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
Resimac has reduced all its fixed rates today, by between -10 bps and -30 bps.
CREDIT CARD RATE CHANGE
ANZ has raised its credit card rates by +1%. More here.
TERM DEPOSIT/SAVINGS RATE CHANGES
TSB has reverted its 6.25% one year TD 'special' back to 6.10%.
TRADE DEFICIT SHRINKS
The February merchandise (goods) trade balance delivered a -$218 mln deficit in the month, much less than the -$847 deficit in February 2023 or the -$715 mln deficit in February 2022. That was principally due to much better export levels which rose +16% from a year ago. Imports rose too, but only by +3.3%. (However there is some anecdotal evidence that containerised imports are suddenly shrinking as evidenced by arriving containers for discharge at our ports. If that turns out to be the actual case we may get a run of much better trade balance data.)
ADDITIONAL FLOOD FUNDING
The Government plans to contribute more funding to Auckland flood resilience through a $2 mln contribution to fund community-driven flood resilience projects. Emergency Management and Recovery Minister Mark Mitchell says last year’s flooding was some of the worst the country had ever seen and the $2 mln would “speed up” small-scale community projects focussed around flood resilience as we go into winter.
BETTER TRADING, BUT LOWER VALUES
Fisher & Paykel Healthcare (FPH) said today that it has updated and raised its profit guidance slightly for the current year. But it also warned that it may have to write down the value of its premises in both Auckland and Mexico because higher interest rates have depressed the valuations of commercial property generally.
MAINZEAL 'PROGRESS'
The liquidators of Mainzeal have collected the court judgements on the directors Shipley, Tilby and Gomm in full. But they are having to pursue Richard Yan in China into bankruptcy. They say they have now recovered $23.8 mln from these directors so far, but it cost them $12.4 mln to pay out the litigation funder. They have also made some minor payments to creditors (6c in the $1) and currently have $12.2 mln on hand to settle the remaining $112 mln in valid claims (of the $159 mln sought).
JAPANESE INFLATION RISES
Inflation is finally embedding in Japan. It's been a long slog to get out of deflation. Their inflation rate climbed to 2.8% in February from 2.2% in the prior month, the highest figure since last November. It has been over 2% since March 2022.
SWAP RATES LITTLE-CHANGED
Wholesale swap rates are likely to be little-changed today. Our chart below records the final positions. The 90 day bank bill rate is unchanged yet again at 5.64%. The Australian 10 year bond yield is unchanged at 4.09%. The China 10 year bond rate is down -2 bps to 2.29% and flirting with its all-time low of 2.28%. The NZ Government 10 year bond rate is up +2 bps at 4.65% and bouncing back up +11 bps in the earlier RBNZ fix to 4.61%. The UST 10yr yield is unchanged at 4.26%. Their 2yr is now at 4.63, so the curve is now inverted by -37 bps.
EQUITIES MOSTLY RISE, & SOME GOOD GAINS
Wall Street closed its Thursday trade with the S&P500 up a net +0.3%. In the first four days, that is a +2.4% rise. Tokyo has opened its Friday session up +0.6% from yesterday. Hong Kong has opened down -0.9%. Shanghai has opened down -0.1%. Singapore has opened up +0.1% from yesterday. The ASX200 is down -0.4% in afternoon trade but heading for a +1.1% weekly gain. The NZX50 is up +0.6% in late trade and heading for a weekly +1.8% gain.
OIL PRICES LOWER
Oil prices have fallen sharply in the US with their WTI price down -US$3 to US$80.50/bbl while the international Brent price is down -US$1 from this time yesterday at US$85/bbl.
GOLD SLIPS
In early Asian trade, gold is down -US$18/oz at US$2183/oz and off ts all-time highs.
NZD SLIPPED
The Kiwi dollar is down nearly -½c against the US greenback from this time yesterday to 60.5 USc. Against the Aussie we have stayed down at 92 AUc. Against the euro we are unchanged at 55.7 euro cents. This all means the TWI-5 has slipped -20 bps.
BITCOIN RETREATS
The bitcoin price has retreated, now at US$65,875 and down -3.0% from this time yesterday. But volatility of the past 24 hours has been moderate at +/- 2.6%.
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72 Comments
This will get some attention.
New Bill Removes Employers’ Requirement To Collect Union Dues
https://www.scoop.co.nz/stories/PA2403/S00075/new-bill-removes-employer…
This is an administrative burden, imposed by law, apparently intended to tilt the playing field in favour of unions at the expense of businesses," says Dr Parmar.
Yer right...may as well as get rid of Kiwisaver, court fines, heck even tax deductions as such a burden on poor businesses.
Payroll deduction notices for unpaid fines are just the Ministry of Justice being lazy. I would ring them and tell them I wouldn't be sending them any deductions. They always made threats they never followed thru on.
Then I would grab the boy racer and tell him if he didn't immediately ring the MOJ and start paying them off, I would deduct the whole fine in one go. Time they learned consequences instead of having others clean up after them.
