Here's our summary of key economic events overnight that affect New Zealand, with news we are now in the last week before the America's Labor Day holiday, signaling the end of the "sell in May and stay away" hiatus. Financial markets will then come back to full capacity. But what awaits them?
The last big 'holiday season' event is the central banker conference at Jackson Hole.
With his eyes firmly on expected American inflation pressures, Federal Reserve Chair Jerome Powell, speaking at the symposium, emphasised the potential necessity for additional interest rate hikes in order to effectively manage the pressures they still see ahead. Despite currently waning inflation they still have "robust" consumer spending, and an expanding economy he said, and a healthy labour market. However, he did say they could hold rates steady at its next meeting in September.
Market reactions to this closely-watched speech have been modest, although Wall Street equities rose and they have ended with a winning week.
At the same conference a Stanford professor is waning that liquidity risks in the gigantic US Treasury bond market may get worse if another crisis like the March 2020 pandemic shock occurs again. And that is because dealer balance sheets are growing much more slowly than the holdings of US Treasuries (because so much more is being issued). Attempts to sell those down in a financial crisis will get stymied by what dealers can handle without themselves coming unders stress. And that could cause a meltdown. He did have some suggestions.
Meanwhile the one piece of American data that was released today, the University of Michigan consumer sentiment survey, didn't have much impact either. After rising sharply for the past several months, this consumer sentiment indicator moved sideways in August. Still, it was at its second highest reading in 21 months and is now about 39% above the all-time historic low reached in June of 2022.
In China, they said they will scrap a rule that disqualifies people who’ve already had a mortgage from being considered a first-time homebuyer in major cities, the official Xinhua news agency reported. It is couched in slightly different terms, but that will be the effect. It does look like an odd approach to take to spark an uptick in their residential property markets.
Meanwhile, Country Garden isn't getting much support for delaying payments on its bond. Bond holders are digging in.
After peaking in April, it has been downhill for German business sentiment, and it fell again in August in the latest Ifo survey and is back to October 2022 levels.
The UST 10yr yield will start today at 4.24%, up +1 bp from this time yesterday to exactly where it was a week ago. Their key 2-10 yield curve inversion is a bit deeper again at -82 bps. Their 1-5 curve inversion is unchanged at -101 bps. Their 3 mth-10yr curve inversion is also unchanged at -115 bps. The Australian 10 year bond yield is now at 4.14% and up +1 bp from yesterday. The China 10 year bond rate is little-changed at 2.58%. And the NZ Government 10 year bond rate is up +4 bps, now at 5.09%. That is the same as the week-ago level.
Wall Street is in a good mood today with the S&P500 up +0.7% and ended the week up +0.6%. Overnight European markets were less enthusiastic with all little-changed. Yesterday, Tokyo ended its Friday session down -2% to be essentially unchanged for the week. Hong Kong ended down -1.4% on Friday to be up +0.9% for the week. But Shanghai was down -0.6% on the day to be down -2% for the week. The ASX200 ended its Friday session down -0.9% yesterday to be -0.5% lower for the week. The NZX50 was down -0.3% yesterday and down -1.2% from a week ago.
The Fear & Greed index is at neutral now, and little-changed in a week.
The price of gold will start today at US$1913/oz and down -US$4 from this time yesterday. A week ago it was at US$1889/oz, so up +1.3% over that period.
And oil prices are up +$1.50 at just on US$80/bbl in the US. The international Brent price is now just on US$84.50/bbl, both levels very similar to a week ago.
The Kiwi dollar starts today unchanged at just on 59.2 USc, and down just -20 bps from a week ago. Against the Aussie we are also unchanged at 92.2 AUc. Against the euro we are marginally softer at 54.7 euro cents. That all means the TWI-5 is now at 68.4, unchanged from yesterday, and little-changed from a week ago.
