What happened Monday

Economy / news

A review of things you need to know before you sign off on Monday; Westpac trims its 2yr home loan offer, service sector in a grim spot, migrants rush in, swaps up, NZD down, & more

14th Aug 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/LOAN RATE CHANGES
Westpac cut its two year home loan rate today. The Co-operative Bank and TSB both raised some fixed rates. And the Co-operative Bank raised its minimum personal loan rate from 6.99% to now 8.99%. The maximums haven't changed.

TERM DEPOSIT/SAVINGS RATE CHANGES
None to report so far.

SERVICE SECTOR NOW IN GRIM POSITION
Service sector activity took a clear hit in July with the PSI dropping to 47.8 from 49.6 in June. BNZ says: "That is concerning enough given it [is] indicating contraction for a significant share of the economy. But it is the details that reveal the real slump. The PSI activity/sales indicator sank to 39.6 in July from 50.9 in June. Outside of lockdown periods, this is the worst sales reading since the survey started in 2007 (including through the GFC). Adding to concerns, the new orders/business indicator also dropped heavily (to 43.8 from 50.4)."

ANOTHER BIG CITY ARRIVES
Data released by Stats NZ today showed that estimates migration for for the year to June 2023 compared the same year in 2022 were for migrant arrivals: 195,200, up +219%,migrant departures: 108,400, up +37%, and so annual net migration was a gain of 86,800, compared with a net loss of -17,600 in the prior year.  The increase in the past year is very similar to New Plymouth's population.

TOURISM STILL IN RECOVERY MODE
But tourism still has not fully recovered its pre-pandemic levels. Overseas visitor arrivals were 178,400 in June, or 84% of pre-pandemic levels, but they were double the same month a year ago and up +11% from May. The biggest changes were in arrivals from Australia and the United States.

"WE DON'T KNOW HOW MUCH THE REGULATOR WILL CATCH"
SkyCity told investors estimating potential exposure to penalties for money laundering breaches at its Adelaide casino was “challenging”. However they have provisioned $50 mln anyway.

RBNZ PAYS BANKS $235 MLN IN INTEREST IN JULY
The Crown settlement balances at the RBNZ were unchanged (from June) at the end of July at $21.1 bln but they were down -$8.5 bln from a year ago. However, bank settlement balances bounced back from their June dip, now at $52 bln (earning 5.5%) and up +$4.3 bln from a year ago.

MORE ELECTION POLICY RELEASED
Today we updated more party policy positions for new releases from Labour and their plan to remove the GST from fruit and vegetables. There is also their In-Work Tax Credit and Working for Families proposals. Then there is the Greens housing energy policies. They can all be compared here.

SWAPS HIGHER
Wholesale swap rates are probably higher again across all tenors. 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 little-changed yet again at 5.64% and now +14 bps above the 5.50% OCR. The Australian 10 year bond yield is up +4 bps from this morning at 4.21%. The China 10 year bond rate is down -2 bps at 2.64% and a one year low. And the NZ Government 10 year bond rate is up +6 bps to 4.96% and its highest since 2011, and still higher than the earlier RBNZ fix which was up +5 bps bps at 4.88%. The UST 10 year yield is at 4.18% and up +2 bps from this morning. Rising long rates are a global trend (except in China).

EQUITIES SHARPLY LOWER IN SHANGHAI
The NZX50 is down a marginal -0.1% in late trade. The ASX200 is down a more chunky -0.9%. Tokyo has opened its week down -1.0% in morning trade. Hong Kong has opened down a very sharp -2.5% and Shanghai is down -1.2%. Fear is spreading over the Chinese economy situation. The S&P500 futures are currently indicating Wall Street will open +0.2% tomorrow.

GOLD SOFT
In early Asian trade, gold is at US$1911/oz and down a further -US$2 from this morning.

NZD SOFTER TOO
The Kiwi dollar is down another -20 bps from this morning to just under 59.6 USc. Against the Aussie we are unchanged at 92.2 AUc. Against the euro we soft at 54.5 euro cents. That means the TWI-5 is at 68.6 and down a bit more than -20 bps.

BITCOIN STILL NOT GOING ANYWHERE
The bitcoin price has slipped slightly from where we opened this morning, now at US$29,275 and down a minor -0.3% or -US$99. Volatility has stayed low at just under +/- 0.6%.

