What happened Friday

Economy / news

A review of things you need to know before you sign off on Friday; more big bonds, more FBU departures, DST ending, Aussie data sags, markets await NFPs, swaps stable, NZD stable, & more

5th Apr 24, 3:59pm by David Chaston

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.

TERM DEPOSIT/SAVINGS RATE CHANGES
No changes here either.

MORE CORPORATE BOND ISSUANCE
Christchurch Airport (CIAL) has raised $125 mln in a 7 year bond issue at 5.44% per annum, being the sum of the Swap Rate (4.39%) plus the issue margin (1.05%).

ANOTHER SENIOR DEPARTURE
Fletcher Building has said Bevan McKenzie, the Group Chief Financial Officer, has decided to resign and will leave the business on 4 October 2024.

DAYLIGHT SAVING ENDS
Don't forget to "fall back" on Sunday morning. We get an extra hour. If you still have manual clocks, you will need to adjust them to one hour "earlier".

AUSSIE RETAIL SALES VOLUMES RETREAT
Australian retail sales are rising but slower than their inflation rate. They were up +1.6% in February from a year ago. But in that same time their inflation indicator rose 3.4%. Any way you look at it, that is a volume drop.

THE RIVERS OF IRON ORE & COAL RUN SLOWER
The Australian goods trade surplus halved in February from the same month a year ago. It came in at a +AU$6.5 bln surplus, down from +AU$12.9 bln in February 2023. The reasons is the combination of falling exports (-2.4%), and import growth staying high (+17.1%). Of particular note is that both rural and non-rural exports fell more than -3%, but that gold exports were up +25% on that basis.

TALE OF TWO EV MAKERS
Talk about Tesla's EV car delivery declines recently is everywhere. They sold 386,800 EVs in Q1, down from 356,500 in the same quarter a year ago. But not so visible has been BYD's recent sales drop. However, it sold 260,000 EVs in Q1-2023 and 300,400 EVs in Q1-2024, a +13% rise. But that was down from the 526,400 it some in Q4-2023, so a big drop from there. Equally curious is that there has been a big negative share price reaction to the Tesla results - but virtually none to the BYD results.

WAITING FOR NFPs
Financial markets are quiet today. Not only is China on holiday, but markets are awaiting the US non-farm payrolls report tomorrow. Given the range of views from recent Fed speakers, the assessment of how they will react to any changes is in flux today.

SWAP RATES ON HOLD
Wholesale swap rates are likely to be little-changed today ahead of the US non-farm payrolls data. Our chart below records the final positions. The 90 day bank bill rate is unchanged yet again at 5.63%. The Australian 10 year bond yield is down -1 bp at 4.15%. The China 10 year bond rate is unchanged again at 2.30% while they are on a long weekend holiday. The NZ Government 10 year bond rate is down -3 bps from this time yesterday at 4.68% and the earlier RBNZ fix was at 4.63% and down -3 bps. The UST 10yr yield is down -5 bps from this time yesterday at 4.31%. Their 2yr is unchanged at 4.67%, so the curve is now inverted more, now by -36 bps.

EQUITIES SHOW WIDELY DIFFERENT RESULTS
In late trade today, the NZX50 is down another -0.5% to be heading for a weekly -0.3% dip. The ASX200 is down -0.9% today and if that holds their week will also be down -0.9%. Tokyo has opened its Friday session down a very sharp -2.3% and taking it on the chin by heading to a -4.4% weekly retreat. Hong Kong is back after a short holiday, down -1.1% in early trade and if it stays like that they will end the week even. Shanghai is closed for a public holiday and probably pleased they are missing the negative action. Singapore is down -0.9%. Earlier Wall Street closed with the S&P500 down -1.2%. after spending most of the day up. Comments from Fed speaker Kashkari drove the late sentiment dive.

OIL PRICES RISE AGAIN
Oil prices are up +US$1.50 to just over US$86.50/bbl while the international Brent price is now just over US$90.50/bbl. These levels are back to five month highs.

GOLD RETREATS
In early Asian trade, gold is down -US$29 from this time yesterday to US$2272/oz and off its ATH.