The bitcoin price is little-changed today and now at US$26,018 and down by just -US$15 from yesterday. It is down by -1% from a week ago. Volatility over the past 24 hours has been low at just under +/- 1%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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116 Comments
Yep for sure......they need to bundle the undead Chinese, those still standing, with just an ounce of debt carrying capacity left, headfirst into the gates of the chomping housing ponzi furnace, to keep the market from breaking the spindly final rungs, that have not buckled and split already......
Much Like NZ......Tony A, Oneroof, is all in, on Concocting (by all and every means available) an evil (pinky finger sucking) master, revival of the Walking Dead NZ RE market.
Even the Rich right Men South of Levin........ they seem intent on Total Control of the new world, of the NZ Housing market, to no end.
7x Houses Luxon is fully transparent in his self-serving ends, to further inflate his 17million housing portfolio at the TOTAL expense of the average Kiwi battler, just trying to house his family, at a reasonable DTI ratio of 3 or 4x.
Wish I could Wake up and it not be True, But is, Oh it is.
Rich right Men South of Levin, they just want total control.
Yes been going through Oliver Anthony/Chris originals and he has some other good ones.
Like: Virginia, Dogonit, Take me home, see his recent open mic night in Farmville! etc.
He has captured the mood of the overworked world, with no good political choices, leadership, other then the rampant paid/vested interests.
On the left is Michael Woods and his stonking share portfolio, along with Helen NIMBY Clarke with her clutch of rentals. Then Ms Ardern traded up the suburbs, why didnt she move down into labour heartland, she received a 1 million dollar advance on her storybook. Sickening.
Yes, fair to say many politicians are self-serving asshats....... We have only one reasonable choice atm, in the gaggle Rich men south of Levin.
TOP.
While I normally would be a Nat voter, NOT NOW.
With their totally and obvious self- serving plans to borrow hundreds of million to give already Rich Men - multihouse landlords tax breaks, Sell NZs existing Housing stock to any foreigner who rolls up with his mighty cashbag and the cruelty of selling live animals via "death, waste and disease ships" is unforgivable and backward step in animal care.
They have not read the room.
Chris Joye absolutely charging with this piece on "hordes of investors ‘stuck’ in painfully over-valued assets". Glorious stuff that the boomers would have ignored.
Every week we are reading new media reports of superannuation funds and sovereign investors seeking to get more exposure to the 5 per cent to 7 per cent interest rates on cash and investment-grade fixed-income.
The problem, of course, is that many investors are stuck with excess holdings of illiquid assets. During the 15-year search for yield following the global financial crisis, most forgot about the cost of illiquidity – you have no ability to get out and hence no optionality to switch your asset allocation.
You are stuck. It is actually much worse than that. You are stuck in over-valued assets, such as commercial real estate, that barely offer a return above cash and which need to decline by another 20 per cent to 35 per cent to adjust to the new world in which we live where the risk-free hurdle rate has risen to 5 per cent to 6 per cent.
The problem is that the more illiquid an asset, the slower the painful price adjustment process. We are seeing this across the board in unlisted equities, property and illiquid credit.
https://www.afr.com/wealth/personal-finance/hoards-of-investors-stuck-i…
NZ 2y is the highest since '08:
https://tradingeconomics.com/new-zealand/2-year-note-yield
When NZ debt was much lower:
https://tradingeconomics.com/new-zealand/government-debt
People in glass houses...
...dealer balance sheets are growing much more slowly than the holdings of US Treasuries...
Nothing is growing as fast as government consumption. I was reading the other day that US healthcare (already 17.4% of GDP) spending is projected to compound at 5.4% every year until 2031. Keeping inflation to a 2% inflation target is going to be a really tough ask in that environment.
Very inflationary this aging demography business.
The West losing control of the gold price? Or perhaps that should be the cartel led by JPM and COMEX.
