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
Kāinga Ora (HNZ) raised their floating rate by +14 bps today to 8.64%, and their 1 & 5 year fixed rates by +20 bps or more. ICBC raised all their mortgage rates, with their floating rate up +35 bps to 7.85% and all fixed rates were raised too.
TERM DEPOSIT/SAVINGS RATE CHANGES
NBS raised their term deposit rates for terms of 6 months to 2 years. But none are market-leading.
RESIDENTIAL BUILDING CONSENTS DIVE
The home building slump picks up speed again. The number of new dwellings consented last month was down over -5% on the previous month on a seasonally-adjusted basis, according to Stats NZ. Consent levels are down more than -25% from July a year ago. In Auckland the drop is -19%, Wellington -37% and Christchurch almost -30% from the same month a year ago
WMP HOLDS LOW
Following up our preview of the WMP Pulse auction overnight, there was something of a surprise result because it came in unchanged, ending a series of sharp falls from late July, and staying at US$2450/tonne. Another fall was expected. Still this locks in a level we last saw in August 2016.
THE NATS RELEASE SOME KEY TAX POLICY
National unveiled its tax policy, promising $250 more a fortnight for average households with children. This headline promise grabbed all the attention, but it also gave in to speculators/'investors' in the residential property market by promising full building depreciation and a reversion to a 2-year bright-line test. (A tax deduction for buildings that don't actually depreciate in market value terms is pretty shameless. It is just a tax cut for friends, and very bad public policy.)
FUNDING FOR GEOTHERMAL GENERATION
The NZ Green Investment Fund will supply up to $25 mln of debt funding for the construction of connection assets for the new ~50MW TOPP2 geothermal plant. Additionally, it will enable upgrades to the existing connection of the 25MW Te Ahi O Maui geothermal plant. These are owned by the Eastland Group, a specialist infrastructure company headquartered in Tairāwhiti that also operates Eastland Port and Gisborne Airport. They recently sold its electricity distribution business, and is recycling capital into its significant generation pipeline.
LEVERAGE & RETURNS
With the release yesterday of the RBNZ Dashboard, we have now updated our bank leverage metrics which you can see here, by bank. There has been little change in any of these metrics between March and June however. The bank with the highest returns for shareholders is ASB (15%pa), followed by BNZ (13.3%), ANZ (12.3%) and Westpac (11.6%). The banks with the highest leverage are Kiwibank (14.6x), Westpac (13.1x), TSB (12.6x), and ASB (11.9x).
SOME NZ BUSINESSES VERY CHINA-DEPENDENT
In a survey of members, the NZ Business Roundtable in China found that 36% of the New Zealand businesses surveyed relied upon China to contribute between 60-100% of their global revenue in 2022, with small and medium sized enterprises skewed towards a higher concentration in China. Most (71%) were either satisfied or more than satisfied with how the New Zealand Government has managed the relationship between NZ and China in the past 24 months. There were 51 companies in this survey.
EASING INFLATION
Australia's July monthly inflation indicator rose 4.9% from a year ago, a rate that is down from 5.4% in June. Annual price rises continue to ease from the peak of 8.4% in December 2022. Even though they came in lower than expected, the July levels are still far higher than the RBA needs them to be, but it will probably lock in a rate pause there because it is going in the right direction.
A BIGGER DROP IN AUSTRALIA
In Australia, their residential building consents fell at an -8.1% rate in July from June to be down -10.6% from a year ago. The private sector components are more negative than the overall results. Interestingly, these are falling faster recently than in New Zealand and both are fast month-on-month falls.
SWAPS SOFT
Wholesale swap rates were probably a little lower today, but the real reaction will come at the close. Our chart will record the final positions. The 90 day bank bill rate is down -1 bps at 5.64%. The Australian 10 year bond yield is down another -5 bps at 4.07%. The China 10 year bond rate is little-changed at 2.60%. The NZ Government 10 year bond rate is down -7 bps to 4.99%, but still above the earlier RBNZ fixing of 4.95%, and down -6 bps. The UST 10 year yield is also down -6 bps from yesterday, now at 4.14%.
EQUITIES RALLY
The NZX50 is down -0.2% near today's close. But the ASX200 is up a strong +1.3% in afternoon trade. Tokyo has opened up +0.9%. Hong Kong is up +0.4% in its opening trades. But Shanghai is down -0.2% in a more restrained mood. Wall Street ended its Tuesday session up a solid +1.5%.
GOLD IN LARGER MOVE UP
In early Asian trade, gold is at US$1936/oz and up +US$14 for the day. Earlier it closed at US$1937/oz in New York, and earlier still at US$1930/oz in London.
NZD FIRMISH
The Kiwi dollar has moved up +¼c against the greenback, now at 59.5 USc. Against the Aussie we have held at 92 AUc. Against the euro we are marginally firmer at 54.7 euro cents. The TWI-5 is up slightly at 68.6.
BITCOIN GETS A LIFELINE
The bitcoin price has risen quickly today after a favourable court ruling against an SEC rule. It is now at US$ 27,418 and up +5.1% in the past 24 hours, although that is a scaled-back rise from earlier. Volatility over the past 24 hours has been +/- 4.3%.