Daily exchange rates

Select chart tabs

Source: RBNZ

Source: CoinDesk

Daily swap rates

Select chart tabs

Source: NZFMA

This soil moisture chart is animated here.

Keep abreast of upcoming events by following our Economic Calendar here ».

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.

117 Comments

by Yvil | 14th Aug 23, 4:13pm 1691986421

I think this is an extremely interesting concept. Selling electric scooters relatively cheaply without a battery. You then pick up a battery from multiple battery banks (like petrol stations if you like) and when your battery runs out, you just swap it for another one at the next battery bank. This could be a game changer in highly populated asian countries to lower pollution and noise.

https://www.bbc.co.uk/news/world-asia-66470327

by WellingtonInvestor | 14th Aug 23, 4:06pm 1691985992

Pity about the weather factor. Hopeless in NZ in the winter.

by JimboJones | 14th Aug 23, 4:12pm 1691986341

Why not a covered 4 wheel version. I always find it crazy that we drive a big heavy car to work every day when something 1/6th of the size could do.

by TronMVP | 14th Aug 23, 5:22pm 1691990531

The postman/woman drives one in my locality, but always on the pavement. They look like they weigh 100kg or thereabouts. Alternatively you could purchase an origional Fiat 500, and convert it to electric power, but the SUVs and utes would easily crush such a car.

by hum | 14th Aug 23, 5:43pm 1691991797

The postman/woman weight 100 kg combined or 100 kg each?

by TronMVP | 14th Aug 23, 6:21pm 1691994094

Actually my estimate was totally wrong - they weigh 500kg ( erm, that's the vehicle alone, and not the postie!)

by Baywatch | 14th Aug 23, 6:30pm 1691994652

What you drive is a status symbol in NZ...even you you cannot afford it!

by mfd | 14th Aug 23, 6:10pm 1691993430

So we're smart enough to deal with hot-swap electric scooters, but haven't figured out warm clothes and waterproofs yet?

by Zwifter | 14th Aug 23, 4:10pm 1691986206

Will not work in New Zealand, too many hills, maniacs in Ford Raptors trying to eat you alive and average road speeds outside Auckland are too high, the more cars going past you the more suicidal it gets.

by Yvil | 14th Aug 23, 4:13pm 1691986397

No it will not work in NZ, not enough population and cold climate. But the world is bigger than NZ ! Indonesia has 150 million scooters, imagine the benefits of just a quarter of them going electric that way! Then India, China...

by Blackbeard | 14th Aug 23, 5:51pm 1691992311

Can we bring more people in then. We can be just like those over populated countries. Will bring happiness to all.

by Nzdan | 14th Aug 23, 6:52pm 1691995929

Ship them in, 1 scooter:1 migrant.

by Pragmatist | 14th Aug 23, 7:14pm 1691997266

It's far more entertaining when it's two scooters, one migrant.

by Hitch22 | 14th Aug 23, 7:59pm 1691999980

Hmmm coal powered electric scooters...changing 25% of generation would be more beneficial...

The power sector will play a major role in the energy transition, but is today the country’s largest contributor to emissions from fossil fuel combustion. Over 60% of the electricity is supplied by a young fleet of coal-fired power plants whose installed capacity will meet a significant share of demand for years to come unless steps are taken now to mitigate their emissions

https://www.iea.org/reports/enhancing-indonesias-power-system/executive…

by agnostium | 14th Aug 23, 10:12pm 1692007958

Typical, make poor people use scooters, we NEED our cars.

by KH | 14th Aug 23, 4:13pm 1691986437

Why are battery swaps needed?

I was in rural China 2018. Swarms of battery scooters - many more than cars. I don't even recall petrol scooters. All were just plug in. It worked. You saw plugged in scooters all the time.

Strangely, we don't see electric scooters here. Few scooters here in NZ, probably well outnumbered by electric bikes for urban use.

by Yvil | 14th Aug 23, 5:04pm 1691989444

Why are battery swaps needed?

So that you never need to wait for a battery to charge ever again. Also it makes the purchase of the scooter cheaper.

by Rob Reid | 14th Aug 23, 5:23pm 1691990599

So who pays for the batteries?

by Yvil | 14th Aug 23, 5:33pm 1691991189

The user of course

by OldSkoolEconomics | 14th Aug 23, 5:25pm 1691990755

It makes a lot of sense, and saves a lot of time.

