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
No changes today to report.
TERM DEPOSIT/SAVINGS RATE CHANGES
TSB has raised its one year term deposit rate to 6.25%. That is about +15 bps better than at any main bank for that term, and almost as high as the 6.3% offers by both Heartland Bank and Rabobank.
SHARP PULLBACK
February new car sales were weak, more evidence of an economic pullback. At 5,951 new cars sold in the month, this was the lowest February result in 11 years, since 2013. The largest pullback is in EVs and hybrids. In December 2023 81% of car sales were NEVs - but in January and February it was about 40%. Light commercials suffered a pullback too. But not heavy commercial vehicles; at 660 units that is the best February result ever (and 38 of them were full EVs).
A LOGJAM OF PROPERTIES FOR SALE
Auckland's housing market is swamped by homes for sale, leaving buyers spoiled for choice and 'creating the largest buyers' market since 2011', says the region's dominant realtor, Barfoot & Thompson.
TOUGH, ESPECIALLY FOR DISCRETIONARY SPENDING I
Household spending data shows that - not unsurprisingly - food has been a big contributor to increased costs, while we've been trying to save with decreased spending on communication and recreation. Increased living costs force spending changes, says Stats NZ
TOUGH, ESPECIALLY FOR DISCRETIONARY SPENDING II
Consumer spending patterns were mixed in February with some merchant groups up and others down, but the overall trend still indicates slowing growth due to the higher cost of living. That's according to the data in the Worldline payments network.
IMPACTS ON ARREARS AND DEFAULTS
Centrix says as consumer arrears are climbing, the flow on effect continues to impact Kiwi businesses. Overall business defaults were up +28% year-on-year in January , while company liquidations were up +16% over the same period.
WATCH THE GST TRACK
Another indicator of toughening economic conditions was revealed in today's Crown Accounts to January. While income taxes collected from individuals are still rising far faster than inflation (+6.3% pa - partly due to more people being employed, but also higher pay rates), GST being collected took a surprisingly sharp dive in January 2024. The Crown collected $2.84 bln in GST in January 2023, but only $2.47 bln in January 2024, a -13% drop. We haven't seen a drop like that for quite some time and it will be closely watched to see if it is a portend, of just a one-off (which does happen sometimes with GST collections). (Total Crown revenues are running +$4.9 bln more in the year to January than the same period last year. +7.0%.)
RBNZ INTRODUCES CYBER RESILIENCE REQUIREMENTS
The Reserve Bank (RBNZ) says it's implementing cyber resilience reporting requirements for the financial institutions it oversees in phases through 2024. These include; a requirement to report material cyber incidents to the RBNZ within 72 hours; entities are to inform the RBNZ of all cyber incidents regardless of materiality with large entities required to report all cyber incidents every six months and smaller ones annually, and; financial institutions will also be required to report to the RBNZ on self-assessment against the regulator's guidance on cyber resilience, annually for big entities and every two years for others. This comes as the RBNZ publishes consultation feedback and decisions on collecting data to support cyber resilience.
CONSUMER LAPTOP TUNED FOR STRONG AI PERFORMANCE
Apple has now released its M3 chip MacBook Air, and claims it is the 'world's best consumer laptop for AI'.
HOW IT WILL BE PAID FOR - BY USERS
The Coalition Government has unveiled a vehicle registration fee hike to pay for its transport plan. National will add $50 to vehicle registration costs and hike fuel taxes by 12 cents in 2027 to cover the costs of transport infrastructure.
COMMODITY PRICES TURN UP
The ANZ World Commodity Price Index gained +3.5% in February from January as both dairy and meat prices improved. In New Zealand dollar terms, the index lifted +4.1% m/m as the NZD fell -0.8% against the US dollar, and from a year ago that puts them up +6.3%.