NZD HOLDS
The Kiwi dollar has held at 60.2 USc although there has been movement in between. And against the Aussie we are also unchanged at 91.5 AUc. Against the euro we a little firmer at 55.6 euro cents. This all means the TWI-5 is still at 69.2 where it was this time yesterday.

BITCOIN RISES
The bitcoin price has risen today to US$68,080 and up +3.0% from this time yesterday. Volatility of the past 24 hours has been high at +/- 3.2%.

Daily exchange rates

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Source: RBNZ

Source: CoinDesk

Daily swap rates

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Source: NZFMA

This soil moisture chart is animated here.

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65 Comments

by solardb | 5th Apr 24, 4:07pm 1712286448

I wouldn't buy an ev right now, there should be a big drop in battery prices coming soon.maybe buyers are doing their homework.

by IT GUY | 5th Apr 24, 4:17pm 1712287079

Resale prices are so unknown its a bit nuts

by easymoney | 5th Apr 24, 4:20pm 1712287223

Give it another 2 years.. 2nd half of the decade will see some big leaps in battery technology..

by JimboJones | 5th Apr 24, 4:36pm 1712288215

Where does that leave ICE vehicles? Surely they have the same problem? Buying an ICE feels like buying a CRT TV 15 years ago because LCD was going to get cheaper and better.

by IT GUY | 5th Apr 24, 4:45pm 1712288716

no way diesel ute has great resale

by Flying high | 5th Apr 24, 5:35pm 1712291750

Didn't you tell us you wanted to pick up a cheap ute from someone overcommitted

by Retired-Poppy | 5th Apr 24, 6:05pm 1712293524

How much are you asking for yours?

by Flying high | 5th Apr 24, 7:50pm 1712299843

My humvee?? Are you selling your toyota

by IT GUY | 5th Apr 24, 7:59pm 1712300398

I love a distressed asset FH, they are the best kind

by Pa1nter | 5th Apr 24, 8:03pm 1712300604

There's still not much out there.

Only thing I've noticed is a flood of MGs (Midgets and MGBs), at slightly lower prices.

by IT GUY | 5th Apr 24, 8:16pm 1712301402

My Daughters want beatles, but as vintage the price just keeps going up

by Pa1nter | 5th Apr 24, 8:52pm 1712303535

Well, there's a lot on the market from the looks of it.

Can't really say what the prices are doing.

by Flying high | 5th Apr 24, 9:25pm 1712305530

The original beetles are awful to drive, prefer modern VW 4wd for work and play

by Zwifter | 5th Apr 24, 4:45pm 1712288735

Yeah nah, electronics has improved out of sight but the ICE not so much, its been here for a very long time and its going to be here a lot longer, there is no 100% substitute for it at this stage.

by JimboJones | 5th Apr 24, 5:03pm 1712289796

You might be right. At this stage the ideal for our family would be 1xICE and 1xEV, its probably going to be a while before that changes to 2xEV. However they are selling way more ICE at the moment, so that could result in way too many of them.

by TommyYank-old | 5th Apr 24, 5:35pm 1712291715

In many geographies the Electric Car is way too limiting. Good commuter vehicle, but not an "all rounder", very different from TVs.

And you wouldn't want to get stuck out in the North American winter cold with an EV.

by M0ralHazard | 5th Apr 24, 6:36pm 1712295382

I feel like they make a great commuter car for a two car family, one small efficient EV and one larger ICE.

by Audaxes | 5th Apr 24, 4:20pm 1712287248

Shanghai is closed for a public holiday and probably pleased they are missing the negative action.

Fascinating article by Nicholas Lardy, perhaps the most esteemed Western scholar specializing on China's economy: https://foreignaffairs.com/united-states/china-still-rising Contrary to The Economist's claim that we've reached "peak China", he argues that "China is still rising", that the West "underestimates the resilience of its economy" and that China's "nominal GDP [will] resume converging toward that of the United States this year and is likely to surpass it in about a decade". He debunks several misconceptions: Link

by Foxglove. | 5th Apr 24, 4:22pm 1712287354

CIAL raises $125 mill. Assumedly that will off set the debt raised for the pie in the sky airport venture at Tarras, Central Otago now defunct. Cash strapped Christchurch City Council & the city’s hard pressed ratepayers now own a large tract of land only 4 hours drive away from any actual catchment locality for which they service debt and pay rates to another local body. One day proudly declare a climate emergency, the next , let’s build a big jet airport. All those responsible for signing off on this outrageously abysmal project should at least do the decent thing and quit forthwith.