1/3 of the original cost of the scooter is battery cost
takes 3-4 hours to charge a battery
batteries last only 2-4 years (presume depends on usage)

I am betting the recharge service provider further discounts the initial scooter cost to lock the customer in. Maybe $499-999 to buy a scooter and then a monthly subscription of say $49 - 99 a month depending on the number of battery swaps.

Customer will also upgrade the scooter after 2 years like we upgrade a phone? so the provider makes more then too.

Its more convenient than lime, nicer maintained scooter (its yours) and probably cheaper to run if used regularly. can also be shared amongst the house/friends?

hmmm.. i am tempted

by Yvil | 14th Aug 23, 5:33pm 1691991218

Thank you for "getting it" OSE !

by Officebound | 14th Aug 23, 6:19pm 1691993974

A Segway Ninebot is $500 - $1500, you own the whole thing, lasts for years, and battery will take you a long way. No need for this battery swap piece

by Yvil | 14th Aug 23, 8:53pm 1692003214

We're talking about t a "moped" kind of scooter, watch the link.

by profile | 14th Aug 23, 9:08pm 1692004124

Clean and quiet, London once boasted a fleet of 20 electric buses. They were more efficient and reliable than their petrol equivalents, and operated on battery power. Mounted under the bus, the batteries had a 60 km range and could be removed and swapped for a fresh one in just three minutes.

This was in 1906, and the bus looked like this:

https://earthbound.report/2018/04/23/your-bus-is-running-approximately-…

by Flying high | 14th Aug 23, 10:01pm 1692007289

Good post. 1906 was pretty early on

by J.C. | 14th Aug 23, 4:20pm 1691986830

You then pick up a battery from multiple battery banks (like petrol stations if you like) and when your battery runs out, you just swap it for another one at the next battery bank.

Happening in Taiwan already.

Gogoro Batteries Power 90% Of Taiwan’s Electric Scooters

https://cleantechnica.com/2023/01/11/gogoro-batteries-power-90-of-taiwa…

by Poppyc | 14th Aug 23, 4:49pm 1691988582

literally what was in the bbc link

by J.C. | 14th Aug 23, 5:05pm 1691989500

The link I referred to was from January. Electric scooters in Taiwan are not some new discovery by the white man.

by Yvil | 14th Aug 23, 5:01pm 1691989267

JC, maybe you want to watch my link before replying...

by Hitch22 | 14th Aug 23, 8:06pm 1692000417

But....Coal is the main source for electricity production in Taiwan. In 2022, coal accounted for nearly 43 percent of total electricity generation. This was followed by natural gas power plants, which made up 39.5 percent, with the fossil fuel total being around 84 percent.

by Whatwillhappen | 14th Aug 23, 4:35pm 1691987705

Korea was doing this for cellphones back in 2004.

by Noncents | 14th Aug 23, 5:03pm 1691989389

ultimately it will depend on cost and the standardisation of the battery system.

Somehow I don't see it happening anytime soon.

by Yvil | 14th Aug 23, 5:11pm 1691989861

Did you watch the link? It's up and running in Taiwan with more than 10'000 battery stations and over 1 Million batteries available to swap.

by Noncents | 14th Aug 23, 5:59pm 1691992789

and we live in ...?

by mfd | 14th Aug 23, 6:12pm 1691993553

...a country where people have no imagination or vision?

by Baywatch | 14th Aug 23, 6:34pm 1691994858

We used do but a certain generation put a stop to that nonsense as it was too expensive and had no effect on their home price increase YOY.

by Squishy | 14th Aug 23, 6:25pm 1691994352

There was a Nissan Leaf version with a swappable battery, an Israeli company where pioneering it.

by Officebound | 14th Aug 23, 4:02pm 1691985747

Population goes up at record levels, all our politicians seem unanimous it's a good thing, while planning to spend tens of billions to catch up on our infrastructure deficit...

by JimboJones | 14th Aug 23, 4:08pm 1691986113

Crazy isn't it. National and Labour are adding massively to the population every year but have barely built a thing. In Auckland we seem to have the same hospitals, roads, rail, etc as we had 15 years ago, just many more people using them.

by WellingtonInvestor | 14th Aug 23, 4:13pm 1691986420

Then everything turns into a crisis. eg Health system crisis, power crisis coming soon. I can't even enrol at my health centre for over a year because they can't get new doctors.