CREDIT RISK & CLIMATE RISK
The RBNZ is talking more about how these two are linked. This goes down to credit risks at individual banks and up to financial stability risks at a system-wide level. The more this risk assessment is developed, the more you will see it applied when you get a loan, and how that loan is priced. The RBNZ is making sure the signals go right through the lending systems of all financial institutions.
COST OF MONEY NOT GETTING CHEAPER AT BANKS
The January banking system funding profile saw continued declines in no-cost at-call monies, and rises in short term funding (<1 year). Funding for longer terms is stable. This continues the slow rise in funding cost pressure on banks overall. As the RBNZ recently noted, these shifts will be felt by banks and get reflected in their pricing decisions. Banks are due to repay $1.8 bln of the Funding for Lending program in March, on top of the $1.3 bls they have already paid back. At its maximum they took $19 bln under this program (at the OCR rate). For the rest of 2023 they are due to repay another $3.9 bln. It seems unlikely they will replace those funds with cheaper cost money.
SENDING AN OLD DOG ON A REINVIGORATION TRIP?
The Government is making South and South East Asia a priority because "it is critical to maintaining and building [our] security and prosperity". To do that they are sending Winston Peters to talk his way through India, Indonesia and Singapore looking for "reinvigoration". I wonder if those hosts realise that it is domestic politics to get WP out of the country?
A POSITIVE PORTEND
Australia delivered a bumper current account surplus in Q4-2023 od +AU$11.8 bln, much more than was expected. This was their best 2023 quarter, taking the annual current account surplus to +AU$31.9 bln. That probably means their Q4-2023 GDP activity will be positive too, helped by net exports.
SWAP RATES HOLD
Wholesale swap rates will probably be little-changed again today. Our chart below records the final positions. The 90 day bank bill rate is up a minor +1 bp at 5.66%. The Australian 10 year bond yield is unchanged from yesterday at 4.12%. The China 10 year bond rate slipped even lower, now just under 2.37%. And the NZ Government 10 year bond rate is up +2 bps to 4.82%, while the earlier RBNZ fixing was at 4.76% and up +1 bps from yesterday. The UST 10 year yield is now at 4.22% and up +2 bps from this time yesterday. The UST 2yr is now down to just on 4.61% and so that key inversion is out to -39 bps.
EQUITY WINNERS & LOSERS
Wall Street ended little-changed as measured by the S&P500. But after hours, futures price=ing has slipped, down -0.2%. Tokyo has opened down -0.6% today. Hong Kong has opened downa sharpish -1.3%. Shanghai is holding the line (for the Party). Singapore has opened also little-changed. The ASX200 is also little-changed in afternoon trade. But the NZX50 is down -0.3% in late trade today.
OIL SOFT
Oil prices are about -US$1 lower at just under US$78.50/bbl in the US while the international Brent price is still at just on US$82.50/bbl.
GOLD FLIRTS WITH ATH
In early Asian trade, gold is now at US$2111/oz and up +US$29 in a day, and to about a record high.
NZD HOLDS
The Kiwi dollar has dipped -10 bps from this time yesterday, now at 60.9 USc. Against the Aussie we are marginally firmer at 93.6 AUc. Against the euro we are marginally softer at 56.2 euro cents. That means the TWI-5 is little-changed today.
BITCOIN SHOOTS HIGHER STILL
The bitcoin price has continued its heady climb today, now at US$68,432 and up +7.8% from this time yesterday. Volatility has been very high at +/- 4.3% today.
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67 Comments
GOLD FLIRTS WITH ATH .(edited)
Also,
Bitcoin was perched at a two-year peak on Tuesday, breaking above $68,600 and stalking the all-time high as money keeps rushing into the largest cryptocurrency by market value.
Bitcoin has gained 50% this year and most of the rise has come in the last few weeks when inflows into U.S.-listed bitcoin funds have surged.
On Tuesday, it was at $68,500 in Asian hours, having reached a session high of $68,828, a whisker away from the all-time peak of $68,999.99 it set in November 2021.