by Baywatch | 5th Apr 24, 4:26pm 1712287574

Not to mention their current water testing results.....High levels of nitrate found in Canterbury drinking water

by Foxglove. | 5th Apr 24, 5:46pm 1712292398

Flashback. 2018. The then CCC water management team withheld adverse water testing results from the CEO for seven months. Hamlet was right but geographically astray about where something is rotten. Getting to the point that Christchurch, as happened with Tauranga, needs a serious intervention from central government to sort out the general ineptness, mismanagement and downright obduracy pervading councillors and down through all levels of executive and staff.

by Grattaway | 5th Apr 24, 6:23pm 1712294582

You realize Greenpeace nitrate test results have a predetermined outcome

by Peter M | 5th Apr 24, 6:45pm 1712295915

Can you provide evidence for this statement?

by powerdownkiwi | 5th Apr 24, 6:54pm 1712296490

No he b---dy well can't.

But collateral evidence of his personal bias - that's everywhere in spades.

by Baywatch | 6th Apr 24, 8:25am 1712345113

Typical comment from a dairy farmer

by IT GUY | 5th Apr 24, 6:35pm 1712295354

So they own a non airport but had to beg to get a decent stadium, this is classic BS from council........ if you fire them they will just move to WGTN where they will glide into council positions......

by Tranny | 5th Apr 24, 4:28pm 1712287691

Am I missing something here or is my maths correct in that this is not a drop, its an increase "Talk about Tesla's EV car delivery declines recently is everywhere. They sold 386,800 EVs in Q1, down from 356,500 in the same quarter a year ago."

by K.W. | 5th Apr 24, 4:39pm 1712288391

Total deliveries Q1 2024: 386,810

Total production Q1 2024: 433,371

Vehicle production declined around 1.7% from a year earlier and 12.5% sequentially for Tesla, not nearly as steeply as the 8.5% annual drop in deliveries.

Tesla doesn’t break out sales by model but reported it produced 412,376 Model 3/Y cars and delivered 369,783. It produced 20,995 of its other models and delivered 17,027.

In the same period last year, the electric automaker reported 422,875 deliveries and production of 440,808 vehicles. In the fourth quarter of 2023, Tesla reported 484,507 deliveries and production of 494,989 vehicles.

by Baywatch | 5th Apr 24, 5:25pm 1712291112

Musk anticipates that earnings from Full Self-Driving (FSD) licensing will surpass Tesla's entire automotive business earnings. ⁠

by Pa1nter | 5th Apr 24, 5:59pm 1712293185

Didn't he anticipate Tesla owners would be paying for their cars by turning them into robot taxis by 2021?

by Foxglove. | 5th Apr 24, 6:26pm 1712294774

Chord by Blondie “dreaming is free” resonates.

by K.W. | 5th Apr 24, 6:32pm 1712295153

Until he figured out that Tesla can simply provide the fleet of robot taxis and cut out the middleman. Waymo are using Jaguar i-Paces for their self driving Uber Eats deliveries in the US. https://www.cnbc.com/2024/04/03/waymo-self-driving-cars-are-delivering-…

by Pa1nter | 5th Apr 24, 6:40pm 1712295622

Not that simply, as it turns out.

by Pragmatist | 5th Apr 24, 7:52pm 1712299940

Musk says a lot of things, best to ignore 90% of it.

by Foxglove. | 5th Apr 24, 8:12pm 1712301172

“Muskrat Ramble.” Wonderful jazz by the great Louis Armstrong. Connotations with my compliments.

by Advisor | 5th Apr 24, 4:36pm 1712288214

Aussie import growth staying high (+17.1%)

Migration-led population growth doing what it does best. You minus the imports priced at CIF from your GDP numbers but the increased activity due to growing imports from freight moving, importer margins, retail and other ticket clipping helps governments peddle the Ponzi as real economic growth.

The Ponzi being the bulk of migrants arriving to service the demand added by the ones that arrived before them.

by J.C. | 5th Apr 24, 4:50pm 1712289018

Sorry but I'm not sure import growth accounts for migration impacts on GDP. Are you just talking about increased consumer demand?