We don't even know what population NZ should be as there doesn't appear to be any actual planning. Migration seems to get controlled by businesses employment needs, but they aren't required to pay anything to improve infrastructure.

by JimboJones | 14th Aug 23, 4:18pm 1691986713

Yep I am happy for them to bring in critical workers (e.g. doctors). But bringing in non-critical workers is just putting more demand on the critical workers as well as the infrastructure.

by Advisor | 14th Aug 23, 4:44pm 1691988247

The conundrum is that we've let this low-skilled mass migration run for far too long. The ones already here generally don't pay enough in taxes to cover cost of building new infrastructure to play catch up and the ones who are able to pay more in taxes no longer want to come to a country with such outdated infrastructure.

The PC report released in 2021 said between 2010 and 2019, no change was noted in the influx of workers across skill levels 1 and 2 (managers, professionals, building/engineering trades, etc.). However, workers across levels 3, 4 and 5 (waiters, retail workers, labourers/cleaners, farm workers, etc.) posted 4-6x increases in influx.

by WellingtonInvestor | 14th Aug 23, 5:33pm 1691991215

I think everyone would be but it is a hard sell to get good doctors to come to NZ.

by bender | 14th Aug 23, 7:46pm 1691999205

Ha, there is hot competition for critical workers and much better places for them to go with house prices being the major drawback to NZ. For example, my niece packed up her new statistics PhD off to the USA, now happily enscounced in a solid near mansion at a small fraction of NZ prices. Nice going boomers.

by agnostium | 14th Aug 23, 10:24pm 1692008652

Lack of public transport and cycling / walking networks in our major cities is also a drawback. People who have lived in cities abroad are not used to being forced into cars on congested roads to get anywhere, they normally have an alternative if they don't want to drive.

by EdwardD | 14th Aug 23, 4:55pm 1691988927

Excellent comment. I had an operation six months ago and three weeks ago I received a text from my doctor's office asking me to get a blood test in order to check all is ok. I went online to my local blood testing office and they have no appointments available for another four weeks.

by Advisor | 14th Aug 23, 5:58pm 1691992738

Apparently, a new starter collecting blood samples from patients at one of NZ's largest pathology labs sits at $23/hour or 30c above minimum wage.

Aranui won't meet their wage increase demands, despite paying out a $41 million dividend to shareholders in the last financial year

Link

by Pat.T | 14th Aug 23, 5:01pm 1691989297

Labour closed the border long enough to put staffing strain on business which pushed up wages then opened the flood gates.

by WellingtonInvestor | 14th Aug 23, 6:10pm 1691993419

It is all just so short sighted. I don't think many politicians have a clue. One MP only recently lowered themselves to go to the supermarket to be like and everyday man, and saw the price of tasty cheese was $20. Haven't they been watching the news or shopping over the last 3 years? Many of them seem to live such sheltered lives.

by agnostium | 14th Aug 23, 10:25pm 1692008738

The National Party ex-bully from Tauranga? I read that in the spin-off, great article

by singautim | 14th Aug 23, 8:35pm 1692002105

When I was young Labour wanted wages to increase.

by Flying high | 14th Aug 23, 9:21pm 1692004881

Dog chasing tail, thinks to itself its making progress, nearly there

by morepork | 14th Aug 23, 5:40pm 1691991642

It's a massive subsidy for businesses.

Maybe we should have an infrastructure contribution of 50k of whatever it takes with every migrant visa to cover the cost of the new infrastructure they'll require.

All this so they can drive down wages.

by Advisor | 14th Aug 23, 6:04pm 1691993076

Even money can't buy quality healthcare in this country now. My partner had an issue with her lower back, so we went to the GP and asked her to put it on our insurance if it helped speed things up.