IBIT have had another busy day (ETF) so expect further gains tomorrow (surprised if still under ATH)
Why would you sell an asset for a currency, when that currency is rapidly depreciating against the asset?
In a situation like that you should only sell as a last resort.
In life of course, sometimes you need cashflow. But It's almost always better to source the fiat you might require elsewhere.
BTC got within $200 of a new ATH. At least in USD terms.
However, it is easier in ATH in terms of its total market cap given the increased number of BTCs mined since Nov 2021.
Fidelity (the 2nd largest ETF) brought in over 400M net BTC today - that is just in one day. Expecting bigger numbers from Blackrock today
I actually bought some Blackrock stock today (BLK). Their BTC ETF alone brings in 42% of inflows out of their entire 600 ETF collection. That's big management fees.
Tomorrow will be interesting
What is more interesting - whether you're a BTC OG or a normie - is that the financial institutions buy regardless of the price. Set amount. Almost like it's programmed. Zero emotion.
It's very different to a swing trader leveraged betting on the price or someone sitting in their living room with their finger hovering over the keyboard button.
Remove emotion from the transaction when demand exceeds supply by a factor of 10-12x, you can guess what's gonna happen.
As they say, it aint rocket science.
Speaking from experience, people are prone to loss aversion. Like most people and most definitely with volatile markets like crypto. So it's understandable for individuals to place orders like today for ex. However, given 800+ purchases of ratty and cryptos with <20 of those purchases being at a loss, emotion is less of a factor for me right now.
What's more grating is the 'what if' scenarios. For ex, what returns could have been realized if all funds were allocated at the lowest 10% of prices paid. Looking at 30-40x returns is all very well but not much point thinking about how much one should have allocated at the time. It's a journey and everyone is different.
Winston is the Foreign Minister. Its literally the job description to go overseas and shake hands with foreign dignitaries. He was supposed to do it when he was last Foreign Minister, but Jacinda Ardern insisted on doing all the international self promotion tours, while he stayed home to be Acting PM.
At least Winston doesnt look like a homeless person, unlike the last one.
I think it's the white bottom sneakers, white t-shirt and casual "stolen valor" army jacket that sort of mimics what a homeless person may wear.
Here's a picture of when she met Antony Blinken.
https://live.staticflickr.com/65535/53089190243_e1117f6526_b.jpg
Nope, not about race unsure why you menti.....ohhh I get it the usual play from the victim mob. Any critique of your own people and out comes race. The reason dress code came to spotlight was Mahuta went to China in 2023, and butchered the whole thing so Hipkins had to go back 3 months later. Saw a photo of her in an article and thought good grief.
When does Mahuta get the rest of the Mataora done?
https://www.nzherald.co.nz/nz/politics/nanaia-mahuta-received-dressing-…
It never ceases to amaze me how bitcoin bulls always seem to rage against the system and yet when the system gives them a little nod they can barely contain themselves in excitement.
Nobody really knows what their cunning plan is. Bull or bear.
What we do know is that the ruling elite couldn't really refuse the ETFs because the SEC had previously approved a futures fund to be listed. The SEC were taken to court because they refused to allow a spot price ETF and lost. So the legal system won for the public on this occasion. We need faith and trust in our legal systems.
From the January 2024 treasury report: The core Crown residual cash deficit of $15.0 billion was higher than the forecast deficit by $1.9 billion.This deficit was primarily driven by net core Crown operating cash outflows and net core Crown capital cash outflows, which were higher than forecast by $1.6 billion and $0.3 billion, respectively.
I thought NACTNZF stopped all 'wastefull' spending in December 2023! Apparently really stopping it takes more than a press release!
Noted earlier that we are now importing less stuff than we were in 2018! Further evidence (as if it was needed) that RBNZ is successfully crushing demand. Sadly, in the last few months the price of stuff we import (overall) has started to go up again as oil prices, shipping cost increases wash through. So, just a reminder, lower demand, higher prices.
