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
Cooperative Bank has trimmed short fixed rates.
TERM DEPOSIT/SAVINGS RATE CHANGES
Cooperative Bank has also trimmed a couple of short TD rates. WBS has trimmed ist 9 month and 18 month rates, both back to 6.00%.
POPULATION STILL RISING FAST
Statistics NZ said today that our population grew by an outsized +2.5% in the year to March 2024, an increase of 130,700 (another Dunedin in one year). It is less than the 3.0% rise in December. That takes it to 5,338,900 with the median age of 38.0 years (females of 38.9 and males 37.1 years). Fast immigration is only able to cancel the rapid aging of existing residents. A median age of 38 years is near a record high, but since it was first achieved in March 2022, it has stopped rising. To avoid a long term budget crisis because of the load boomers will place on NZ Super and health care, we need this median age to retreat somehow. Otherwise something structural in our social bargain will have to give way. In 2014 the median age was 37.5 years. in 2004 it was 35.1 years. In 1994 it was 32.2 years. Immigration has kept it from blowing out quite effectively recently but public policy is an unstable base and if the taps are turned off that day of reckoning could come much faster.
STILL WANTING TO BUILD NEW OFFICES ...
The latest building consent activity shows there is plenty of commercial building work in the pipeline - apart from for retail space. Almost 100,000 m2 of new office space was consented in the March 2024 quarter, but less than 26,000 m2 of new retail space.
BUT A HEAVIER DEBT LOAD
But things don't look so rosy for our largest construction firm. After a Fletcher Building update with 'few redeeming features' analysts see a risk that the company's net debt 'moves up' in the first half of the next financial year.
"DOING UP THE HOUSE? THAT CAN WAIT"
ANZ has been inspecting the entrails of retail activity from their access to the gritty bank activity details in their system, mostly card use activity. Because they are our largest bank, this analysis is especially powerful. They note growth slowed to +2.5% nominal for the year to April, which continues the downward trend in place since the borders reopened and tourist dollars flooded the terminals. Durables and clothing continue to lag as pressure is mounting on consumers’ discretionary spending. They noted that the impetus from tourism-related spending is starting to wane. And you know things aren't great when the only category gaining momentum is "miscellaneous services".
SMALL CHANGE
In Australia, the rate of gain in their wage pay slipped to 4.1% in the March quarter. That is the first time that gain rate has fallen since Q4-2020 and it may suggest labour market pressures are starting to ease there.
BIG CUT
Argentina's central bank cut its benchmark interest rate -1000 bps to 40% from 50%, marking the sixth adjustment since December due to a slowing inflation rate, bringing the rates to the lowest since June 2022. The monthly inflation rate slowed for the fourth straight month to 8.8% in April from 11% in the previous month and below market forecasts of a 9% gain.
SWAP RATES ON HOLD
Wholesale swap rates are likely to be little-changed yet again today. Our chart below will record the final positions. The 90 day bank bill rate is up +1 bp at 5.64%, a level it has hovered around for more than 70 days. The Australian 10 year bond yield is essentially unchanged at 4.37%. The China 10 year bond rate is still at 2.30%. The NZ Government 10 year bond rate is down -4 bps to 4.72% and the earlier RBNZ fix was at 4.67% and down -4 bps from yesterday. The UST 10yr yield is down -5 bps from yesterday at 4.44%. Their 2yr is now at 4.82%, so the curve is little-changed at -38 bps inverted.
EQUITY MARKETS MIXED & ONLY MOVING MINOR AMOUNTS
The NZX50 is down another -0.5% in late trade today. The ASX200 is up +0.5% in afternoon trade. Tokyo has opened its Wednesday trade up +0.4%. Hong Kong is down -2% while Shanghai is down -0.3% in very early trade today. Singapore has opened down -0.5%. Wall Street ended its Tuesday session with the S&P500 up +0.5% from yesterday.
OIL HOLDS
The oil price is little-changed from this time yesterday, still at just under US$78.50/bbl in the US, while now at just over US$82.50/bbl for the international Brent price.
GOLD RECOVERS
In early Asian trade, gold has recovered +US$17 from this time yesterday and back at US$2360/oz.
NZD RISES
The Kiwi dollar has risen nearly +½c from this time yesterday, now at 60.5 USc. Against the Aussie we are holding at 91.1 AUc. Against the euro we are also firm at 55.9 euro cents. This all means the TWI-5 is up at 69.7, and a +30 bps gain.
BITCOIN SLIPS BACK
The bitcoin price has slipped to US$61,741 and down -1.3% from this time yesterday. Volatility of the past 24 hours has been modest at +/- 1.6%.
This soil moisture chart is animated here.
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61 Comments
"The NZX50 is down another -0.5% in late trade today. The ASX200 is up +0.5% in afternoon trade."
As a newly minted ASX investor [ EDIT - I think XAO investor is the technical term ] I always like to tell people that the ASX is just like the NZX except the price goes in the opposite direction.
Every dog has its day
Must be a new phenomenon, in the 2010s the NZX50 outperformed the ASX200
I believe the NZX is a total gross return index which makes it very misleading when compared to price return like most of the Western world.
