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). It's a skinny edition today.
MORTGAGE/LOAN RATE CHANGES
None so far today.
TERM DEPOSIT/SAVINGS RATE CHANGES
BNZ raised its six month TD rate, and lowered rates for terms 2 years and longer. More here.
FALL-OFF
There was a big drop in the number of new homes completed in Auckland at the end of last year. But this decline may not be the start of an expected downturn in housing supply, it may just be seasonal.
THROUGH THE SLUMP, UP FROM HERE
Giant dairy co-operative Fonterra has raised its milk price for farmers by an implied 30 cents to $7.80 per kilogram of milk solids - meaning the early season slump in prices has been almost completely reversed. This comes after most bank analysts signaled a rise was coming.
NOT LOOKING GOOD FOR SYNLAIT
Meanwhile small rival Synlait has told shareholders they are facing an ugly year in their half year trading update.
EXPENSIVE MONEY
SBS Bank's $60 mln subordinated bond offer had its margin range announced today of between 3.0% and 3.2%. And they said the interest rate for the first five and a half years until the First Optional Redemption Date will be no less than the minimum interest rate of 7.35% pa.
GETTING UGLIER
Not only is SkyCity facing a huge fine of AML breaches at its Adelaide casino, now New Zealand authorities are moving against it for AML breaches at its casinos in Auckland, Hamilton and Queenstown.
TRADING HALT
"FBU has requested [a] trading halt to allow it to finalise earnings guidance which it proposes to release to the market, which is likely to materially vary from current analyst forecasts. The information to allow FBU to do this will arise as the Board and sub-committee of the Board finalise FBU's half year accounts."
A MUTED HOLIDAY SEASON
Kiwibank's Household Spending Tracker reports that electronic card spending by Kiwibank customers rose 5% over the December quarter. "But 2023’s silly seasonal Santa spike was far more muted compared to previous years. Over the quarter, consumer spend was just 0.4% higher than 2022’s levels. And in the month of December, spend was unchanged. But given the (visible) hand of inflation, no change in the value of spend forewarns a decline in the volume of spend. Our data revealed exactly that. The number of transactions were 3% fewer over December compared to 2022, and down 3.3% on the quarter. With high inflation and rising interest rates, Kiwi households were clearly more reluctant to spend in 2023. Such restraint continued into the festive season. And 2024 will likely be more of the same. January spend also looks to have been a weak month, with the typical lift in hospitality underperforming."
STILL OVER +4%
Costs from grocery suppliers to supermarkets increased +4.3% in January from a year ago, according to the The Infometrics-Foodstuffs New Zealand Grocery Supplier Cost Index. However this is another moderation in input cost pressures, but not by much. This index was up +4.5% in December, although up +10.0% in January 2023.
EXITS
The Financial Services Council announced the resignation of CEO, Richard Klipin. And the Auckland-centered EMA said its CEO Brett O’Riley will "hand over the mantle" mid year.
SWAP RATES RISE FURTHER
Wholesale swap rates will probably be higher yet again today, but mostly the one year term. However, the key reaction will come at the close. Our chart below records the final positions. The 90 day bank bill rate is down -1 bp to 5.69%. The Australian 10 year bond yield is up +1 bp at 4.17%. The China 10 year bond rate is little-changed at 2.45%. And the NZ Government 10 year bond rate is up another +2 bps at 4.93% and a one month high, while the earlier RBNZ fixing was at 4.79% and down -2 bps from yesterday. The UST 10 year yield is now at 4.18% and unchanged from this morning. The UST 2yr is at 4.49% and so that key inversion is now just on -31 bps.
EQUITY WINNERS & LOSERS
The NZX50 has opened the week down -0.8%. The tough announcements from the three companies above haven't helped. The ASX200 is down -0.3% in early afternoon trade. Tokyo is closed for National Foundation Day. Hong Kong is also closed for the New Year holiday, as is Shanghai and Singapore. The S&P500 futures suggests Wall Street will open tomorrow up +0.3%.