Until recently, Western institutional money was driving the price of gold in wholesale markets such as London, mainly based on real interest rates. Gold was bought when real rates fell and vice versa. However, from late 2022 until June 2023 gold was up 17% while real rates were more or less flat, and Western institutions were net sellers. Most likely, Eastern central banks, and Turkish and Chinese private demand, lifted the price of gold.
https://www.gainesvillecoins.com/blog/the-west-is-losing-control-over-g…
Is this 1989 or 2023? If you didn't see the date you wouldn't know the difference. There isn't a cycle where they don't forecast a soft landing and elevated inflation risks. Every time. SPOILER: recession in 1990. https://buff.ly/47OQeYM Link
Alan Laurie Forestry Report
https://www.laurieforestry.co.nz/news/monthly-reports-august/
"Nothing's Working" - China's Latest 'Stimulus'-Driven-Rally Lasted Just 30 Mins
https://www.zerohedge.com/markets/nothings-working-chinas-latest-stimul…
Not at all. There's a cause and effect of everyone's interaction with the world. If you're overtly self interested, unempathetic, and lacking in appreciation, you're more likely to be deficient in love and valuable relationships.
On the flipside, truly generous people rarely run around constantly decrying about an abundance of greed in the world. They're usually out there, being generous.
Too many people are confusing complaining about something, with actually doing something better. Everyone could start by doing 5-10 things a day for someone else, with no expectation of any sort of reward.
Thanks for your opinion, but mine is that the human world we live in is an engineered construct.
"use of an engineering approach—that is, action based only on thorough knowledge of the situation and on the application of scientific principles and tried practices to the task of getting people to support ideas and programs."
There's a good amount of evidence forming that many of our behaviours we deem to be uniquely human, language, tool usage, spirituality, that sort of thing, were also present in adjacent species.
Much of things is baked in.
Humans, even at higher level, only have limited influence.
But that would require morals wouldn't it (the desire to give and ease the suffering of others) - and per your post above, the world is an immoral place.
There's morals, as an ideological framework, and then there's the causative string of action and reaction.
It's all stuff and nonsense until it's put into practice. My comment on the Universe's amorality (which isn't the same as immorality) is more that the land known as New Zealand, is actually just fine, and any implied or actual "greed" is of no relevance to it. Only us.
I like this view (by someone famous with strong character, morals, principles and leadership):
“We but mirror the world. All the tendencies present in the outer world are to be found in the world of our body. If we could change ourselves, the tendencies in the world would also change. As a man changes his own nature, so does the attitude of the world change towards him. This is the divine mystery supreme. A wonderful thing it is and the source of our happiness. We need not wait to see what others do.”
Or simply he said:
"Be the change you want to see in the world"
Words is how we convey these ideas.
But even if you look back to your upbringing, it wasn't so much the ideas of morals your parents and elders preached to you. It was how they actually conducted themselves that made the impression on you.
Everyone's expecting a daddy to save us. We'll be waiting a long time.
The conduct of my parents/grandparents was based upon their belief system (largely very christian). My grandfather is still referred to as being as close to a saint as they have met (even after being dead for decades). He was the director of a significant sized firm and would be completely disgusted as to what has happened to our society since he passed.
One of their (my grandparents) mantras that they always talked to me about was that what we should aspire to was to simply having enough to live comfortably, with no need for anymore. Anything above that was for gifting and helping others.
This appears to have been replaced by a mantra of 'getting ahead' - where everybody views their fellow man/women in society as a competitor to be beaten/suppressed/marginalised and not part of a brotherhood where we try to lift one another up by doing good for each other and avoiding actions that would cause harm/suffering. Ie instead of getting ahead we should be viewing others with compassion and asking - 'do I have enough?' and if so, 'why would I need more?" (housing is a good example where people think it is their right to buy multiple rentals during a housing affordability crisis - why?! We only need one house to live in comfortably and raise children - anything more is excess that based upon my upbringing isn't necessary - actually it would be a sign of selfishness and greed and ignorance to the plight of community as a whole)
I hope we can return to the vision my grandfather had for society - as opposed to this current fear/greed and disregard for the well being of others in our communities. The world was a in a far better place decades ago when we actually genuinely cared for one another instead of viewing other people as our own path to riches.