Turns out it still takes 3-4 months to see a specialist because of all the backlog of elective surgeries and doctor shortages. All you can do in the meantime is pop painkillers everyday like breath mint.

by Noncents | 14th Aug 23, 11:10pm 1692011405

Here in NP, a specialist (sole in Taranaki) has closed the public waitlist, and the private is essentially shut as well, with an 18-24 month wait just to get an initial consult.

by JimboJones | 14th Aug 23, 4:04pm 1691985844

I'd call myself one of the more optimistic commenters here, but I feel like the economy has really cooled in the last month or so. I reckon we will see some pretty dismal numbers coming out soon.

by Yvil | 14th Aug 23, 4:10pm 1691986219

Agreed JJ, I own three businesses and I have been surprised how well they have done so far. But in July I noticed a clear slow down in one of them and now, another one is also slowing down markedly. It could of course be just a weak winter month, but I think it's rather due to people running out of money because of higher interest rates and cost of living.

by JamesM | 14th Aug 23, 4:32pm 1691987544

what industry are the businesses in if you don't mind my asking Yvil?

by OldSkoolEconomics | 14th Aug 23, 5:00pm 1691989200

Economy definitely cooling. in our B2B market:

- People are really reading and re-reading proposal details. questioning details that they wouldn't have even read 12 months ago.

- Time to pay bills has been pushed out by weeks in several industries.. lots of excuses but ultimately their revenues are down.

- More enquiries are coming in, but less converting, taking more time to close and for less money.

All indicators that the boom is over. Expect things to wobble for a year or two.

by dumbthoughts | 14th Aug 23, 6:05pm 1691993116

Seconded. This is where I'm at.

Far more quibbling over details and price. Businesses wanting "more for less".
Taking longer to get paid, noticeably longer.
Inquiries are generally lower value and they taking a much longer time to piss or get off the pot

by Yvil | 14th Aug 23, 5:39pm 1691991562

James, I made the mistake of revealing too much about myself in the past and all I get is cynical, sarcastic attacks from posters who are too scared to reveal anything about themselves. So sorry, but I won't tell you which industry.

by JamesM | 14th Aug 23, 7:08pm 1691996900

No problem Yvil- completely understand. Was just curious to get a feel for which industries were experiencing a downturn.

I am a shareholder in a property consultancy business and an air-conditioning business. The consultancy business is still doing well as it is exposed to all industries as clients but the air-con business has seen a marked reduction in forward work due to fewer new developments and existing landlords feeling the pinch with increased interest costs at a time when their assets are being revalued down.

by Rampart | 14th Aug 23, 8:00pm 1692000011

I’m also in the air con and electrical field. We’ve had an OK winter but things are definitely slowing. Once the last of this cold weather dissipates I’m expecting it to be a real struggle to retain staff.

by Zwifter | 14th Aug 23, 4:12pm 1691986339

Wow that's a big call from an ardent Labour supporter. Did say a few months ago that we would be hitting rock bottom just as the election rolls around.

by JimboJones | 14th Aug 23, 4:16pm 1691986580

I wouldn't call myself a Labour supporter, I am very much in the swing vote territory at the moment. While I dislike almost every National party policy, at least I would get a tax cut so I may go there yet. Sick of Labour promising to improve infrastructure but only delivering on handouts.

by bender | 14th Aug 23, 4:47pm 1691988478

dislikes almost every National policy but a tax cut would get his vote. Democracy won't survive such thinking.

by JimboJones | 14th Aug 23, 5:06pm 1691989619

I normally vote for the greater long term good, but I don't see any party that will actually invest my tax money any more, so I would prefer to get some of it back rather than it just being passed on to the next bloke.

by MLSmith1 | 14th Aug 23, 6:19pm 1691993971

Swing vote now.. hahaha.. you been drinking that Damascus wine like Robo 😂

by JimboJones | 14th Aug 23, 7:07pm 1691996868

I’ll let you know closer to the election. But Labour seem to be focusing on the short term cost of living crisis which is a huge change in direction from their last 2 campaigns which were all about fixing infrastructure deficits, housing, health, etc. I hate government throwing away vast sums of money on short term solutions that become permanent costs.

by dumbthoughts | 14th Aug 23, 4:23pm 1691987012

I've lost two relatively longstanding retainer clients in the last week (who I'm on good enough terms with for them to be straight up and say 'hey, we haven't got the work/cashflow to keep paying you any more). Also commented the other day that I'm really noticing it taking longer to get paid by some clients. My clients are typically reporting to me a challenging environment too.

Wouldn't say disastrous by any stretch, but noticeable for sure.