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85 Comments
In other news it seams like bike shops around Wellington are hitting hard times, a couple of big clearance on top of clearance sales coming up in the next couple of weeks and 99 bikes in town closing its doors in a few days. Not a very transport friendly city unless you have a good pair of trail shoes and can carry your office on your back.
Haven't seen as many around lately. To be fair, 99 bikes took over a failing Bike Barn, and target cheaper heavier bikes which aren't really suitable for the type of riding most of Wellington seems to do. I'm sure there's a market for a good gravel/adventure/touring specialised store but otherwise the transport and downhill markets are already saturated by other shops and there isn't a lot of wriggle room offering crap bikes to experienced riders I guess
IDK about that, knew the owner of a bicycle store and he used to make an absolute fortune on markup. The bike market is also significantly bifurcated between kids bikes on one side and hardcore cycling, BMX and mountain biking on the other. The money is in kids bikes and recreational cycles though.
Bike biz guy I know says that many of the retailers (including his own) are sitting on heaps of stock and it just isn't moving. Part of the problem is also that stock ages, e.g. you can be sat on last year's Model XYZ bike that is now not worth so much as the new, more desirable model has come out.
Crazy to think that not that long ago it was almost impossible to get a bike. I remember going into an Evo Cycles shop after my last ride got stolen, flush with the insurance money and there was barely anything available. Now the same shop is overflowing with stock at some fairly sharp prices.
Even the scoundrels at PB Tech have actually had some decent, clearance-type sales recently whereas normally a sale for them is just an exercise in how far they can push fair trading rules without getting caught.
Seeing this with some cars now too. I've had my eye on one at a dealer for a while, bit of a "fun" car - nothing I need in the slightest.
It's a 2021 registration vehicle that is ex-demo but we are nearly in 2024 ... it's actually just about out of its factory warranty period. Has had $10k cut off the price, and I keep being hassled to buy it but they won't cut any more. Sits languishing on the forecourt, presumably being started up occasionally but otherwise sitting unwanted.
I'd buy it for the right price - but if the dealer would rather have it contribute to their pile of overflowing stock, so be it.
I had the same experience, last year there was a rush of buying, hardly any stock earlier this year, and now seems like there have been perpetual sales since May.
I decided to build my own POS bike and gradually upgrade it as interest in the hobby permitted. Maybe some good parts on clearance coming up
You won't be having those 2 bottles of red HM. The increase in carbon tax will chew up that tax break lickety split. You'll also end up paying more by going private for the public services National will cut. If you live in Auckland you'll be covering the rates increase that will be required to pay for the 2b funding cut Luxon is imposing on AT.
wayne brown not a fan, he will have a 2b hole in income for aucklands roading fund to fill unluckly if you are an auckland ratepayer
and as someone that walks home and crosses both motorways in auckland watching them not moving much faster than i am walking at rush hour i can not see how things will improve
Auckland Mayor Wayne Brown says scrapping regional fuel tax could leave council with $2b budget gapWe are using the funding for the Eastern Busway, as well as planned upgrades like Lake Road, Lincoln Road and Glendvar Road.”Brown said these projects were at risk if the RFT was dropped without a replacement, warning it could leave close to a $2b gap in the council’s budget.“It will mean more delays to sensible projects to optimise our road network and more potholes.”
The UST 10 year yield is also down -6 bps from yesterday, now at 4.14%.
Excess No More? Dwindling Pandemic Savings
Figure 1 shows that estimates of accumulated excess savings, in nominal terms, totaled around $2.1 trillion by August 2021 when it peaked (green area). Since then, aggregate personal savings have dipped below the pre-pandemic trend, signaling an overall drawdown of pandemic-related excess savings. The drawdown on household savings was initially slow but started to accelerate in 2022 and has remained around $100 billion per month on average.
The red area in Figure 1 shows our updated estimate for cumulative drawdowns, which reached more than $1.9 trillion as of June 2023. This implies that there is less than $190 billion of excess savings remaining in the aggregate economy. Should the recent pace of drawdowns persist—for example, at average rates from the past 3, 6, or 12 months—aggregate excess savings would likely be depleted in the third quarter of 2023.
This is going to hurt over future years: 15% of Kiwi kids now leaving school without any NCEA qualification
https://www.kiwiblog.co.nz/2023/08/up_on_the_facts_nz_yesterday.html
15% left without any NCEA qualification (up 50% since 2017's 10% figure)
25% left without getting NCEA Level 2 (not shown in graph above)
48% (~1/2) left without getting NCEA Level 3 or UE (not shown in graph above)
21.5% left before turning 17-years-old (up 36% since 2017's 15.8% figure)
33% more 16-year-olds left school
63% more 15-year-olds left school
(data for 14-year-olds wasn't provided)
promising full building depreciation (A tax deduction for buildings that don't actually depreciate in market value terms is pretty shameless. It is just a tax cut for friends
That's not actually true David.