I find what has been happening immoral ;-P
See I don't really know if the world was that much better, or if the naivety of childhood and the stories everyone blindly agreed with just made it seem that way.
Probably if I had anything to comment on is that we have an increasing desire to rely on systems to be the arbiter of preferred conduct, rather than the individual.
"This is just a figment of your imagination"
Nice try at gaslighting there ZS.
So you are trying to tell me that my life experience isn't real?
You can disagree with me if you like, and show me evidence of an opinion to the contrary, but don't dare try to gaslight me into thinking my views aren't 'real' or that they are imaginary because you don't like them.
https://www.newportinstitute.com/resources/mental-health/what_is_gaslig…
https://www.choosingtherapy.com/narcissist-gaslighting/
Just because you've learnt a term related to cluster b personality disorders, doesn't mean you can just go ascribing it every time someone says something you don't agree with.
It's your subjective opinion. I don't even know how you can gauge it.
In 2023, we think society has degraded because we think everyone's out to screw everyone else financially (some are, most arent, and the ratio likely hasn't changed much).
In the good old days, we villanised homosexuals for the most ridiculous reasons. We spilled our sons' blood by telling them they were fighting for king and country. Most of us, were serfs, if we were lucky. We burned women over a fire to test if they were witches.
Did we get better, worse, or no improvement?
Indeed, it is nostalgia for what never was.
Things are better now in New Zealand than ever before when it comes to human interactions in general.
I'm not sure about IO's grandparents attitudes and teachings to be honest. I mean they could have said make as much money as possible so that you can help more people or something like that and still be worshipped. Just making enough money for basic comfort*, whatever that means, seems rather platitudinous, even ascetic.
* my grandfather felt that a car like a Rolls Royce was necessary for driving over the rough roads of Kenya although after realizing that would be a bit too showy opted for a Bentley instead.
As a personal philosophy I'm not too far away. I always like the saying "a meal is as good as a feast", in that everything I have, is more than enough. The toll to be extremely wealthy, isn't often worth the cost of admission.
But then yeah, as you say if you wanted to follow the generously-virtuous approach to it's full extent, you'd give it all away and live in rags.
One thing that has probably changed, and it's partially due to 80s neoliberalism, is that the average person has now had the potential of becoming wealthy dangled in front of them as a carrot. Whereas previously, most people took a job as a kid, and worked it till they retired, and that was just what you did.
And yet prior to that the British built a huge empire based on industry and commerce largely driven by individuals searching for wealth through innovation, production and , er, colonization. Those kids getting a job for life (and IO's grandparents) were simply basking in the afterglow of the achievements of the gloriously enterprising Victorians and their grandparents..
The Labour government's motto was "helping ordinary kiwis get ahead", get ahead of what exactly? Their own doubts and fears? Their finances? No, in practice it means fighting each other for scarse resources, like toilet paper and houses. Is there a lack of houses out there? Maybe. Does that justify asking $800k for a starter home? No, because interest rates crush people who paid that price, they only paid that price because of FOMO and they wanted to 'get ahead'.
I frikkin love this and have had many discussions with friends and colleagues along precisely the same lines. I try not to let it get to me reading/seeing some people's integrity, ethics and general care for other people but honestly, it genuinely saddens me that more people can't think this way or at least see that what they have is enough.......
I listen to this guy regularly and believe if we could all follow even a little bit of the advise in this podcast the world would be a much greater place in my opinion https://open.spotify.com/episode/18CBLPR5KMnVzbfuFX6yad?si=HyQZTicmSRK-…
Rich Men South of Levin, Take Power and crush the weak?. God departs NZ........we are forsaken.
Zwifter and Winger votes for the scrotes/controllers Richmen South of Levin - Wellington NZ.....NZs Wash DC USA (yes North of Richmond, VA - Wash DC)
Reputations Are Hard To Build And Easy To Lose.
