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
Co-op Bank has moved up its owner-occupied 6-month fiixed rate from 6.99% to 7.09%, the 1-year from 6.99% to 7.09%, the 18-mnths from 6.89% to 6.95% and 2-year from 6.75% to 6.79%.
Kookmin Bank has moved its variable rate from 8.50% to 9.00%.
Police Credit Union has moved its 1-year rate from 7.20% to 7.25% and its 2-year from 6.79% to 6.89%.
TERM DEPOSIT/SAVINGS RATE CHANGES
BNZ has tweaked its 6-month to 18-month rates by between 5 and 10 basis points. It means the big four now all offer 5.95% for 12 months.
Kiwi Bond rates have been raised again by between 25 and 50 basis points. See more here.
AUSSIES FEELING THE MORTGAGE STRESS
A record high 1.5 million Australians are now ‘at risk’ of ‘mortgage stress’ - representing 29.2% of mortgage holders, according to new research from Roy Morgan. The number of Australians ‘At Risk’ of mortgage stress has increased by 642,000 over the last year as the Reserve Bank of Australia increased interest rates at twelve of the last fifteen-monthly meetings. Interestingly, official interest rates in Australia are now at 4.1%, compared with our Official Cash Rate of 5.5%. The big difference across the ditch is that most Australian mortgages are on variable rates, so are quickly hiked when official rates go up. Most of our mortgage rates are fixed, so have a lag in going up. Is Australia going to prove to be a 'canary in the mine' for us?
SBS BANK LOOKS FOR UP TO $175 MLN
SBS is offering up to $125,000,000 (with the ability to accept oversubscriptions of up to an additional $50,000,000 at SBS Bank’s discretion) of 5.5 year, unsecured, senior, fixed rate bonds, maturing on March 7, 2029 to institutional investors and New Zealand retail investors. The offer closes on August 31. The Bonds are expected to be quoted on the NZX Debt Market. The interest rate for the Bonds will be set on the rate set date as being equal to the base rate plus the issue margin, subject to a minimum interest rate of 6.10% per annum. The indicative issue margin range for the Bonds is 1.40% to 1.55% per annum. The Bonds are expected to be rated BBB+ by Fitch Australia Pty Limited. The arranger is Westpac, while Westpac and Forsyth Barr are the joint lead managers.
FAST FOOD NOT FAST ENOUGH TO BEAT INFLATION
Fast food giant Restaurant Brands, purveyor of KFC, Pizza Hut, Carl's Jr and Taco Bell has produced a net profit of just $2.2 million (down from $15.3 million) for the six months to June 30, 2023. This was on total store revenue of $640.2 million. The company's chairman, José Parés, said performance was impacted significantly "due to continued input cost increases in the New Zealand business which exceeded earlier expectations of scope and quantum", lower than expected sales growth in California and Hawaii; and higher interest rates leading to increased funding costs. The business had implemented a strategic programme of price increases and cost control measures but was not able to raise prices to fully offset the cost increases during the period without significantly impacting transaction volumes. "It is critical that price increases are made at a pace and level that is cognisant of sales volumes, customer loyalty and our relativity to competitors. We remain firmly focused on these factors as we seek improved profitability in the second half of 2023," Parés said.
MIQ SECURITY PROVIDER JAILED FOR TAX EVASION
The principal of a company that provided security at three Auckland hotels used as MIQ facilities during the pandemic - receiving $300,000 payment from the Government - has been jailed for three years and one month for tax evasion. Rupert Faimoa-Magele was sentenced on 47 charges of evading or attempting to evade the assessment and or payment of GST, PAYE and income tax by his company Blade Group Limited. Faimoa-Magele evaded the assessment and/or payment of $1,077,548.23 payable for GST, Employer deductions, and Income Tax by a mixture of not filing Blade Group Limited’s tax returns and filing some returns that materially understated the tax payable.
SWAPS MIXED
Wholesale swap rates were probably little changed at shorter terms but up at longer terms, but the real reaction will come at the close. Our chart will record the final positions. The 90 day bank bill rate is unchanged at 5.67%. The Australian 10 year bond yield is down 2 bps at 4.16%. The China 10 year bond rate is up 4bps at 2.61%. The NZ Government 10 year bond rate is up 2 bps to 5.07%. The UST 10 year yield is down 2 bps from late last week NZ time at 4.24%.