"Administrative burden"... Surely payroll is automated pretty much everywhere where workers are routinely unionised...? I find it hard to believe that's actually a significant administrative cost for employers in the grand scheme of things, especially when you already have things like mandatory deductions for Kiwisaver/PAYE/ACC etc etc...
Luxon's press secretary must be busy this weekend trying to frame this as a move to curb inflation? Let's see less payroll burden will reduce admin costs and allow businesses to lower their prices.
When in reality, the hope here is that somehow passing on the administrative effort to those less able to absorb it (employees or unions) will further discourage union participation in NZ.
"They say they have now recovered $23.8 mln from these directors so far, but it cost them $12.4 mln to pay out the litigation funder. "
Was the litigation funder a subsidiary of the insurance company? (if not, why not?😂)
I know that most D&O policies had std clauses around not admitting liability and exhausting all legal appeals before the policy will pay out
A complex area that will depend on the policy (I should read mine 😉). My recollection is that std exclusions include for eg criminal wrongdoing.
https://www.russellmcveagh.com/insights/march-2023/d-o-cover-recent-the…
It was a very arrogant company it would seem from top to bottom. We had an EQ assessor from our insurers who repeatedly asserted because was a LBP and he had worked for Mainzeal what he said was unchallengeable. Actually during the long course of the claim process we unfortunately encountered many such failed builders, but he was by far the worst. And of course he was wrong, dead wrong.
Looks like police officers don't appear happy with the new PM, not going to make it easy given all the extra work that the incoming government is expecting them to do.
Speaking to the Tova podcast, the officer is eviscerating in his assessment of Christopher Luxon’s guess at how much a trainee police officer is paid.
Luxon - speaking on the podcast last week - took a punt “$90,000”, when in reality they earn little more than half that - $50,834.
“It just shows that he's in a position where money is not a problem so he can just throw around figures that don't actually mean much to him.”
Less than Luxon's accomodation allowance in fact.
https://www.stuff.co.nz/politics/350221993/tova-podcast-laughing-stock-…
Was told of this benefit (see link) only two days ago. Incentive for cops to do a year or two in areas nobody wants.
Suprised actually this lasted as long as it did as I see this as a fringe benefit that should of been subject to tax.
https://www.nzherald.co.nz/nz/police-cuts-rural-cops-could-lose-super-c…
Strangely morepork you did not mention the bit which said ".......the average constabulary remuneration is actually $99,000....."
Which seems reasonable to me, and there is some increase to come. $100,000pa is a wage many would dream about.
I am weary of the government servants taking turns with their pay claims and the quite distorted media information about pay. I am thinking of nurses, of which I know something about. eg. A young new grad acquaintance earns $100 an hour for extra work. But all you get mentioned is the starting wage as a newbie.
I wasn't going to quote the whole article, an as we all know averages are deceptive, I'd be interested to see the median, I wonder how they define people to be part of the constabulary.
The numbers quoted also included retirement contributions and insurance subsidies - things that in my experience are not normally included in headline pay. My guess is they are also including overtime pay, which is nice from a financial perspective but is often not sustainable.
"service"...so, unrelated to competence, performance, skills...?
I remember 30 years ago our site agreement scrapped service based pay in lengthy negotiations with the unions (engineers, sfw, storeworkets & a couple of others) & moved to skills & responsibilities based. It was considered revolutionary at the time (early Employment Contracts Act).
I was a fitter welder back then. Tradesmen paid barely above the minimum wage , but lots of hours and incentives avaliable. nowhere else to go because ll industry was closing down .
The "top" tradesmen would push out a lot of work , but they would leave a mess , not maintain machinery , not cooperate with other workers. Leave the "slow" workers to clean up , and fix things. not a pleasant working enviroment.
if you needed 13 washers for a job , there was 13 washers supplied. not 14 or 15. we did one job on a water treatment plant , it was so cold we would drop a washer into the deep pools . 1/2 hour drive into town to get another ONE. The up and coming engineer insisted this was still cheaper than been overstocked.
We moved to self directed work teams at the same time, a multi year journey however one of the more people empowering and satisfying things that I've been involved with.
Did away with the entire historical 1st line management supervision layer. No place to hide for passengers rocking the boat.
How would you quantify competence, performance, skills in front-line service police work? Sure it's comparatively easy when the only goal is profit driven but that isn't the case at all with police work, nursing, firefighting etc. And it's not exactly like they can switch employers if they are unsatisfied with the status quo.
Good questions to which I wouldn't attempt a detailed response late at night off the top of my head. I'm also traveling to oz this weekend to visit family.
I would just initially say that such workplace culture change isn't easy anywhere (perhaps even more difficult nowadays when apparently no one accepts responsibility or accountability for their actions) & "profit" isn't typically achieved sustainably with short term solely cost driven solutions it includes other objectives eg quality & safety.
A great watch about the very short history of China's real estate market.
https://youtu.be/ascPhiXcpss?si=rFjMaHe6qsAJuT4c
Applies to NZ, and virtually everywhere else. Do all stories end the same?
