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
Nothing again today. Update: SBS Bank has reduced its three year fixed rate by -30 bps to 5.99%.
TERM DEPOSIT/SAVINGS RATE CHANGES
The Co-operative Bank pushed through some minor increases to rates today. Update: SBS Bank said it was reducing its market-leading one year TD rate from 6.50% to 6.00%.
VENDORS ADJUST LOWER
The gap between the price vendors expect to receive for their properties and the price buyers are prepared to pay continues to narrow. It is sellers/vendors who are lowering their price expectations, falling to meet buyer expectations.
ANOTHER MILK PRICE CUT
Just two weeks after their cut their milk payout indication by -$1, Fonterra have cut it further by another -25c, following the latest negative dairy auction. Both will mean more than $5 bln less will be paid to farmers next year than for the current season. But the new season is only just starting, so there are many more forecasts yet to be worked through.
CAPITAL RETURNED TODAY
Fonterra today returned more than $80 mln to its shareholder farmers, a capital return from the divestment of a number of offshore subsidiaries. This will go some way to cushioning the payout cuts.
NEW TRACTORS A HARD SELL NOW
There were only 179 new tractors registered in July nationwide, the lowest since 2017. The ten year average for a July is 235, so July 2023 is -24% lower than that. In July 2021, more than 320 new tractors were sold, almost double the 2023 level.
'CERTAINTY' ARRIVES
The Government released its decision on the issues He Waka Eka Noa advised on. They have come down on the side of doing everything inside the Emissions Trading Scheme. That will include 'rewarding on-farm sequestration' that can be validated scientifically. Native vegetation or riparian plantings will be recognised. But there is more work to do for this comprehensive system and it won't start until late 2024, and roll out for full implementation by Q4-2025. That means it will be vital for farmers to accurately measure and manage their emissions, prior to the start of farm-level pricing. A lot of the drive for a full ETS-based system is coming from European-based customers of dairy and meat products, like Nestle. More here.
PROPERTY MANGERS TO BE LICENSED
Residential property managers are going to be licensed. However private and public landlords, including Kāinga Ora and registered Community Housing Providers, would not come under the new regime.
JAPANESE INFLATION STAYS ELEVATED
The Japanese CPI inflation rate was unchanged at +3.3% in July but this was notably higher than market forecasts of +2.5%. Core inflation stayed above 3% too. Prices continued to rise for food which was up +8.8% in July from a year ago, compared with +8.4% in June. The latest figures are well above the Bank of Japan's 2% target, and for the 16th consecutive month.
EVERGRANDE RUNS AGROUND
China's Evergrande Group, once the country's second-largest property developer, filed for bankruptcy in New York earlier today. It was a Chapter 15 bankruptcy filing meaning its actually a Chinese bankruptcy, a move that protects its US assets from creditors while it works on a restructuring deal elsewhere. Rival Country Garden, another very large property developer, is going down the same 'restructuring' path.
SWAPS A TOUCH HIGHER
Wholesale swap rates were probably a touch higher today although probably not significantly, but the real reaction will come at the close. Our chart will record the final positions. The 90 day bank bill rate is unchanged yet again at 5.64% and now +14 bps above the 5.50% OCR. The Australian 10 year bond yield is unchanged from this time yesterday at 4.28%. The China 10 year bond rate is little-changed at 2.58% and a new three year low. And the NZ Government 10 year bond rate has settled at 5.11% and still its highest since 2011, and still higher than the earlier RBNZ fix which was up +4 bps bps to 5.02%. That is the RBNZ's series highest since July 2011. The UST 10 year yield is at 4.26% and down -3 bps from yesterday.