EQUITIES RALLY
Asian markets have rallied after China announced new measures over the weekend to support its ailing markets. But we are not getting the mood here. The NZX50 is up just 0.1% in late afternoon. The ASX200 is up 0.6%. Tokyo has opened up 1.7%. Hong Kong is up 2.0% at open, while Shanghai is bouncing 2.7% at open. Wall Street closed at the weekend with the S&P500 up 0.7% on Saturday our time.
GOLD RISES SLIGHTLY
In early Asian trade, gold is at US$1916/oz and up just very slightly on the day.
NZD MIXED
The Kiwi dollar has edged up slightly against the US currency from earlier in the day from US59c to US59.2c. Against the Aussie we have slipped from at 92.3 AUc to 92.1 AUc. Against the euro we are unchanged at 54.7 euro cents. The TWI-5 is unchanged at 68.4.
BITCOIN HANGING ON TO $26,000
The bitcoin price is hanging tough at just over $26,000, barely changed in the past 24 hours.
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53 Comments
Water ingress has occured on the house that I sold at the peak and now the ceiling in the bedroom has fallen in..... They needed to demolish it anyway to rebuild but I now hear that they may need to sell as they have no funding.... things get interesting when you pay 3.2mil for 800 sq m...... sight unseen. So now they have no funding and no rent at all.... tick tock tick tock so many stories of people sitting on problem properties with crazy big mortgages starting to surface, by the time they sell that they will be down 40-50%
Someone at work wants to move from akl to chch but said she cant sell the house because it's gone down so will hold and rent since it will go up again fer sure. Needless to say I offered her alternative facts to consider before she makes a decision, starting with what a sunk cost is, the nz balance of payments deficits and sticky inflation. To her credit she said she'd think a bit more (at least until the next bbq). Brave bag holders- not a game for cowards like me.
Similar sort of thing happened to a friend of mine. They own a place in Wellington, but had bought a section on the Kapiti coast to build. Were trying to sell their Wellington home mid 2022 but didn't like the offers they were receiving. Come 2023 and their house value has fallen further and they aren't able to build the house they designed due to building cost increases, reduced equity in their other home and stricter lending criteria. Plus the section they purchased has also gone down in value.
"...NZ started with a low net debt to GDP ratio. And still has a relatively low net debt to GDP ratio. But our increase in net debt was very large as compared to other countries, and the current general government primary balance is awful. Deficits that large might make sense in a recession, when tax revenues are down and spending on benefits is high. But doing this while the Reserve Bank is meant to be trying to get inflation back down is simply irresponsible.
The OBEGAL path presented at BEFU was not credible.
Treasury forgot that the government passed legislation banning the sale of cigarettes with nicotine in them from 1 April 2025; it projected a tobacco excise path that did not change with what amounts to tobacco prohibition. Recall that tobacco excise revenues are on the order of $1.7-$1.8 billion per year, and that the government’s projected surplus for 2026 was on the order of $0.6 billion. The VLNC rules bring forward the sharp drop in tobacco excise revenues that would otherwise have been expected further down the track. Annual tobacco excise revenues after 2026 are likely to be about a billion dollars lower than had been forecast at BEFU, on this single item, unless an incoming government eases the VLNC rules.
At the same time, large spending items like the food in schools programme were forecast to end at the end of 2024. It may be politically challenging for any incoming government to end that spending line in 2024. Treasury has to forecast based on what the government has legislated (barring its amnesia about the effect of tobacco prohibition on tobacco excise revenue). But expenditure paths that depend on decisions that are unlikely to be made may not be all that credible."
http://offsettingbehaviour.blogspot.com/2023/08/deficits-and-prefu.html
Profile,
Good post. I owe you an apology, sort of anyway. An article in nature confirmed that the world has greened to a greater extent than I had thought and of course, explained why-a globally warmer climate thanks to increased CO2.