Lucky for me, I don't have a huge cost base in the business and can trim further if needed - in some respects I wouldn't mind a bit less of a hectic time as I'd like more family time and also have some internal/non-client projects to work on that are yielding me a small but growing amount of USD (which could be very helpful). I'm backing out of a couple of purchases though e.g. new equipment and upgrading a vehicle.

by Rob Reid | 14th Aug 23, 5:40pm 1691991653

I have a mate who sells and installs electric gates. He has always had more work than he could do or get workers for, but last week I heard for the first time that work is drying up.

by dumbthoughts | 14th Aug 23, 5:56pm 1691992614

Some of my clients in 'consistent' industries or ones that have recently been buzzing are reporting the same.

I'm basically trying to get as much cash in the door (and have as little leave) as I can in the short term, so I can go on hibernation/cruisy mode for a while if needed.

by IT GUY | 14th Aug 23, 6:29pm 1691994599

Their is NO WAY RBNZ will put up OCR, it needs a lower NZD to help exporters here, inflation will be solved by lack of demand due to have no cash.

by Audaxes | 14th Aug 23, 6:47pm 1691995636

Thank God. I maybe able to get less than industrial size deck and painting maintenance again.

by Palmtree08 | 14th Aug 23, 4:06pm 1691985962

"migrant arrivals: 195,200, up +219%" Lucky there's so many "Interest" commenters moving out to make space.

by WellingtonInvestor | 14th Aug 23, 4:09pm 1691986199

So where are they living? Or are we manufacturing another housing crisis? It all just seems so short sighted, beucase massive popualtion increaes requires matching infrastructure, and we don't have enough as it is.

by Mofo Fomo | 14th Aug 23, 4:33pm 1691987594

These immigrants are moving into the homes of the 90k that left this👍m year.

Out with the quality in with the quantity

where from and who are these immigrants arriving. Aussie 501s

by OldSkoolEconomics | 14th Aug 23, 5:09pm 1691989798

Exactly - but they are living 2 families/workers to every house. So they can afford the rent on unskilled wages vs those that left on skilled wages.

Mind you they double the infrastructure needs of those they replaced - 2 cars, 2 hospital beds, 2 pensions, etc etc

by Eschaton | 14th Aug 23, 4:36pm 1691987816

Auckland

by The Black Swan | 14th Aug 23, 5:05pm 1691989555

NZD down 4 cents against the USD in the last 4 weeks. Saw unleaded 91 now over $3 at multiple service stations on Auckland's North Shore today. The 2nd wave of inflation is arriving folks...OCR is going to 6% by year end.

by Mofo Fomo | 14th Aug 23, 4:35pm 1691987742

NZD should be on a par with the Argentinian $ soon.

by J.C. | 14th Aug 23, 4:23pm 1691987014

Money contraction (as measured by change in growth in U.S. M2) now the greatest since the Great Depression. From peak to trough, it's the worst since at least the 1860s.

https://twitter.com/profstonge/status/1690731628723576834

by Independent_Observer | 14th Aug 23, 4:40pm 1691988010

Yes if something really bad happens in the next few years (thinking a 1929 style crash and/or a 1930's style depression, or excessive money printing and run away inflation) then this shouldn't be a surprise given charts like the above you link to.

by J.C. | 14th Aug 23, 4:43pm 1691988208

I think the biggest difference between then and now is that the taps can be turned more easily. In fact they're already open. I'm not an expert but my mentors say that liquidity is flowing.

by Independent_Observer | 14th Aug 23, 5:07pm 1691989650

The only reason we are not in a recession/depression is because of the deficit spending of governments around the world. This isn't sustainable.

It is possible we see even more credit rating downgrades in the next few years - but that will just put more pressure on interest rates (i.e. higher rate of default = higher demanded reward for investing in that nations government bonds/treasuries).

So I'm not sure how we can expect to have a soft landing out of this...

Governments keep spending to support economies and the situation gets worse.

They cut spending to keep inflation and interest rate down (and keep credit ratings from deteriorating) but then I think our economies quickly fall into recession.