EQUITIES LOWER AGAIN
The NZX50 is down -0.7% today in late trade on a global risk-off vibe and rising benchmark yields and down -2.3% so far this week. The ASX200 is up +0.2% in afternoon trade, and down -2.5% so far for the week. Tokyo has opened its Friday session down -0.2% in morning trade heading for a -2.8% weekly fall. Hong Kong has opened down another -0.7% and heading for a -2.7% weekly fall. Shanghai however is benefiting from 'home team' support, up a minor +0.1% starting today, and up +0.2% for the week so far. Everything is required to be 'positive' in China now. The S&P500 ended its Thursday session down another -0.8%. That puts it down -2.1% for the four days of their week so far.
GOLD HOLDS
In early Asian trade, gold is at US$1893/oz and little-changed from yesterday. Earlier in New York it closed at US$1889, and earlier still in London it closed at US$1894/oz.
NZD HOLDING
The Kiwi dollar is a little firmer today, up +20 bps from this time yesterday at just under 59.4 USc. Against the Aussie we holding softer at 92.5 AUc. Against the euro we little-changed at 54.5 euro cents. That means the TWI-5 is at 68.6 and firmer by about +20 bps.
BITCOIN DIVES
The bitcoin price is sharply lower today, now at US$26,420 and down -7%. At one point it was under US$25,400. Volatility has been extreme at just on +/- 8.5%. The latest dump came after the WSJ discovered that Elon Musk had been writing down his holdings in SpaceX over the past two year - over the same period he had been spruiking his 'interest' in crypto. A classic Musk manipulation.
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42 Comments
"won't start until late 2024, and roll out for full implementation by Q4-2025." James Shaw is not a happy chappy.
Rolling it out to no earlier than 2035 would be a better plan.
I understand the EU net zero by 2050 or earlier *(don't have the dates at hand) is in tatters.
The absolute joke is that the North Sea peaked a long time ago, and the UK is now a major importer. And always will be, until things unravel.
https://en.wikipedia.org/wiki/North_Sea_oil
' When it peaked in 1999, production of North Sea oil was 128 million tonnes per year, approx, 950,000 m³ (6 million barrels) per day, having risen by ~ 5% from the early 1990s. However, by 2010 this had halved to under 60million tonnes/year, and continued declining further, and between 2015 and 2020 has hovered between 40 and 50 million tonnes/year, at around 35% of the 1999 peak. From 2005 the UK became a net importer of crude oil, and as production declined, the amount imported has slowly risen to ~ 20 million tonnes per year by 2020. '
It's being done to pretend; to pretend to themselves, to pretend to business, to pretend to voters - the pretense is that they can continue their energy-consuming lifestyles. But - as their poor have known for some time and their middle classes are finding out - they can't.
Interesting to note those who need to be fooled.
There is 3-20 trillion tonnes of coal they can hook in to as well if they get chilly. plus another trillion odd in Wales.
https://www.google.com/url?q=https://www.ibtimes.co.uk/newly-discovered…
https://en.wikipedia.org/wiki/Coal_mining_in_the_United_Kingdom
'UK coal production peaked in 1913 at 287 million tonnes.'
Which was one of the reasons they went to war, although few realised it at the time. They are net importers now, importing more than they extract (nobody produces a resource, they extract; a subtraction from a total). I guess they could do coal-to-oil for a short time (those SUV's injectors tent to clog on coal); the Germans ran WW2 on it...
and lost...
Amazing coal peak at the same time steam trains peaked. If they want any more they know where to get 20 trillion tonnes. When they have used that up they can hook in to the 23.3 and 64.6 trillion tcm Bowland shale for another couple of centuries of energy or apply some 21st C tech to their North Sea resource. Bless PDK and his peak oil theories.
The latest dump came after the WSJ discovered that Elon Musk had been writing down his holdings in SpaceX over the past two year - over the same period he had been spruiking his 'interest' in crypto. A classic Musk manipulation.
More interesting is who they sold to? Blackrock or another financial institution? Would not be a surprise. Speculators with long positions wrecked today. Always a good thing. Markets need to be flushed. DGM calls suggest we can go down 60-80% from here.
