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 today.
TERM DEPOSIT/SAVINGS RATE CHANGES
The Co-operative bank raised its 6 month rate by +5 bps to 5.65% and its nine month rate to the same level.
MORE FILLED JOBS, WITH PAY UP WITH INFLATION
The number of filled jobs rose by +5,400 in May from April and now total 2.37 mln. They are up +82,000 in a year (an extra New Plymouth or a Napier). This Stats NZ data shows the expansion of filled jobs is slowing however but are still strong in the service sector. The pace of wage increases remains elevated, but growth in earnings per filled job has come down off a peak of +8.1% pa in February 2022 to +6.2% pa in May 2023 - still basically keeping up with inflation. Westpac pointed out "that the demand for labour is as much a factor as the supply when it comes to inflation pressures."
WE ONLY WANT TO TRADE, THANKYOU
In Beijing, Chinese President Xi Jinping met with Chris Hipkins and called New Zealand 'a friend' but Hipkins was slow to return the compliment, preferring to focus on trade. China touted its process of 'opening up' 改革开放 but we should note that China has been saying that since the late 1970s when Deng Xiaoping was leader. Arguably, China has not delivered on its promises or claims very fast, even if New Zealand has been an early adopter. Xi also met with three other country leaders yesterday, all notably smaller ones - Barbados, Mongolia, and Vietnam. Large countries are wary of tying themselves to China's embrace. New Zealand didn't sign up to the common language the others did on One-China, GDI, GSI, and GCI. (GDI is the Belt & Road initiative, GSI is their Global Security Initiative, and the GCI is their Global Civilisation Initiative.)
FIRST HOME BUYERS ARE GETTING IN AT LOWER PRICES
The average amount first home buyers are paying for a home dropped about -$48,000 over the year to May. First home buyers are now paying about $669,000 on average for a home and taking on a $556,000 mortgage.
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BACK ON TRACK
The regulation FMA is satisfied the splitting out of the NZX's regulatory functions is working well. The annual NZX Market Operator Obligations Review reports NZX met all its market operator obligations during the review period from 1 January 2022 to 31 December 2022.
GAYA HERRINGTON
We have released a long-form interview with Gaya Herrington today. She talks about why the goal should be meeting human needs within planetary boundaries rather than economic growth. The Global Financial Crisis led to her leaving central banking, going back to university to study sustainability, and she has revisited The Limits to Growth.
TACKLING FRAUD ATTACKS
Online fraud is a growing problem. ANZ said that "only 0.06% of transactions are fraudulent" but it is a big problem for them and their customers because they process 67 mln transactions per month. That means they are dealing with 40,000+ fraud attempts every month. They claim their fraud detection system regularly detects and stops payment fraud. But clearly that isn't enough. They have released an enhanced Fraud Check tool to send an SMS message for any transaction they think looks suspicious, requiring confirmation from its customer that it is ok to proceed. (They never send email requests that have links, for these confirmations. By very wary of email 'confirmations'.) Also, see this.
A DRYING OUT IS COMING
NIWA is again warning that El Niño is coming. During El Niño, New Zealand tends to experience more southerly winds during winter. While that hasn’t been the case so far, a sharp cold snap along with strong winds will soon arrive on our shores and last into early next week. During late winter, spring, and summer, southwesterly-to-westerly winds may become more prominent. This increases the chance for drier-than-normal conditions in eastern areas of the country and tends to cause more rain in the west. Such winds can also contribute to increased wildfire risk because of drying grounds in key agricultural regions, along with occasional hot air masses coming in from Australia. While El Niño has been associated with historically significant droughts in New Zealand, such as in 1972-73, 1982-83, 1997-98, and 2009-10, but it doesn’t always bring one, they said.
AUSSIE INFLATION EASES
In March, CPI inflation was running at 7.0% pa. But today they released their May inflation indicator which has it easing to 5.6% pa. That's a 13 month low. The RBA next reviews its cash rate target on Tuesday next week, so the chance of a hold then might have gone up. But then again 5.6% is still way above their target and the RBA doesn't always do what the markets think the signals are. Besides, some are noticing a rise in inflation expectations.