Sure is, but on the other hand NZ stocks are much more income stocks than capital growth stocks, so just measuring capital gain under values performance.
Sure is, but on the other hand NZ stocks are much more income stocks than capital growth stocks, so just measuring capital gain under values performance.
SMARTSHARES NZ DIVIDEND ETF (DIV) has a dividend yield of 5.7%. Capital value decreased 13.8% over past 5 years.
That's a GAIN of roughly 10 percent over 5 years. WOW (sarc)
Australia shares are as well
Really? The ASX is banks and utilities which are very much income stocks.
And miners, which also pay huge dividends. BHP (Australia's largest company) is paying 5.5% with 100% franking credits. FMG (7th largest) is paying 9.1%
Think that changed when S&P took over calculating the NZX indices, from memory it's a modified laspeyres index calculated in a consistent way across all their equity indices.
I bought some KMD. right before it dropped like a rock.
Have you ever done anything productive, loner?
Asking for a friend.
Unfortunately yes, every day for around 50-60 hours a week for a last couple of decades. I hope to change that soon.
PDK could make you the president of his chicken little party- no hope, no productivity, no clue ( despite the claimed high IQ)
I discount parasites, and note that all the loner discusses here - 100% - is parasitism.
Thus the question.
The proportion of parasites to productive folk is too big now; financial transactions outrank real activity by some orders of magnitude.
That is not a maintainable state.
BTW - those who disparage (chicken little) in place of reasoning, are admitting they have weak-or-no argument.
As a newly minted ASX investor I always like to tell people that the ASX is just like the NZX except the price goes in the opposite direction.
Have you invested in ASX Ltd Wolfie?
Why?
Yes put a decent amount in from my crypto sales into the Milford fund. Its treading water so far.
Sounds like my TAB account
Yes put a decent amount in from my crypto sales into the Milford fund. Its treading water so far.
OK. I thought you possibly meant the company that operates the exchange.
Ha I know what you mean. Crypto has taught me there is nothing quite like owning the casino.
STAR is after a new CEO.....
Previous experience before Royal Commissions / senate commissions could be an advantage
Yeah although it hasn’t been stellar this year either
Otherwise something structural in our social bargain will have to give way.
So giving way on the social bargain of home ownership, liveable wages, health care, productivity growth ... is a worthy price to pay to not give away the social bargain of superannuation?
Yeah I chortled when I read that …. It’s all going to end very badly unless age is adjusted up and it’s means tested like Aussie does
You'd almost think superannuation spending wasn't just magicked into existence like all government spending and after distribution, wasn't recycled through the economy keeping councils, service industries etc afloat?
I think some of it gets spent overseas on international holidays, especially by those who do not actually need it for local expenses.... ie have means and incomes....
Surely it has to be means tested! No justification for giving wealthy retirees weekly taxpayer handouts
The comment that we must relentlessly increase the population (via immigration) to counter it aging is nonsensical in that when the younger, larger population of immigrants retire then we'll have to import even more people - a virtual pyramid scheme. I think much better to accept a gradual decline in population and compel people to work a bit longer.
I didn’t sign up to no ‘social bargain’ of big population.
I heard that farmers in India get subsidised loans. I wonder if interest rates that are 1-2% lower in NZ for agriculture would make sense. It would mean agriculture, a much harder and higher commitment industry to get into than most, would be a little easier. But not so much that it is worth mortgaging properties to put the money in the bank.
Subsidy? Please wash your mouth out.
What is happening right now with Gamestop is beyond riveting. It's outrageous. Now, not claiming to be an expert, but it appears that the GME shares loaned out 5x the float. You read that correctly. 5x. That means for every share borrowed, it has been loaned out multiple times. My water cooler crew shrug their shoulders and say 'no big deal' and 'they [the financial masters] know what they're doing'.
The official FINRA data says short interest is only 27%, but others are indicating that it's 500%. Who do you believe? It's staggering stuff.
Can only happen if big insiders are in on the game , pun intended
Deep F****g Value
Hence the push to DRS shares into Computer Share. Removes them from being rehypothecated.
Computershare is not some 'super registry' though. Actually, the way they operate and 'effectively' implement tech are archaic.
I agree that their business practices are old school, but my GME shares can't be borrowed by a SHF to drive my share price down.
I agree that their business practices are old school, but my GME shares can't be borrowed by a SHF to drive my share price down.
I know what you're saying. People who buy GME through Sharesies for ex, arguably 'should' have a corresponding registry. For ex, I own US-based shares purchased through CMC Australia. Shares purchased on ASX and NZX are all recorded with the registry.
What we do know is that the shenanigans / rehypothecation are being driven by the establishment for their mates. The little guy can't pull these stunts. And the degens are those exposing it.
Anyone with a decent brokerage account (like Interactive Brokers) can sell short.
IMHO seems a stretch as they need to be settled every day so if it were 5* settlement accounts would be passing the parcel around - any non delivery would blow up the whole system
IMHO seems a stretch as they need to be settled every day so if it were 5* settlement accounts would be passing the parcel around - any non delivery would blow up the whole system
This is what you need to understand
You dont need to settle short sales on a daily basis, you sell short and sit and wait until you feel like buying them back. This could be weeks or years. You pay interest on the borrowed amount, and are also responsible for paying dividends to the owner of the shares you borrowed.