I think the likes of Japan and China are our canaries. We're going to end up in the same place. How quickly, is the exciting question.
Even during their epic bubble, most Japanese did not rely on housing as a savings vehicle nor were they buying investment properties (it's very rare for Japanese to own investment properties as they see it as a 'business' unlike in NZ or Aussie). Even at the peak of their bubble, total housing stock valuation to GDP only reached a multiple of close to 3x. Ours got close to 5x - highest ever multiple ever among developed countries I think.
F'more Japanese h'hold debt to GDP has held at the same rate since the bubble - approx 70%. Our h'hold debt to GDP was only 28% at the time of the Japanese bubble in late 80s/early 90s. It's now 91%. And our h'hold debt to income is way off the charts.
most Japanese did not rely on housing as a savings vehicle nor were they buying investment properties (it's very rare for Japanese to own investment properties as they see it as a 'business' unlike in NZ or Aussie)
Owner occupier rate in Tokyo is only 45%, and over 80% of rentals are owned privately (compared to a corporation or government).
So it's actually more common.
Also more into owning rentals; South Korea, where you pay 50-80% of the value of the property in advance as rent, and the landlord takes that money, and buys more rentals.
Owner occupier rate in Tokyo is only 45%, and over 80% of rentals are owned privately (compared to a corporation or government).
Most rental properties in Japan are owned by incorporated companies (for tax purposes) and these properties are let through agents. The rental contract is between the tenant and the agent.
Stay in your lane.
I said 80%, to be generous.
Public, quasi-public, and corporate rental housing have decreased their significance over time and account for only 7.1% of housing units.
According to the 2003 HLS, individuals own 85% of Japan’s private rental units
https://www.brookings.edu/articles/japan-rental-housing-markets/
Japan's rental yields are comparable to NZs, but their cost of borrowing has been lower for longer. It's a more lucrative investment there than in NZ, so its fairly attractive.
If anyone thinks NZ is special, it sounds like it's you.
According to the 2003 HLS, individuals own 85% of Japan’s private rental units
The Japan HLS does not survey ownership of rental properties. Here are the data sets.
Incidentally, the financialization of housing in the Anglosphere started not long after the Japan bubble ended. I forget which banking agreement spurred all this. Anyway, given that 95%+ of new money supply comes courtesy of private banks, you can appreciate how much bigger the ex-Japan housing bubble has become.
https://www.sciencedirect.com/science/article/pii/S1057521914001070
Some quite nasty tax changes in the UK means that Aussie expats making coin will not be able to negatively gear on property investments nor will not get the benefit of franking credits on any Australian shares they own. Assume this will apply to Kiwis as well.
They will also pay tax on any superannuation income they bring from Aussie should they retire in the UK.
“My view is that this may well be enough of a poison pill for many Australians and Kiwis to leave the UK – that is, to arrange their affairs so as not to be tax resident in the UK, or more probably return home,” said one London-residing Australian executive.
Older long-term Australian execs in the UK are most alarmed about the potential change to inheritance tax. HMRC takes 40 per cent of any estate – including overseas property and assets – above a tax-free threshold of £325,000 plus a few other relatively minor exemptions.
https://www.afr.com/world/europe/uk-s-new-tax-slug-to-force-expat-aussi…
Nothing's changed in the UK, I see that TVNZ is showing this program soon.
https://www.tvnz.co.nz/shows/mr-bates-vs-the-post-office
Not that Oz is any better
Surely part of their role is to help prevent the economy becoming highly vulnerable (potentially impacting financial stability). Their decisions through 2020-2021 made us very vulnerable and now we are seeing the effects…
Here's their stated functions:
managing inflation to keep prices stable while supporting maximum, sustainable employment
regulating banks, insurers and finance companies
producing New Zealand’s banknotes and coins
operating effective wholesale payment and settlement systems.
Interesting they still list employment along with inflation though.
Regardless, the central banks know the higher rates are going to smash demand, and that there are consequences therein
Looking a bit deeper, they can and are making sustained attempts over time to suppress borrowing risk from the credit market.
I said it fairly early on, but part of a higher for longer strategy is to kill off marginal lenders who can only get by on the low rates. Doing this can't occur without broader adverse economic conditions.
They will happily sacrifice some of us to bolster an assumption of greater overall security.
Good heavens. Commonwealth Bank of Australia is the 12th biggest bank in the world, and the Ponzi is part of the reason for this. It's also the most expensive on a number of measures.
CBA is all in on housing, and it remains its biggest current strength, but also its largest risk. – even more expensive than the Magnificent Seven tech stocks. Any downturn in housing would increase bad debts and hurtt profits.
But then:
CBA is currently 29% overvalued according to Morningstar analyst Nathan Zaia. Assessing whether to invest in a stock, or to stay invested in a stock, is about weighing the potential reward against the potential risks. Given the tepid short- and long-term earnings outlook, the current pricing of CBA seems exorbitant both against local and global peers.
https://www.macrobusiness.com.au/2024/03/cba-is-the-most-expensive-bank…
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