So not a good place to be.

by J.C. | 14th Aug 23, 5:16pm 1691990203

Yes yes. The only issue I see is that Anglosphere boomers will not compromise. Look at the madness in Aussie at the moment with the immigration. It's desperate moves.

by Independent_Observer | 14th Aug 23, 5:24pm 1691990674

Once you finish reading 'The 4th Turning' then the madness makes more sense! ;-p

by Peter M | 14th Aug 23, 5:42pm 1691991736

100 % correct. We are already in the 4th turning!

by Independent_Observer | 14th Aug 23, 6:22pm 1691994130

Yes and Neill Howe has just released: 'The 4th Turning Is Here - what the seasons of history tells us about how and when this crisis will end'

https://www.amazon.com/Fourth-Turning-Here-Seasons-History/dp/1982173734

by cantab | 14th Aug 23, 8:23pm 1692001412

Yes this is the great flaw in the plan… The modern idea is to buffer the economy with low interest rates when times are tough, so that the debt can be repaid when “things improve”. The problem is, if the economy isn’t left to retract naturally (quickly), then things may never actually improve.

Part of the normal retraction process is the clearing of dead-wood (unproductive businesses) from the system. This frees up resources and revenue stream for the remaining productive players. But if all businesses are bolstered artificially and are able to survive, then there’s no re-birth process and the stagnation continues indefinitely (until who knows what happens…).

by Squishy | 14th Aug 23, 6:37pm 1691995054

1. The drop in US M2 is tiny when compared to the prior yeeting: https://fred.stlouisfed.org/series/M2SL

2. The velocity of M2 has substantially been increasing which mitigates most drops in the overall level: https://fred.stlouisfed.org/series/M2V

by Silvi | 14th Aug 23, 4:29pm 1691987363

And what is not being reported here is that Sheep and Wool farmers, buying stock for $150, consider fed costs etc and now selling for $100.

Not just dairying taking a hit. These numbers are significant.

The spending and investing will stop and hard.

by Grattaway | 14th Aug 23, 4:47pm 1691988450

So the value of agricultural land should be falling quite sharply?

as will production?

Adding to further pressure on BOP deficits

by Rob Reid | 14th Aug 23, 5:49pm 1691992181

Overseas trade figures due out on monday I think. We'll see how deep the ag excrement runs now.

by Hans Brink | 14th Aug 23, 7:07pm 1691996837

Poor quality land, eg hill country, is going to drop in value significantly are my thoughts.

by SteveO | 14th Aug 23, 11:57pm 1692014256

Also a meat company collapsing not paying farmers possibly, Be the first fall over for years

by Hans Brink | 15th Aug 23, 8:10pm 1692087032

I would be suprised if that happened SteveO, as the meat processing industry is fairly marginalized anyway. The buyers have enough capital to support suppliers.

Through put is a problem as everyone wants to kill at the same time and there is no point in the companies increasing killing capacity when the volume isn't there for most of the year.

Also farmers won't commit to one processor and play them off against each other which makes it difficult for the company to work out supply chain issues.

by Justa comment | 14th Aug 23, 4:37pm 1691987864

Those 10 yr swap rates are surging higher, not just here, US and AU also. Could we hit 5%?

by Independent_Observer | 14th Aug 23, 6:35pm 1691994938

Yip - US 30 year treasury yield comfortably back up above 4% now.

https://fred.stlouisfed.org/series/DGS30

The last 10 years, its traded well below this so could be a sign of inflation being higher for longer.

by lonewolfnz | 14th Aug 23, 4:40pm 1691988030

RBNZ collaborating with Ripple / XRP for a CBDC? I call bs but who knows

https://www.cryptopolitan.com/reserve-bank-of-new-zealand-collaborates-…

by J.C. | 14th Aug 23, 4:45pm 1691988319

Don't think so Wolfie. This is trash crypto media. Quite possibly some enquiries of interest from RBNZ to Ripple, but only about the technology. Nothing to do with XRP.

by J.C. | 14th Aug 23, 4:41pm 1691988096

An equivalent of 10%+ of the Aussie govt's deficit has gone to fraudsters.

Next-level incompetence.

The Tax Office has admitted paying out more than $1.6 billion in fake GST claims as part of a $4.6 billion fraud based on a simple scheme promoted on social media platform TikTok – a total that is twice previous reports and the biggest tax fraud in Australian history.