However, the same journal-peer reviewed naturally, also looked at plant diseases and here is a brief extract;
Increasing incidence and severity of plant disease outbreaks poses significant and growing risks to primary productivity, global food security and biodiversity loss for many vulnerable areas of the world1,2,3,4,5,6,7. These disease outbreaks cause yield and ecological losses. For example, the annual crop yield loss caused by pathogens (microorganisms that cause diseases and constrain host health and productivity) and pests alone is estimated at US$220 billion3,4,5,6, directly impacting food security, regional economies and other linked socio-economic aspects. This is further exacerbated by post-harvest loss caused by pathogenic microorganisms such as Penicillium spp. and Xanthomonas euvesicatoria1. Furthermore, climate change poses an increased risk of intensification of plant diseases, putting at risk the world’s food supply and natural plant biodiversity7,8,9
Do you have a link to that data? The latest I could find shows NZ ahead of many countries including Austria, Belgium, Brazil, Czech, Denmark, Finland, Germany, Italy, Netherlands, Switzerland, Sweden, UK - and a bunch of others incl Equatorial Guinea
https://www.imf.org/external/datamapper/NGDP_RPCH@WEO/OEMDC/ADVEC/WEOWO…
https://i.stuff.co.nz/motoring/132824983/abandoned-evs-are-piling-up-ac…
"Abandoned EVs are piling up across China. But why?"
Still for sale. Offers over $1.4m. Looks like one of five has sold. No mention of the other 5.
A quick browse through TradeMe suggests that there are a ton of houses for sale in the Napier area. Kind of odd given the cyclone damaged so many.
IMHO we actually have enough housing, especially given the change in demographics coming in the next 10 years as boomers sell the big places.
This will have implications for little ‘ole NZ’s residential development sector. Both Evergrande and Country Garden own, or fund, a number of Chinese development entities active in Auckland. A number of mid scale ‘kiwi’ developers are also reliant on Chinese funding.
Read the commenting guidelines. Trolls are not tolerated. Well that’s the policy even if it’s not backed up by the editors. Weird. People are banned for lesser things.
At least I support the site, lol. But my patience is wearing thin.
It would be nice to get an apology from Yves some time, but I doubt he is man enough.
At least Yves makes some valid points from time to time, even if he casts some appalling assertions. Unlike you, a mere troll.
Motley Fool takes on the challenge of explaining Aussie house prices. No clear hook here so you have to work through it yourself if you're so inclined. Summary says it all:
Which means, even if we can explain why house prices have increased so far and so fast, it’s very unclear how they increase meaningfully from here.
https://www.fool.com.au/2021/05/19/how-on-earth-do-you-justify-australi…
Listening to the ol' Jim Rickards on the weekend waxing and waning on gold. People tend to forget a few things:
- From 1971-1980 the gold price bull run did a 22x
- 1999-2011 the gold price bull run did a 7x
And the media tries to tell the sheeple about tulips, Dogecoin, etc.
Rickards then goes on to talk about Jim Rogers saying that gold is going to the moon. But nothing goes to the moon without a correction. At least a 50% retracement which happened around 2014.
Rickards suggests a USD15K gold price possible before 2025.
Maybe JC but I think 5k is doable with a big banking crisis...... if the crisis gets big enough no one knows the limits Gold could move like BTC if things get non linear...
Rickards is pretty good with the math in terms of explaining his $15K in relation to expansion of M1 and M2 money supply across the U.S., EU, and Japan. When you consider this, $5K looks well undercooked. For similar reasons, talk of USD1 million+ Bitcoin is not that outrageous.
You can actually create infinite new assets. All you have to do is create artificial scarcity.
- Need land prices to go up? Create zoning laws.
- Need water prices to go up?Create water districts.
- Need air prices to go up? Create emissions restrictions.
There's lots of things we take for granted that could easily be monitised by governments to create new asset classes and extract value.
I've just squizzed through the NZX report to shareholders. The summary above fails to report the special $11M gain in last year's profit. Inflation might've 'cost' them a couple mill but they've really overhyped the narrative. Increased costs due to store expansion and they're still good to go with dividends.
Thanks. I've come to realise the information age just repeats everything, is subject to the bias' of the repeater/compiler of said information, and also heavily influenced by the dominant narrative of the times. It's a trick to find the source of truth these days.
I'm not sure who would want to invest in the SBS bond offer - 6.1% for 5 years, with a BBB+ rating, and down the long list of creditors. The bank doesn't have the strongest balance sheet, nor is it core to the NZ banking sector (i.e not too big to fail). Term deposits are already hitting 5+% PIE for 5 years. Not sure the spread is worth the risk.
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