime-minister-s-chief-of-st…
The whole scene around parliament, the mps, the staffing, the bureaucracy, the consultants, the lobbyists, the cronies is as intertwined, convoluted, writhing and treacherous as a barrel of snakes
100% Squalid and Crony (pushing corruption at times)
Like reporting on the Housing Crash, but its coming..........
This is the Prime Minister who was Minister of Education pushing through the Polytech reform shambles wasn't it? Also wasn't he in the Cabinet during the whole secret pre election Cogovernance and 3-5 Waters shennanigans? The lobbyists and election pollsters must have talked him in to going back on his previous direction of government.
Credit card spending on domestic cards now back to 2018 levels in real (CPI adjusted) terms. The key monthly datasets like this (including median earnings, filled jobs, net bank lending, govt fiscal stimulus etc) are all showing that our economy ran out of fuel in the latter half of 2022. Yet, still the bank economists and commentators spent the last few months talking up our 'overheating economy' (before getting shocked by the GDP stats!) Clueless.
“Ran out of fuel in the latter half of 2022.” Hard to argue with that but you might add that it had already run out when the panicky crash of the OCR on the advent of covid provided another gush. It was flogging a dead horse. By that time the OCR had been lowered to the point that any prudent borrowing for viable and productive investment had already taken advantage of the opportunity. What came next was encouragement by the powers that be to borrow to spend to supposedly save the economy. Present and forthcoming interest rates are due testament to how foolhardy that policy was illustrated by a considerable number of households and businesses now in no position to service the debt that they acquired.
We were running out of steam in late 2019 - now we're lining up to have the recession we were meant to have then. Here we are except much more debt. 2022 was simply the prologue imo, more interesting twists to come.
I don't buy the 'we need a recession' argument. Surely we can do better than that? What we need is an economy that does not rely on commercial banks pumping ever more credit money into asset bubbles - loading households with debt whilst the handful of people cashing out of the ponzi get rich. That means making some fairly major adjustments to our tax and policy settings - not crashing the economy when the ponzi scheme gets out of hand (only to re-start it again).
Suggest you study more cycles, both globally and domestically...... the alternate is to engineer a depression and collapse of fiat.
No it isn't. There is nothing natural nor inevitable about our boom and bust cycles - they are the consequence of policy choices, legal / regulatory frameworks, and crude 1970s monetarism. We could smooth out the highs and lows with smarter automatic financial stabilisers and redistributive mechanisms (e.g. variable profit taxes, LVT, job guarantees, full-term fixed rate mortgages for owner occupiers through public banking etc). We could recognise that we are too small and isolated for functional competitive markets in many areas, and too vulnerable therefore to monopolistic rent extraction (Switzerland have shown us how to tackle that). We could set out plans to achieve a trade balance so that we are less exposed to international capital flows. I would suggest you read more Minsky!
Some interesting point Jfoe, I like the idea of setting out plans to achieve a trade balance. Looking at Korea trade deficit, surely transitioning the transport sector to more sustainable modes so we can stop importing so many cars would be a start. Any thoughts on that?
Coastal shipping needs to move towards ferry or barge type services to the main ports / population centres.
As well as main ports , many strategic services to transport strained areas need to be subsidised. Auckland - Coromandel, Tauranga -Gisborne - Napier obvious ones at the moment.
Logs need to be barged off these areas to stop the damage to roads that can't cope with the weight.
My suspicion is that if this was viable it would be being done. Logs are all transported from inland to the coast. They will always be taken to the place it is cheapest to take them to. They will always be taken in the manner which is cheapest.
Road transport is only the cheapest because the user doesn't pay directly, we all subsidise it at massive expense. It only appears cheaper because the true costs are not readily apparent.
Real scandal is the cost of NZ to Aus shipping..
Little update on the ol' ratty. I'm not convinced that we're out of a bear market but this is now one of the most interesting times in its short history. Was speaking with a normie friend who was asking me what happens if all the holders cashed in their chips. I pointed out that Glassnode data shows that 73% of the total supply is in the custody of long-term holders.
How would you describe your normie friend's reaction?
Most normies I talk to think crypto died when FTX proved it's a scam.
We are in a technical bull market now for sure, making higher highs and higher lows. Dips are for buying. It doesnt mean we cant go back to 20k though.
That deviation down to 16k would not have happened if not for FTX blowing up, so I was stoked to get the opportunity to stack some sats at those prices :)
https://www.oneroof.co.nz/news/luminaries-author-eleanor-catton-sells-h…
Sold for $1.7M. - $625K under 2021 CV and 200K lower than 2017 CV.
Homes estimate still showing $2.2M
https://homes.co.nz/address/auckland/mount-eden/14-charlton-avenue/P7ow
Farcical
A yellow and blue house on a cross lease ain't going to pull the heart strings.
By the same token, there was a multi offer, which I can see as being a flip asking a lot more in a few months
She bought in 2014 for 1.22 so 480k profit for gratis
In contrast, The man booker was a paltry £50k
The real value of the prize is much greater than that. Immense value in terms of marketing
Or, you know, recognition that you are a fucking awesome writer, worth more than $$$
You just can't help yourself can you?
You're either so up to your eyeballs in property debt that you're shitting your pants at the property crash and so desperate to save yourself that you think spruiking on here will somehow be enough to turn the market or
you have invested so much of your identity on spruiking that like the most ardent conspiracy theorist you can't face facts because it would mean you'd been fooled all along.
Literally anytime anyone posts anything that suggests property is crashing or not a good long-term investment at this time you jump in. Seriously tragic.
A big chunk of the value added would have been because it was lived in by a famous Booker Prize winner.
We fundamentally need our own Jones Act to force any ship operating between ports in New Zealand to be owned and operated from New Zealand and under our flag. Deregulating coastal shipping has been a disaster.
The net result of such a move could easily be no shipping
"the trade surplus with China is now only $640 bln"....hopefully that is a statement in the future about trading relationships and not inflation going even more crazy than it is....might want to dash the hopes of the reader by correcting that...
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