Another metals trader says it has been hit by nickel fraud
Missouri-headquartered Kataman is a mid-sized US-focused commodity trading house best known for its role in the aluminum market. But in August 2022, according to Kataman’s filings in a Singapore lawsuit, it entered into an agreement to buy 167 tons of LME-branded nickel for $3.3 million from New Alloys.
The fed is telling us they will have to print money. Very important article based on a paper published by the st Louis fed.
"Fiscal dominance occurs when the central bank must set policies not to maintain stable prices, but to ensure the federal government can afford to fund itself in the debt markets"
https://cryptohayes.substack.com/p/kite-or-board
If you know how the markets work the mind blowing part starts past half way.
https://www.thelancet.com/journals/lancet/article/PIIS0140-6736(23)01368-5/fulltext
Analysis of NZ covid response. One for profile to chew over...
Based on data that will not reflect potential future problems. Anything "Official" will never tell the full story, you are better off with actual facts gathered from a large group of friends. I may have saved a load of old people, who realistically will die in the next few years anyway but it has maimed a whole pile of younger people for the rest of their lives. I don't think any future governments will try and pull the mandate and lock everyone down thing again anytime soon.
This interpretation is limited by several factors such as clinical uncertainty determining whether COVID-19 was the cause of death
The precise failings of the data collection which renders it near useless in reflecting back and trying to utilise it for future policy decisions. Highly likely this will be how the Labours govt prove to be yet again unaccountable.
Oman Govt has found that the ol' rat poison is consistent with Islamic law and therefore investing USD1.1 billion in additional mining facilities. Funny that. Bitcoin is still seen as the devil at most neighborhood BBQs in the West.
https://tftc.io/martys-bent/issue-1377-oman-has-entered-the-chat/
I'm starting to get the feeling these BBQs and water coolers are just places that make you feel socially awkward.
Depends. The BBQs and water coolers are a perfect place to understand current attitudes, fears, and motivations. In most cases, not the place to discuss Oman and BTC mining. I know that. Stick to the 'common bond' narratives - rugby World Cup, holiday plans, etc.
The problem with your view is it assumes everyone that doesn't agree with you is some sort of mainstream one dimensional type.
You can be bored of both Rugby and Bitcoin mining. I'll entertain a superficial conversion with someone who's a big fan of either, for a while.
Like many fans, you have a string of positive news stories to spur you along. This hasn't materialised in your investment being more valuable. So its not that your audience is brainwashed by the MSM, it's that theyve heard enough stories so as not to take them very seriously.
The problem with your view is it assumes everyone that doesn't agree with you is some sort of mainstream one dimensional type.
Not at all. I love hearing perspectives that challenge or change my world view. But you can't expect that to happen at the water cooler. Or if so, it's going to take multiple visits.
It also makes life far more interesting if one accepts that their world view has weaknesses or is flat out wrong. If more people were able to take this disposition, our society would be much better. At present, it's very superficial in terms of how people think and behave. And that's what the ruling elite prefers - a nation of sheeple more interested in 7-10 year theories and national rankings published by media that tell us how great we are.
There definitely can be merits to adopting a contrarian view. Commercially, it can help spot what others may not, to financial advantage.
If being contrarian is all one is doing, for no tangible benefit, that is indeed something for one to reflect on.
Being trapped in a world of normies and water coolers, is not evidence of freedom of thought.
Yeah, so that's why running around labelling most people as naive sheep, normies, or whatever, is your contrarian-ness pre-biasing how you approach many things
1. Sheeple are those who blindly follow the behavior of others without independent thinking. Nothing to do with 'contrarian.'
2. Normie is a humorous descriptor currently being used by those in the crypto space to explain the attitudes and behaviors of those not in the crypto space but seem to think they understand it well because they read something in Granny Herald or heard something around the water cooler.
Also, nothing to do with contrarian.
If you somehow feel intimidated by this, that's possibly an indicator of your own insecurities.