OIL PRICES HOLD
Oil prices are still at just over US$76.50/bbl in the US while the international Brent price is now just under US$81.50/bbl.
GOLD HOLDS
In early Asian trade, gold is now at US$2023 and down -US$1 from this morning's open.
NZD HOLDS
The Kiwi dollar is little-changed from where we opened this morning, now at 61.4 USc. Against the Aussie we are at 94 AUc. Against the euro we are holding at 56.8 euro cents. That means the TWI-5 is now at just under 70.9 today and also little-changed from this morning.
BITCOIN HOLDS
The bitcoin price has moved little today, now at US$48,435 and up +0.6% from this morning's open. There's been modest volatility again over the past 24 hours of just on +/- 1.2%.
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79 Comments
I really don’t understand how Fletcher continues to be backed so much by the punters. My dad has had shares in them for a few years, and always seems surprised when they keep underperforming. Ignores my protestations of mediocre complacency. Most at the water cooler seem to disagree with me.
Que sera
The issues with Polyethylene pipes has not even properly surfaced yet. This could be the next leaky home issue for NZ. You cannot use these pipes in the US or Canada but we still use them in this part of the world. It is starting to be flagged with some insurance companies.
Polyethylene pipes (PE100) are great when installed properly, being used more often in civil infrastructure. The issue is not so much the pipe material but the install methodology and fittings. A properly installed PE line (scraped, cleaned and electrofused) will last over 100 years. A butt welded joint will have a tensile strength stronger than the parent pipe material.
But try convincing Plumbers a $5k electrofusion machine or a $15k butt weld machine is worthwhile lugging around. They'd much rather roll the dice with a $250 crimp tool, or worse push fits. Relying on solid crimped fittings to maintain pullout resistance on a material that suffers from elastomeric creep/relaxation.
But also PEX manufacturers skimp on resin and end up with pipes with ovality and brittleness. I think that's what Iplex's latest issues are in Australia are from, dodgy resin.
So much is about the installation right? Although is the product that good if it is so sensitive to improper installation?
Seeing lots of issues with engineered floorboards, so called ‘floating systems’. The biggest issues are with the cowboy installers (and that’s most of them) but have seen a few less than ideal outcomes with some installers of good repute.
Definitely. Dodgy materials still factor into it for sure, but installation and inferior systems are largely to blame.
Unfortunately could add cost, depending on how hungry merchants are. For example, a 25m of 22mm PEX Pipe is $144 at Mitre 10 Mega. A 25m of 25od PE100 Blue = $294m But then you go 50m at $356 per coil which is a reasonably fair market price @ $7 incl GST per meter.
I think FBU will say dodgy resin, but the fact they are banned in USA and Canada suggests that the chemical makeup is not suitable for the intended purpose. Add to that the install issues and you have to wonder why they are allowed here.
From your experience (I am assuming you have some) are PEX on the whole better?
I don't normally sell PEX, I work for a manufacturer of PE100 pipe in Civil, which is an "inferior" version of PEX as PEX uses crosslinked polymers improving temperature and chemical resistance. So not experience in PEX but can understand where the issues potentially lie. Extruding polymer pipes with inferior resin (not enough oxidizer, elevated moisture content etc) can result in brittle pipe, prone to slow crack propagation.
Then you get old plumber mate is potentially exceeding the allowable bend radius of the pipe to save a bob on elbows, along with fittings like Sharkbites that you push home and away you go. They all sell "no welding" solutions, but by welding Polypipes you end up with a homogenous system.
I think PEX is better than Polybutylene, but like any system if you make it easy for cowboys then you'll have problems.
Noticed today there have been two articles on DuVal in the press since Friday. Kenyon Clarke was claiming a business valuation of circa $700m a week or so ago on instagram.
https://newsroom.co.nz/2024/02/09/work-stops-on-big-du-val-site-as-cont…
https://businessdesk.co.nz/article/property/du-val-group-was-technicall…
Will be watching this one with interest. Don't think it will be pretty.