WEAKER DEMAND, MARGIN PRESSURES = PROFIT SLUMP
In China, more indications of their economic funk. Profits earned by their industrial firms dropped by -19% from a year earlier in the first five months of 2023, on weak demand, and margin pressures. The decline followed a -21% plunge in the prior period and a 4% fall in 2022, with profits shrinking in both state-owned firms and the private sector.
SWAPS TURN UP
Wholesale swap rates are ending today a bit firmer. 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 again at 5.69% and still +19 bps above the 5.50% OCR. The Australian 10 year bond yield is down -8 bps from this morning at 3.88%. The China 10 year bond rate is little-changed at 2.71%. But the NZ Government 10 year bond rate is at 4.61% and up +8 bps from yesterday, and that is still higher than the earlier RBNZ fix which was up +7 bps to 4.54%. The UST 10 year yield is now at 3.77% and up +4 bps from this time yesterday.
EQUITIES RISING (EXCEPT IN CHINA)
Wall Street was up +1.2% on the S&P500 probably because recession fears seem to be fading. Tokyo has opened its Wednesday session up +0.9% and turning back up towards the record highs it posted earlier in the month. Hong Kong is little-changed at its open, but Shanghai has opened down -0.5%. The ASX200 has caught whatever New York and Tokyo has and is also up +1.1% in afternoon trade. The NZX50 is tagging along but more modestly, up +0.5% near the end of trade today.
GOLD RETREATS
In early Asian trade, gold is at US$1915/oz and down -US$14 from yesterday. Earlier it closed in New York at US$1914/oz and earlier still it closed in London also at US$1919/oz.
NZD LOWER
The Kiwi dollar is down -½c from this time yesterday and now at 61.2 USc but that is more about the USD than the NZD. Against the Aussie we are marginally firmer at 92.2 AUc. Against the euro we are lower at 55.9 euro cents. That means the TWI-5 is down to 69.8.
BITCOIN SLIGHTLY FIRMER AGAIN
The bitcoin price has risen slightly further today and is now at US$30,512 which is up +0.4% from yesterday. Volatility has stayed modest at +/- 1.3%.
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64 Comments
A big question to ask is how many of those new jobs are held by current workers working a second job to make ends meet?
https://www.cnbc.com/2022/09/27/nearly-70-percent-of-americans-are-look…
Xi also met with three other country leaders yesterday, all notably smaller ones - Barbados, Mongolia, and Vietnam. Large countries are wary of tying themselves to China's embrace.
Vietnam is doing well out of China, particularly for agricultural exports. Big earners include lychee and dragon fruit. The latter's prices have soared 400% since end of Coivd.
Bitcoin mining finally hits Aussie. About bloody time. Should also be mining ol' ratty from the coal gas seams.
https://www.abc.net.au/news/2023-06-27/bengal-energy-bitcoin-donga-outb…
Banked energy, dug up and burnt to create diminishing returns on an 'asset' that fundamentally does and returns nothing.
Banked energy? For what? And re coal gas seams, tell me you don't understand methane.
BTC in USD has returned 84% YTD. Where does 'nothing' start from? <90%?
Tell me you don't understand 'opportunity cost' if you can't understand coal/gas not used is banked energy.
As an asset, Bitcoin fundamentally returns nothing, it's value is only based on the possibility of people buying it for more in future.
As a currency, it's terrible. It scales poorly, and has an outsized portion of it's user base as criminals.
Thus "It fundamentally does and returns nothing".
Tell me you don't understand 'opportunity cost' if you can't understand coal/gas not used is banked energy.
Puhleese.
As an asset, Bitcoin fundamentally returns nothing, it's value is only based on the possibility of people buying it for more in future.
As a currency, it's terrible. It scales poorly, and has an outsized portion of it's user base as criminals.
Thus "It fundamentally does and returns nothing
Water cooler narratives don't cut it. It has 'value' here and now.
OK, I think I get it, we're coming at this from different perspectives.