1. Sheeple are those who blindly follow the behavior of others without independent thinking. Nothing to do with 'contrarian.'
You cast wider society as being like this, and yourself as some sort of genius arbiter of objectivity.
Your actual reasoning abilities, are greatly clouded by this. You just aren't capable of seeing it.
If you somehow feel intimidated by this, that's possibly an indicator of your own insecurities.
Not at all, I'm just interested by your level of hubris. When I make stupid bets, I usually avoid publicising them until they pay off. You've not made any money, but sound like you're some sort of financial whizz. You know just enough to be dangerous.
You cast wider society as being like this, and yourself as some sort of genius arbiter of objectivity.
Your actual reasoning abilities, are greatly clouded by this. You just aren't capable of seeing it.
Wrong. As I stated above, I am open to challenging my own world view and changing my position on almost everything.
You've not made any money, but sound like you're some sort of financial whizz.
And you expect to be taken seriously with schoolyard taunts like this? Sorry pal but that's just entry-level trolling.
Financial acumen is usually a fairly binary affair, your approach either results in net positive returns, or it doesn't. Your enthusiasm for Bitcoin rests on your belief of a large future payday, there has been no triple digit growth of your entire portfolio. In the absence of a tangible return, you have to double down on the Bitcoin story building to something, from your investment entry point.
You talk of sheeple, but most every piece of "information" you're digesting to reinforce your initial assumption it's a good idea, has been put there by someone with a vested financial interest in getting you onboard. The same as most sheeple, but you're following a different shepherd.
Financial acumen is usually a fairly binary affair, your approach either results in net positive returns, or it doesn't.
OK. Fair enough. So you're saying that because the ol' rat poison has outperformed NZ propadee on the past 6 months, YTD, past 12 months, and past 5 years, that the sheeple people would have been better off in BTC than NZ propadee.
OK. Maybe. But I think your simplistic notion about binary outcomes looks pretty stupid.
No, you didn't get it.
Your financial decisions/investments have returned a poor outcome for the time and money expended (as opposed to returning you a surplus well in excess of what you've put in). That's the binary-ness, the ability to make decent money AT ALL, and not how BTC is tracking against the current price of guavas.
Make some bank first, then if you must, regale us with your genius.
Just so we're clear though, it was YOU that brought property into the debate. Then claimed it was me. Genius.
Your financial decisions/investments have returned a poor outcome for the time and money expended (as opposed to returning you a surplus well in excess of what you've put in).
Is this me personally that you're referring to? Or is this the whole of NZ society? What's the equation you use for time / money that you use to get this binary outcome? Or is it something more simple? Like beating the rate of inflation. Or perhaps it's related to an investment beating / matching the time horizon in the 7-10 year theory.
Im not sure how much further I can dumb this down. Im talking about your personal financial success investing in crypto. Net out.
How about,
-take the money you've put into Bitcoin.
-Now find the difference between that, and what you could liquidate the Bitcoin for today
-Take that number, and divide it by the number 5000
If the answers over a hundred, I'd be impressed at your amazing ninja Bitcoin prowess.
OK, don't think your troll poo is that toxic. Let's say I estimate the rate of inflation to be 10% and I use that as a benchmark for any asset I hold. And let's say the compounding return of my own ratty is 11%. That means I have "won" on the binary outcome, right?
Pretty sure most people in the West now see Islamic law being a bit too close to the Devil for comfort. I'm not religious at all but I will take Christianity any day.
I'll throw you and the other sock puppets a bone Z. The bursting of the property bubble might not be as dramatic as many expect, so that should tickle your receptors. Unfortunately, it the wealth effect is toast IMO. And that's what you should be concerned about.
F'more, ratty could be heading as low as USD4K. You read that here.
Here's a good weekend read for the apocalyptics (both religious and secular) amongst us :-);
https://rogerpielkejr.substack.com/p/the-new-apocalypticism
What I find interesting is the The Enlightenment period released us (humankind) from the chains of spirituality/mysticism through embracing science, and now science itself is providing that same end-of-days (for our sins) warning :-).