Firstly building do depreciate, that's why they need constant repairs and maintenance, the value generally going up is the land, not the building.
Secondly, the claimed building depreciation needs to be paid back when the building (and land) is sold, it's called "depreciation recovered" in accounting lingo, so at best, it's a tax deferred, but it's not a "tax cut for friends"
It is the government recovering the depreciation, already claimed by the house owner, at the time of the sale. In over words, if you chose to depreciate your rental property, then you have to pay back that amount when you sell the property, unless you want to try to argue that the property has actually depreciated in value.
Yeah you're the Oracle, not. I don't care how much you made, the question, raised by your good self was about whether buildings depreciate. You disagreed with Parker but then admitted its returned back (recovered). Thats why I told you, make your mind up. As you like berating others I'm just giving you some back.
Btw are we still on track for massive value decline over the year. Was it 30 percent drop over 2023 or 20 percent.
Most people here know your background. As an architect and investor that does not make you a qualified builder, sparky and plumber. You may have some knowledge of those trades, but dont pretend to be an expert in areas you're not. I think in this case you're trying to confuse non-investors what's really happening with the tax fiddle on your motel
Btw I hope when you sold your coromandel bnb house, you paid back your gst on the selling price. Or was that another fiddle
Silver price pushing through the 12-year resistance. Adjusted for inflation, new all-time high price would around USD200. No need to get excited. Could be JP Morgan playing silly buggers with the market.
Here's a summary of past 12 month commodity price changes:
Sugar: +34%
Silver: +29%
Gold: +11%
US CPI: +3.2%
Copper: +2%
Gasoline: -1%
Soybeans: -5%
WTI Crude: -14%
Brent Crude: -15%
Aluminum: -15%
Heating Oil: -17%
Wheat: -23%
Cotton: -26%
Corn: -27%
Zinc: -34%
Coffee: -36%
Nat Gas: -71%
Interesting. Yet we still have high inflation.
Greater falls in commodity prices related to what people actually consume. You're right. Intuitively it doesn't add up.
If you consider inflation as money supply manipulation, the gold and silver prices make intuitive sense.
Stifel: Perfect Storm For Commodities
New geopolitics of BRICS-11 in 3 words: "Three MAJOR chokepoints" Link
Rumors around the water cooler suggest that a major scandal about to break with the ol' rat poison.
Will believe if when I see it, but the basic premise is that the Biden Administration had been plotting a directive to "send it to zero". According to sources, the plot can be validated and documented.
This is scarcely believable but actually true. Unless Roubini is lying.
Current unrealized losses in the US banking system is -$1.8 trillion out of only $2.2 trillion capital.
With corporate taxes due Sep 15 & possible gov shutdown Oct 2, the general public has no idea the banks are already insolvent entering a nightmare liquidity scenario in October
https://twitter.com/FinanceLancelot/status/1696657731539869970
More cheerful stuff from Dr Doom. Interesting and perhaps concerning. It’s only intuition but it feels to me there will be some sort of trouble in the USA before the year is out. So while shares have done well there so far (unlike the crapness down under), we will see…
Bulls have been rubbishing Jeremy Grantham, time will tell.
I actually see Grantham more of a Dr Doom than Roubini. J.C, Roubini is not lying, he's a very smart man. His view is not new and is shared by Peter Schiff and others. Many american banks are actually broke. Broke in the sense that if they valued their assets at today's valuations, capitalised at today's interest rates, they would not cover their liabilities.
Of course, the Fed doesn’t mark to market, nor have banks done so since the early-2009 market low, when the Financial Accounting Standards Board relaxed FAS Rule 157 (which is actually what ended the global financial crisis – by making bank insolvency opaque). Link -Hussman
Rather than whinge we should just take charge ourselves. Yvil has inspired me (I am actually being kind of genuine here). Grow more, bake more, make more, eat less supermarket crap, go to markets more. Screw the supermarkets!!!
- keep more of our hard earned cash
- line less of the duopoly’s pockets
- be healthier
Cool. And one day maybe you might apologise for saying totally untrue things about my support of this website, which was in a really nasty ‘put down’ manner. I very nearly cancelled my membership after that, which as a supporter of this site I am sure you wouldn’t want to see. I am sure support of the site is welcome and needed. I am prepared to move on.
I dont know about anti war, but was anti war expenditure. Not anti violence though. "Fight like you've never fought before." was what he told his election win believers. And they did. Was he hoping for the death of Mike Pence and others.
like Hitler who had a personality transplant, so did Donald trump. Hitler was a nobody until his 30s and Trump was engrossed in his buildings and casinos. But both changed to power hungry/power mad.
I would argue that JA had more in common with Hitler than Trump does. Trump is a twat for sure but JA has used race to divide the country, put in place an agenda that gives one race rights over another in the name of equity of outcome (saw that on a govt job advert). Hitler also manipulated the media, as labour still do.
Not anti-war? I'd have to check on that "Fight like you've never fought before." quote.
But here he is being asked on who he wants to win out of Ukraine or Russia. "I want everybody to stop dying".
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