The article you shared is a net negative for man-kind, the environment, and the economy as a whole (that energy could otherwise be used to build something that does something), but that's not your concern, you are simply concerned with your own financial outcomes.
Am I missing something? If not, ummmm... Try be a better human.
The article you shared is a net negative for man-kind, the environment, and the economy as a whole (that energy could otherwise be used to build something that does something), but that's not your concern, you are simply concerned with your own financial outcomes.
Once again, this is a water cooler narrative. If you took the time to understand Bitcoin mining, you might come to the conclusion that it is actually a promoter of energy conservation, particularly as it relates to the transition to renewable energy and the stabilization of energy grids.
But that won't happen if you don't make an effort.
First off, trying to debate with you is like chasing a sheep around a field. If you'd stay in one spot, you are very easily caught.
Beyond that, the piece 'Bitcoin supports the transition to renewables" is not a hard narrative to understand, bitcoin mining puts a floor on pricing during times of excess energy, increasing it's viability, increasing the business case for building renewables. I understand it, I just don't see it being true on balance.
Here's a simple test, "Then what". If Bitcoin does that, and successfully transitions the whole world to 100% renewables, then what for bitcoin?
Here's a simple test, "Then what". If Bitcoin does that, and successfully transitions the whole world to 100% renewables, then what for bitcoin?
It's in the scrolls, silly.
At that point, Bitcoin will save Africa by providing banking services for the unbanked. Current Bitcoin believers will generously distribute some of their coins to these poor unwashed masses. For a small fee, of course, but one does what one can.
Then the water cooler crew will eat their words, and the normies will kowtow to the believers' greatness. A select few founders will ascend to crypto heaven and the rest of the flock will inherit heaven on earth.
Some of that's possibly also the basics of Jehovah's Witness, hard to differentiate sometimes.
Good point. Bad NZDan, a quick google search + copy and paste the first result without verifying the data. 1449 kwh, in the back of my mind, did seem awfully low for 13 years.
https://www.visualcapitalist.com/cp/the-cost-of-mining-bitcoin-in-198-d…
Can food stalls help save China’s economy? Young people are quitting their jobs to find out
Maybe this is what NZ youth should be doing. Food trucks.
Economists say that without significantly increasing people’s income, it will be difficult to boost consumption enough to wean China off the infrastructure investments the government has relied on to keep the economy growing. In June, the central bank unexpectedly cut interest rates in an effort to stimulate borrowing and increase spending.
https://www.latimes.com/world-nation/story/2023-06-20/china-youth-unemp…
Have not forgotten the grocery trucks in the suburbs. Days before supermarkets & where the corner store was too distant if the family didn’t have a car. The truck used to come round the streets twice a week and some local stores had a delivery boy on a bike to compete. Just about all produce was NZ made topped up ex the old country.
Its so hard to know what will happen. I feel like there is still a lot of decline remaining, but there certainly aren't the number of for sale signs around as I would have expected, either there are buyers or very few sellers. Which is weird as I just walked past a massive apartment complex almost complete, who is buying them?
Are we not in safe hands? The newly appointed Associate Finance Minister is reported in the NZH as admitting to having to be pulled out of her own head. That must be a truly awful predicament and one can only hope all measures available are there in support. This is though a cabinet minister holding senior and serious positions. As such the responsibilities are neither inconsequential nor to be unattended. Surely a reallocation of duties would be beneficial to the identity and the work needed..
"We can already see rising sales in the near 19% seasonally adjusted rise in nationwide sales in the three months to May compared with the three months to February."
TA must have a handy collection of straws. Dr Seuss books roll off the tongue easier than this.
Alternative interpretation: the bottom is falling out, higher market is still selling but fewer at the bottom as the HPI continues to slide. I hope it's not the bottom, then we may accelerate the brain drain and all my work mates will piss off overseas.
I have a skilled workmate who moved to NZ with 12 other families around the same time. He says 6 of those families recently bailed out to Oz within a month or so of each other - just too expensive here for the incomes. Churn.