I do agree that migration-led economic growth is a kind of input for Aussie's (and ours) Ponzinomics model.

by J.C. | 5th Apr 24, 4:42pm 1712288536

Of particular note is that both rural and non-rural exports fell more than -3%, but that gold exports were up +25% on that basis.

Perth Mint has always been important for WA, even though people don't really understand why. What's more, if the Federal Govt ever tried confiscating their gold, they couldn't do so. The WA Govt has an important role to play here. Perth Mint has had some scrapes with the Shanghai Gold Exchange. They need to drop any bogan/cowboy attitude in how they operate. I've also seen claims laid against PM for potential rehypothecation. Also, not something they should ever get involved with.

by IT GUY | 5th Apr 24, 4:49pm 1712288980

SGE questioned purity and was found to be correct

by J.C. | 5th Apr 24, 4:51pm 1712289093

Yes. But it seemingly blew over quickly. Very stupid on PM's part. I would put it down to carelessness over deception.

by Galloleous | 5th Apr 24, 6:48pm 1712296127

Their purity was fine, it was still 99.99% pure gold

"The mint has confirmed that all gold sold during that period had exceeded the minimum 99.99% industry standard; however, it had breached Shanghai’s tougher specifications which require that 0.01% of the non-gold component cannot contain more than 50 parts per million of silver."

So nothing wrong with the purity.

by IT GUY | 5th Apr 24, 8:19pm 1712301585

How much more then 50 parts per million did they find?

by J.C. | 5th Apr 24, 4:46pm 1712288795

AFR on the boomers have screwed over younger Aussies. Chickens coming home to roost.

Ken Henry has warned that Australia’s social compact [contract] with younger workers shouldering an ever-rising tax burden faces an “existential crisis” unless reformers can better persuade a sceptical public of the need to overhaul tax and spending.

Australia was too reliant on economically damaging taxes on wages, corporate non-mining profits, and state property stamp duties, said the former Treasury secretary who, in 2009, led the last major review of the tax system for the Rudd government. Its 138 recommendations remain largely unimplemented.

“Dumb luck” of “plundering” natural resources would not deliver prosperity for future generations, he said in a speech in Canberra

https://www.afr.com/policy/tax-and-super/young-people-have-been-screwed…

by IT GUY | 5th Apr 24, 4:51pm 1712289062

Maybe they can move here to the unlikey country

by Audaxes | 5th Apr 24, 6:05pm 1712293530

Dr Henry said business investment for years had been at “terribly, terribly low” recessionary levels, as Australia was one of the very few advanced economies not to cut its 30 per cent corporate tax rate this century.

It explained why Australia had become a net exporter of capital because local investment was less attractive, he said.

“Superannuation funds are investing more and more of our savings offshore, and foreigners are investing less of their savings in Australia. This seems to me to be pretty rational behaviour.”

by Audaxes | 5th Apr 24, 6:14pm 1712294065

Already, we have run 13 cash deficits over the last 15 years.

To hide it, successive governments have increasingly labelled new spending capex rather than opex, gaming the fiscal-responsibility rules to make the operating balance before gains and losses (OBEGAL) look better.

Treasury pushes back against the practice, but usually in vain.

When Willis ever achieves surplus, now not expected until 2028/9, New Zealand will have run a cash deficit for 18 of the previous 20 years. Even under the OBEGAL measure, there will have been just five surpluses in 20 years, two under Labour.

Luxon and Willis promised to address Robertson’s wreckage seriously. Link

by JimboJones | 5th Apr 24, 5:04pm 1712289844

https://www.stuff.co.nz/business/350236906/weak-housing-market-blamed-r…

by Llama_360 | 5th Apr 24, 5:38pm 1712291890

You beat me to it. I wonder who the company owed money to.

by Middleaged | 5th Apr 24, 6:41pm 1712295689

Over $500k of debt, a lot of it to IRD. Does that signal bad luck, bad management, or bad morals?

by legrandsoir | 5th Apr 24, 7:52pm 1712299966

IRD debt is usually bad management and morals. It's almost always GST and PAYE, which is really just money collected on behalf of IRD. They don't go unpaid through bad luck in my experience.

by JimboJones | 5th Apr 24, 5:09pm 1712290171

https://www.stuff.co.nz/politics/350220974/public-service-job-cuts-what…

The axe is falling on the public service, with major job cuts looming in the weeks and months ahead.