The fraud was uncovered by Westpac and other banks, some of which passed on a series of alerts to the Tax Office from 2020. But after being frustrated by the apparent lack of action by the Tax Office, some bank staff shared their concerns informally with the Reserve Bank, which then alerted Treasury and the Tax Office in February last year.

https://www.afr.com/companies/professional-services/tiktok-gst-fraud-hi…

by J.C. | 14th Aug 23, 6:22pm 1691994148

"You were right. It's not a passing fad"

NYT capitulates on the ol' rat poison after 10+ years of trying to create a negative impression for the likes of Jamie Dimon and Liz 'Pocahontas' Warren.

It's like the MSM has entered a new position on crypto — bargaining.

https://www.nytimes.com/2023/08/13/your-money/cryptocurency-personal-fi…

by Rob Reid | 14th Aug 23, 8:46pm 1692002773

"percentage of people in the United States owning crypto grew to 11 percent from 3 percent in just a year"

"younger adults are more open to this way of putting money to work"

"41 percent of men ages 18 to 29 reported having owned or used cryptocurrency, just 16 percent of women in that age range"

Here we all are again - Revenge of the Nerds.

by IT GUY | 14th Aug 23, 6:14pm 1691993693

Good friends over from Aussie say The NZ vibe has turned well south vs western aussie..... they come over each year as from NZ, but cannot believe how negitive the view is in NZ right now, clearly the country is heading in the wrong direction vs Aussie. Bring on 14th oct.

by Squishy | 14th Aug 23, 6:17pm 1691993864

Why isn't the Kiwi flying? We don't want to import more inflation, rising oil is already working against us.

by J.C. | 14th Aug 23, 6:23pm 1691994207

You need a much higher OCR for people to buy the Kiwi peso.

by IT GUY | 14th Aug 23, 6:36pm 1691995005

The natural buyers of kiwi are the exporters converting USD back to NZD but with diary prices down and timber and red meat there are less buyers... and it looks like NZ recession is going to be much deeper so FX traders are positioning for this and the serious possibility/eventuality of a ratings downgrade, which is looking certain now.... Kiwi tends to decide to live above or below 60.... down we go. USD safe haven trade

by Squishy | 14th Aug 23, 6:39pm 1691995197

The Reserve Bank should probably prepare a statement about being prepared to look through "transitory currency volatility" so they can keep interest rates lower for longer.

by Audaxes | 14th Aug 23, 6:56pm 1691996208

Total stock of rmb loans up y/y in July barely more than the worst months last year - lockdown months. That's how bad the credit environment has gotten to be in China. They were counting on a global soft landing but it has let them down big time. https://buff.ly/3Oqv6io Link

by IT GUY | 14th Aug 23, 7:03pm 1691996586

Yes and the rest of the world was relying on China demand for their soft landing...... so landings get harder

by Audaxes | 14th Aug 23, 7:15pm 1691997358

The Crown settlement balances at the RBNZ were unchanged (from June) at the end of July at $21.1 bln but they were down -$8.5 bln from a year ago. However, bank settlement balances bounced back from their June dip, now at $52 bln (earning 5.5%) and up +$4.3 bln from a year ago.

Government keeps crediting qualified beneficiary bank accounts faster than bank underwritten government bond issuance proceeds are deducted from bank settlement balances. Latest bank settlement cash balance stands at $56.275bn.

by mikekirk29 | 14th Aug 23, 7:56pm 1691999818

Credit costs still rising

NZ PSI showing recession

Fixed mortgage run offs draining disposable income

Further 10% at least to come off house prices

by Rob Reid | 14th Aug 23, 9:00pm 1692003628

I just got an idea for the next Killer App:

You point your phone at a bag of nuts or something and it tells you if it should be zero rated for GST.

I don't even want money for the idea - I just want it to exist.

by nktokyo | 14th Aug 23, 10:03pm 1692007400

"Populist and stupid"

Oof

https://www.nzherald.co.nz/nz/new-zealand-tax-experts-respond-to-gst-fr…

by Zwifter | 14th Aug 23, 10:26pm 1692008789

Nice link, Labour gets roasted. Its not worth worrying about anyway, Labour are gone by lunchtime on the 14th October.

by JamesM | 14th Aug 23, 10:29pm 1692008997

I love how the ‘economist’ from the council of trade unions tries to defend it, then Brad Olsen puts him back in his box.