But I'm sure we can keep borrowing and making it more expensive because of our large balance of payments surplus \sarc
Popcorn.
FWIW - take the emotional spin out of Alexander's article, and look at the graph he's using. If anything, the Head-and-Shoulders pattern that's been established suggests that a fall back to $700k for the median is on the cards, followed by a further decline back to $612k.
And as always, time will tell.
This is also a case for a snap election.
https://thedailyblog.co.nz/2023/06/28/well-well-well-confidential-cabin…
He has a way with words:
The problem with the current model is that it is NZ on Air mates funding other NZ on Air mates to form an echo bunker of elite opinion that never has to dirty itself with reality.
All that is being generated by the current funding model is The Spin-off sharing their content with RNZ/Stuff/TVNZ etc etc etc. An endless social engineering campaign that promotes diversity over white cis male facts.
I’m confused with her timing. She said she has been on mental health leave for 3 weeks but wasn’t she appointed to one of Woods portfolio’s 3 weeks ago?
A sceptic might say that she is hiding from scrutiny at the moment.
Are we going to hear more about staff bullying claims or more dramas re Meng Foon donations/appointment?
What needs to be seriously considered here is the stress and strain on an individual that has suffered cancer. In the heat of battle with EQC & insurers I faced such a challenge and without any medical evidence, my gut feeling was that conflict had been the catalyst. Many, many others express similar circumstances as giving cause. Like it or not in reality it does from thereon, perch somewhat on your shoulder. I recall six years or so ago, suggesting on here the same advice for Nikki Kaye in that, in terms of life choice it might just be prudent to leave the heat behind in the kitchen.
The pace of wage increases remains elevated
According to the data released today, real earnings (CPI adjusted) increased on average by 4% from 2012 through to 2019. COVID caused a wobble in 2020, 2021 was strong (around 6%), but 2022 and early 2023 is running at around 1%. Last time real wage growth dropped down to this level like this was 2008. I heard it wasn't a good year.
According to the data released today, real earnings (CPI adjusted) increased on average by 4% from 2012 through to 2019.
Right. Then if you factor in asset price growth like housing, earnings are likely to be <4% pa. Typically, over the medium term, earnings growth lags that of CPI growth and house price growth.
Large countries are wary of tying themselves to China's embrace.
Good Morning from #Germany where Chinese Premier Li Qiang arrived for an official visit. Li said Beijing is ready to work w/Berlin to push for new developments in bilateral ties. #China is Germany's most important trading partner, even though Germany runs such a large trade deficit w/no other country. Link
WTF!!!!! I thought the $45m cost over 14 months was a typo. Now that I have confirmed it I am gobsmacked.
I work in commercial property and understand the industrial market in NZ well. This cost at an average rental of $150sqm pa translates to over 250,000sqm leased. That is the equivalent of 100 large industrial warehouses.
They have either been massively ripped off or something criminal has occurred.
Just measured the dimensions of a box of 5 RAT’s. Given they stated the value was $9 per test I have calculated they have 3.33m expired boxes. Putting aside the obvious question why the hell did they order so many? I have calculated the following- approx 1,000 boxes can be stored in 1m3 so 3,333m3 of storage is required. A mid sized warehouse of 2,000m2 with a capability to store up to 6m high provides 12,000m3 which is more than enough when access/circulation is considered. The cost of a 2,000sqm site with yard, parking and associated office should be less than $500K pa.
For comparison Harvey Normans distribution centre in Albany which services North Auckland and carries much larger bulky goods is approx 2,500sqm and costs $650K pa.
This needs much greater scrutiny.
Major dollar crisis brewing in Asia threatening world's monetary system and economy.
China's yuan currency has been incredibly weak to the point authorities in Beijing have been unable to successfully intervene against the dollar. It spells worldwide trouble given falling CNY is a dependable global recession and crisis signal. The worse it becomes for the Chinese, the more deflation we should expect elsewhere.
‘No one grovels like a Kiwi’, lol
https://www.macrobusiness.com.au/2023/06/europe-nz-compete-for-worlds-g…
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