Naked short selling is banned. You can only do covered short selling - which means you need to source stock to borrow before selling them.
Naked short selling exists and is happening.
FYI, naked short selling as it relates to GME. The regulators are asleep at the wheel at best and complicit at worst.
https://prospect.org/power/gamestop-mess-exposes-the-naked-short-sellin…
Maccy B letting rip and claiming 46 years to save a Sydney house deposit.
Sydney’s housing market has well and truly descended into the Hunger Games.
New analysis from Finder shows that it will take a typical single school leaver 46 years to save a 20% deposit on a median Sydney house:
https://www.macrobusiness.com.au/2024/05/46-years-to-save-a-sydney-hous…
So 18+46 = 64 years old... plenty of time to pay the other 80% off....
Never fear, the banks don't care if you pay them profit for the rest of your life, as chances are they will get their money back before you get your house anyway. Sounds lovely, the thought of paying a bank to feel secure for the rest of your life....when it isn't secure (sarc).
To avoid a long term budget crisis because of the load boomers will place on NZ Super and health care, we need this median age to retreat somehow.
This is not necessarily true. Yes, we do need to increase healthy life expectancy so that people are not as reliant on the health and aged care system in their later years. But, this is already happening, and many people are choosing to work longer and top-up their pension with part-time work. All good. No problem here. Work if you want, draw your pension, look after your grandkids so that we don't need to 'spend' too many people on providing early years childcare (don't get me started on this). Remember when this is how families worked (during our first couple of million years)?
Ultimately supporting an older population requires us to rebalance our economy so that our health and aged care sectors are a bigger part of our economy and we 'spend' fewer people and resources on less important things. Our 'economy' does not care whether someone is working in Harvey Norman or a Hospital. In fact, the more people we 'spend' on health and care and the less people we 'spend' on selling us imported stuff we don't need, the healthier our economy will be - lower trade deficit, lower emissions etc.
This might mean the Govt share of total consumption inching up a bit - but is that a problem? I would also note that the parts of our economy that generate export returns are very small in staffing terms. So we have huge potential to reassign workers that towards higher value activity like health and care. This is what our tax system is for - to ensure that enough of our real resources are secured for the public good.
"Yes, we do need to increase healthy life expectancy so that people are not as reliant on the health and aged care system in their later years. But, this is already happening,..."
And I suspect we are at peak societal health....with a failing health system.
The expectation that people will increasingly be able to work for longer is imo akin to endless growth...we have milked that increase as far as it is likely to go, and it will likely decline from here....and then add in the mental health crisis that appears evident across the entire population and productivity appears to be on a downward trend.
Nevermind the demographics
The expectation that people will increasingly be able to work for longer is imo akin to endless growth
I wouldn't necessarily say that there's an expectation people can work longer, as some will have health issues form their work type e.g manual roles and the prevalence of shoulder and knee issues in the population. However there will be some that have made good financial decisions and retire early, and others that will need to work longer without choice by means of divorce, lack of savings at retirement etc. I find it an irony that the NZ super system that was set up to benefit all universally, which could be argued as some do that a flat tax does too, but in reality it eventually benefits the wealthy who already have the means, by reducing the drain on said wealth, and is again not very much to go on for the poor in terms of quality of life.
.... or, as in our case , great-grandchild!
It will only get worst age wise. Short term I would say many do, and more will, work into their 70's, a few till their 80's. But when that big chunk of boomers hit their 90's, and even hitting the century becomes more common, oh boy.
US President Biden will raise tariffs on a wide range of Chinese imports, incl semiconductors, batteries, solar cells & critical minerals — in an election-year bid to bolster domestic manufacturing. Changes to impact around $18bn in current annual imports.
And so it begins.
https://www.bloomberg.com/news/articles/2024-05-14/biden-imposes-sweepi…
Pretty sure Biden doesn't know if he's Arthur or Martha let alone imposing trade tarrifs.
I had to laugh when I saw this the other day.
!00% tariff on EVs justified partly because 'the Chinese are overproducing - 30m when they can only sell about 25m domestically'. What kind of nonsense is this?
Meanwhile, there are real problems that usually fly under the radar for a long time before erupting
https://www.nzherald.co.nz/nz/north-canterbury-honey-company-forced-to-…
Australia's housing crisis in 10 graphs, from the federal budget
It would be revealing to see a NZ comparison.
https://www.abc.net.au/news/2024-05-15/federal-budget-housing-crisis-in…
(Oz CGT on investment properties seems to have no +ve effect on housing supply and rents: just another ticket clipping rort like their stamp duties)
There are far too many vested interests in the Aussie Ponzi. State govts rely on it for funding. It's not got so far out of control, nobody really knows what to do.
Oz CGT on investment properties seems to have no +ve effect on housing supply and rents
This is not an argument against CGT. Keep in mind that yes, they have a CGT, but it comes with a 50% discount, so the relative tax advantage of investing in property remains. Given that, it should be obvious that there will be no discernible effect.
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