What goes around comes around.
Enjoy!
Interesting read. I was a secular greenie type apocalyptic. By the late 90s I realized we will burn all the oil regardless of climate targets and basically gave up advocating. I roamed the intellectual wilderness for 20 years.
Now I've moved on to be an acolyte of Disciple of The Prophet Hawkes Bay's DGM Death Cult, and live only for the Third Scroll to be revealed.
My personal journey nicely correlates to the increasing desperation and hopelessness I see about me.
A grandson of mine recently traveled from Taupo to HB via the Esk Valley. Nature's absolute power to both give and destroy has made a lasting impression on him as well. He commented to me that it's a biblical lesson that one can read about, but experiencing it is another thing.
Shocking if that were the case. And those should be built/maintained by the Regional Council. Instead they were busy spending up large on the Ruataniwha Dam project. Just unbelievable. Bad local government is a curse in many ways (not all are as bad as HBRC has been).
So I had a look at the issue - This quote shows the CE of HBRC doesn't understand AEP at all, which is shocking;
The 2018 was a one-in-100-year event, Munro said, “meaning it was unlikely … to reoccur for a long time”.
So the stop banks (built to a 1% AEP) failed/were breached as recently as 2018. A 1% AEP means that there is a 1% chance of failure in any given year - it has nothing, absolutely nothing, to do with the likely timeframe between similar events. His statement is pure garbage.
As soon as you have a breach - you understand that your defenses are inadequate.
When the political decisions are made based on ideology & the business cases have to support it...
https://www.rnz.co.nz/news/national/496650/analysis-what-reviews-of-cit…
The retail banks - mostly foreign owned - have been ensuring the "higher, for longer" mantra has become so engrained in NZ's thinking it has become absolutely necessary, and becomes a truism.
But what does it actually mean and why are the retail banks saying this is a given? Let me explain.
Prior to 2022/23 we had ten plus years of low interest rates. Bank profits increased nicely as their residential mortgage books (their main lending by far in NZ) grew year on year ... and their profits with it. Their 'spread' between deposit rates and lending rates stayed stable and didn't need to widen as the growth in total lending ensured their profits went up.
Now, 2023, and house prices are unaffordable to many, while house prices have fallen and will probably stagnate for some time, maybe 20+ plus years, and new stock each year remains a tiny percentage of the total housing stock. Retails banks can no longer rely on rising house prices to keep their growing profits. What do they do instead?
They sell the "higher, for longer" scam.
In essence, this will mean that retail banks can hold, or increase, profits by increasing the spread (their margins) between what they borrow at and what they lend at. The scam element is that they'll pretend they are helping to drive down inflation. The truth is actually far, far, different - it's all about ensuring their profits remain stable or grow.
Am I right? Time will tell of course. But keep an eye on what various independent sources say about the spread, or margins, retail banks get between their funding costs and the lending rates - and of course whether retail bank profits fall (unlikely), or stay the same / rise (likely).
Question for the day: When capitalism become an inescapable cost, doesn't it actually become a tax?
Its simply "Higher for longer" because the RBNZ didn't want to go "Even higher for shorter". I knew 6 months ago that we simply couldn't afford to have the majority of peoples interest rates above 7 to 8%. If rates had gone to15% then they wouldn't have needed to stay at that level for very long at all, but it would have totally wiped some people out. Its called a soft landing, not a hard landing. People need to adapt to the new normal.
Slipping under the radar for most.
India and the United Arab Emirates (UAE) have officially started trading with each other in their local currencies.
The Indian government announced on Monday that the country’s leading petroleum refiner, Indian Oil Corp., used the local rupee to buy one million barrels of oil from the Abu Dhabi National Oil Company — not the U.S. dollar.
https://finance.yahoo.com/news/dollar-being-dethroned-india-just-201500…
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