Other than the banks - who is actually making money from construction?
Prices are ludicrous compared to most other nations. Yet the developers are crumbling, the builders are struggling, and the monopolistic supplier is constantly having issues.
For our most important industry you would think it would be a more profitable.
How much you need to earn to buy an average home under new loan rules
Aucklanders would likely need to earn a minimum $172,000 a year to buy an average priced house under the Reserve Bank’s new debt-to-income lending rules.
That’s $12,000 more than the city’s $159,176 mean household income, as calculated by Infometrics.
Nationally, buying an average-priced home would likely require an income of $154,697 - or $27,000 higher than the typical Kiwi household income.
do the math on how much average prices have to fall, i am still calling -10% 2024
40 to 50% real fall from 2021/22 peak to play out, to the bottom in 2026.
Still lots of pain to come as INTEREST RATES stay much higher, and for much longer (higher forever) than all currently believe.
Just look at the property "Investor" types bleeting endlessly on the social media, about the pains of endless topping up of their "investments".....as interest rates normalise to the new world of deglobalisation.
They all say fix short.....(far out, this is what fecks them up in the first place!!) for 6 months/1 year as rates are "surely to fall soon" NOPE!
The identities of people allowed to freely come and go from Parliament have been made secret by the new Speaker.
Gerry Brownlee told RNZ he did not agree with the blanket ban on lobbyists having swipe card access and some discretion was needed.
Right...but but..
At the time, National's deputy leader Nicola Willis backed the swipe card ban and said there should be a "transparent, publicly accountable register of who's doing the lobbying and who they're lobbying for".
It makes it easier to deny having contact with lobbyists, it really is just thinly veiled bribery and corruption.
Any new policy coming up is going to benefit the few at the expense of the many. To be honest, most Kiwi's are either so dumb they won't notice or so apathetic they won't care.
An RNZ analysis of political donations since 2021 shows people involved in the property industry are giving the most - and almost all of it is going to National, ACT and NZ First.
Since 2021, people aligned with the property industry have donated more than $2.5 million to political parties.
More than half of the cash from the property industry went to the National Party (53 percent), followed by ACT (32 percent) and New Zealand First (12 percent). Labour received 2 percent.
https://www.rnz.co.nz/news/national/499176/property-industry-tops-political-donations
It's much bigger than that. This is Aussie but the same deal.
Power maps are used to set out the who’s who in a government department: names; titles; positions; contact details; and, crucially, a colour-coded ranking system detailing how well-disposed (or otherwise) those individuals are to, say, KPMG.
These are used by consulting firms to get their tentacles into departments. To traffic in favours. To peddle influence, so as to sell consulting services — worth hundreds of millions of taxpayers’ dollars — into those departments.
And, crucially, these maps undermine an arms-length, transparent, non-partisan and uncorrupted framework for the procurement of consulting services.
They undermine getting the best and most appropriate advice, from the best qualified firms. They also work to preclude smaller, less influential, less corrupting, boutique firms.
https://theklaxon.com.au/kpmg-ceo-andrew-yates-the-barnaby-joyce-of-big…
Amazing - property received so much in handouts of taxpayer money during COVID times and still the industry bleated about lost dignity and have invested in politicians who'll change laws in ways that benefit their own and their donors investments.
And we tut-tut at the ramraiders of petty amounts.
Grand Poohbah Adrian Orr gives his 5 cents on stablecoins and Bloomie picks it up. Nothing enlightening and not sure he knows that an NZD stablecoin already exists.
New Zealand Central Banker Slams Stablecoins as ‘Oxymorons’ https://www.bloomberg.com/news/articles/2024-02-12/new-zealand-central-…
She has the mana, but isn't interested.
The one they should put up, is AOC.
https://ocasio-cortez.house.gov/
https://www.usatoday.com/story/news/2022/10/16/who-is-aoc-alexandria-oc…
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