Meanwhile the latest data on spending shows that discretionary spending is falling through the floor, and, guess what? Those cruise ships that have been keeping retailers heads above water have five weeks of cruising left.
Anyways, I can stop sounding the recession klaxon now that a few more of the economist commentariat have finally worked out what is happening.
21 May 2024 for the pivot, by which time it will be waaaay too late.
Meanwhile the latest data on spending shows that discretionary spending is falling through the floor, and, guess what? Those cruise ships that have been keeping retailers heads above water have five weeks of cruising left.
The last thing you want after an epic housing bubble is a collapse in consumer spending. And why is that? The housing sector is the collateral for many of the producers of the goods and services. The two sectors are interconnected and have a symbiotic relationship.
MH: The financial overhead has grown so large that paying interest, amortization and fees shrinks the economy. So we are in for years of debt deflation. That means that people have to pay so much debt service for mortgages, credit cards, student loans, bank loans and other obligations that they have less to spend on goods and services. So markets shrink. New investment and employment fall off, and the economy is falls into a downward spiral. Link
Yes this creates a wonderful environment for those with cash and who have an understanding of value vs price....
I always make better returns in the long term from periods like this.... some got rid of debt so they where in a better position, those who blindly believed it was time in the market are about to learn a hard lesson.
If an investment does not offer a positive cashflow it will be revalued lower until it does.
In July 2007, Prince (CitiGroup CEO) told the Financial Times that global liquidity was enormous and only a significant disruptive event could create difficulty in the leveraged buyout market. "As long as the music is playing, you've got to get up and dance,"
I chat with Scarfie a lot, we both agree on a few things - keep dancing but make sure you have a good rural retreat for when the music stops.... I have seen some stunners 50kw solar, big wind, diesel with 10k L storage and gensets, years of firewood on site... real boltholes where you have to wind uphill up a long driveway, at the very end of a dead end gravel road....
In the same vein from another source.
I get a lot of satisfaction out of watching the ex-Air NZ CEO Luxon trying to use our Airforce 757's. I don't think they have been able to make a scheduled flight in 5 years? Sometimes we even fly both because there is almost a 100% chance one will breakdown. It's absolutely hilarious.
Can't stay in the PM's residence in Wgtn because it's not fit to live in, can't use the planes because they are munted. What isn't munted in NZ? hahaha
Not sure TA says the property market is Munted
its a long list
Interisland Ferries
Main Road to Northland
Kiwi Rail - everywhere and everything about this organisation needs a full inquiry and probably 10 bil
Education attendance
Health waiting lists Drs GPs - everything to do with health
Police actually more justice - we need harder judges.
Cost of living - mainly cost of housing and food but soon to be insurance and rates
Stats - doing less with 50% more staff
The Crusaders - proper munted, go the Chiefs
The air force - at least they have Orions and Hurc replacements...
The navy - ships are rusting and offices leaving for 50% pay increases.
Auckland Airport - munted
WGTN water munted, why limit it to the water just munted.
Given that he committed to flying commercial during the election, maybe its Luxon's memory that is munted.
He was asked whether that meant he was committing to flying commercial for international travel if National won the election.
"That's what I'm saying," he said.
give the 757s to MoTat, or to these guys worth a visit !!!
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We're edging closer to the date when the Bank Term Funding Program (BTFP) will not be renewed. Bitcoin and gold are anticipating this. The end of BTFP will not be positive as the Fed still has yet to cut rates to a level that pushes the 10-year Treasury into the 2-3% range. At these levels, the banks' bond portfolios are back in profit vs. the current massive unrealised losses on their balance sheets.
Yellen and Powell are confident that the the market won’t bankrupt a few of the troubled banks once the BTFP isn’t renewed. BTFP is politically toxic, but these people think there will be no negative market reaction.
The end of BTFP could cause a mini financial crisis. This would mean rate cuts, tapering of QT, and/or a resumption of money printing via QE.
Bitcoin’s price action is suggesting that this is possibly already a response to this.
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