The US 2/10 is still deeply inverted but its possible we are starting to see the spread head back towards 0.
https://fred.stlouisfed.org/series/T10Y2Y
If you drag the timescale out, you can see that during the early 1980's stagflationary periods, recession hit while the inversion was still happening. For deflationary recessions (i.e. the subsequent recessions), they occured after the 2/10 had normalised back to a positive spread.
This is a great tool here: https://fred.stlouisfed.org/series/T10Y2Y
I'd encourage anyone who wants to learn/experiement with yield curves to have a play with this interactive chart.
I suggest to trying changing the year value from 2019 to 2020, 2021, 2022, 2023.
Note how it is inverted in 2019 - indicating that financial trouble was ahead (before we knew anything about covid!) and how it normalised in 2020-2022, but again now it is signalling trouble again now in 2023.
Wrong link in above post…try this one:
Celebrity Aussie spruiker Mark Bouris now gone full DGM. The article even has accompanying doom audio.
Mark Bouris warns families will be ‘forced to sell their homes’ within months as mortgage cliff erupts
Australia is facing a devastating financial disaster – and money guru Mark Bouris has warned things will get nightmarish within months.
https://www.news.com.au/finance/economy/interest-rates/mark-bouris-warn…
He's a flog (as the Aussies would say), runs a mortgage broking business and did very well on the way up and is now in tougher times. He is pushing his DGM agenda to try and get rates lowered. Total galah.
Makes sense. Needs more churn and believes that lower debt servicing will help the business. Of course he would be right.
Make no mistake, Aussies are even more addicted to house price growth than we are. Decades of negative gearing has inflated house prices in central Sydney to grotesque levels. Yes you can buy cheaper on the outskirts - but you're in a summer furnace, commuter hell with $250+ toll bills p/w.
Yes you can buy cheaper on the outskirts - but you're in a summer furnace, commuter hell with $250+ toll bills p/w.
Why would you even bother? Sounds like hell. The NSW govt is addicted to property and the industry there is openly corrupt.
The NSW Planning Department has been forced to conduct an urgent review of all recent development approvals handed to building giant Walker Corp after its recently departed secretary walked straight into a senior role with the company.
https://www.smh.com.au/politics/nsw/government-probe-after-former-secre…
I recall reading the last NSW Premier with the unflattering sobriquet "Bin Chicken" resigned as her boyfriend was on the take from Chinese developers and was influencing her. Another Minister has just resigned after he had undisclosed land holdings his Govt was allocating development consent to. I guess it's their DNA.
https://www.news.com.au/national/nsw-act/politics/tim-crakanthorp-annou…
Daryl Maguire.
In tapped calls, New South Wales Premier Gladys Berejiklian heard about some of her secret ex-partner Daryl Maguire’s exploits for Chinese-Australian export agent Jimmy Liu.
An ABC investigation unravels how the former MP did favours for Mr Liu’s company, which allegedly swindled vast sums from Australians and became embroiled in a devastating international fraud.
https://www.abc.net.au/news/2021-07-28/how-nsw-mp-daryl-maguire-helped-…
One way we could signal to markets we are serious about inflation is to RBNZ from using quantitative easing again except by positive act of parliament.
Presently everyone believes that RBNZ will go back to easy money policy if CPI dips which supports this inflation hypothesis. If we signalled the positive intention not to make the same mistake again it would substantially re-balance that discussion.
Fire them all for failing to meet their own target.
Their models might be fancy, no doubt full of variables. For every variable there is an assumption. For every assumption there is risk. For every risk there is an assumption about the nature and level of the risk.
Bit inclined to agree with Democritus some days:
"Nothing exists except atoms and empty space; everything else is opinion".
l am sure they are intelligent and have access to a lot of data but in the end the one making the assumptions is setting the bounds of the model.
"The latest dump came after the WSJ discovered that Elon Musk had been writing down his holdings"
I mentioned this already.
Writing down is an accounting requirement where there is a devaluation of pricing. It doesn't mean he sold. Classic misinformation looking for a reason for the correction.
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