As of April 5, Stuff had confirmed that 975 roles have been disestablished as part of the cost savings drive.

So a saving of $97 mil if they average $100k each. Nothing to be sneezed at, but they still need to do that another 30 times just to pay for the $20 a week tax cut.

by Hamish | 5th Apr 24, 5:34pm 1712291698

The big unknown is the flow on from those 975 roles disestablished.

Some may have been ultimately saving us tax payers $$, or reducing risks in certain areas.. On the other hand removing some roles may save not just the salary, but more $$ if the work they were doing was negative cost/benefit.

I have my doubts that the minister of finance's demand for ~6.5% costs savings across all departments is a sound strategy.

Some ministries may already have been running lean. Some others with fat in the system.

It's a pretty blunt approach to take.

by Llama_360 | 5th Apr 24, 5:40pm 1712292053

I wondered about that. I had heard of one ministry that had already looked to shrink before the government changed. I wonder how many deliberately tried to expand before the change so they could just’cut’ back to normal.

by Advisor | 5th Apr 24, 5:50pm 1712292650

You are missing the fact that the 975 FTEs largely represents cuts to permanent roles. On top of that, thousands of fixed-term and hourly contracts have not been rolled over across the public sector. Reportedly, IT professionals are some of the worst hit in Wellington.

Also a good chunk of departmental budgets have been culled, stuff that wouldve been spent on service procurement, grants, etc. For example, MBIE got stripped off a $30m fund for transforming "advanced manufacturing" and a few million more for supporting diversity initiatives, whatever that means.

by Grattaway | 5th Apr 24, 6:30pm 1712295026

and salary costs are just a small part of the cost of each employee who need office space, resources, HR services etc etc. In addition lots of civil servants create work for other civil servants -so if the least productive are gone you would expect to see an improvement in services not a decline - if not the GM or HOD should be following them down the road.

by IT GUY | 5th Apr 24, 6:51pm 1712296281

It's not just WGTN, all over NZ Contractors are being cut across public and private sector, mostly they never appear on org charts anyway.... It's a dire time to be a contractor. This will set projects back, and the velocity of many agile teams who rely on contractors to perform specialised tasks will slow... IE productivity must fall here, this recession will deepen, its not going to be a few Qs, the impact of current changes will hit hard H2 24 / H1 25. Cannot believe how quiet the media (do we have a non woke media anymore) are being here. I know you are not meant to frighten the woman and children but.... the reason private is firing staff is they had no plan B and suddenly need one

by Middleaged | 5th Apr 24, 5:56pm 1712293002

Although universities are not technically public departments, I'm feeling like a trend setter by getting made redundant late last year. Apparently we don't need Frontline clinical educators at the moment.

Now working privately with a pay rise and a chunk off the mortgage.

by K.W. | 5th Apr 24, 6:36pm 1712295399

975 out of the extra 65,000 people Labour hired is but a drop in the bucket. Even 10 times that number would barely make a dent. Keep going - they need to implement a 2017 headcount maximum.

by Pa1nter | 5th Apr 24, 6:41pm 1712295677

Ah 2017, when we had super awesome public services.

by Hamish | 5th Apr 24, 6:55pm 1712296545

And approximately 0.5M less people to look after......

by IT GUY | 5th Apr 24, 6:58pm 1712296708

I thought 2017 was a good vintage remind me why it was so crap?

by kiwikidsnz | 5th Apr 24, 7:33pm 1712298821

Which Public service results improved over the last 6 years ?

Note that a "result" is not their 36% increase in staff & the many extra billions spent.

by Peter M | 5th Apr 24, 6:29pm 1712294974

The CEO of BYD doesn't own twitter!

by Antz | 5th Apr 24, 6:35pm 1712295309

And maybe the BYD share price is slightly more connected to their historic and expected earnings?

by Let me be Frank | 5th Apr 24, 8:12pm 1712301127

They sold 386,800 EVs in Q1, down from 356,500 in the same quarter a year ago

.....Pardon???