What happened Monday

Economy / news

A review of things you need to know before you sign off on Monday; filled jobs stop rising, car sales slump, Tesla wins local big battery contract, log prices rise, SFO gets ringleader, swaps hold, NZD holds, & more

1st Jul 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 to report today.

TERM DEPOSIT/SAVINGS RATE CHANGES
The Dosh Strives fund manager at-call account has risen to 5.10% from 4.85%.

PEAKED
May data out today on filled jobs shows a clear slowing pace with the number of filled jobs up just +0.9% from a year ago. But there was no change from April. It looks topped out. Payrolls are up +5.3% from May a year ago.

RETREATING
The shadow of the removal of the taxpayer-supported Clean Car Discount scheme is darker than was anticipated, with sharp drops in registrations for both new and used passenger cars more than expected. In June, only 6,965 new cars were registered (compared to 17,302 in June 2023), only 7,489 used imports registered (16,680 in June 2023). Respectively these are -60% and -55% less than in June 2023. The drop-off for NEVs was even more dramatic.

FALLING
Last week was the slowest week so far this year for residential property auctions. More homes are being auctioned compared to a year ago but the sales level is lower. Also, see this.

TESLA WINS CONTACT’S $163 MLN GRID-STYLE PLAN FOR GLENBROOK
Contact Energy has told the market it plans to build a 100MW grid-scale battery at Glenbrook, in the Auckland region. Tesla was selected to supply the Megapack 2 XL battery system and provide maintenance after a "competitive tender process" with an option to expand capacity to 130MW. Contact says construction will start immediately, and the battery is expected to be operational by the first quarter in 2026. The battery is expected to cost up to $163 mln. It will provide "renewable electricity flexibility" and support new wind and solar projects, the energy company says. Contact also has consent to build another 100MW battery in Stratford in the Taranaki region.

PRICES RISE
Chinese log demand is steady and inventories are falling allowing small increases in at-wharf log prices in June, helping offset weak domestic demand.

ADAPTING TO FACE A BROADER RANGE OF NATURAL HAZARDS
The Coalition government is transforming EQC into the Natural Hazards Commission. And with the broader role, they have asked Treasury to review financial and levy settings for natural hazards.

PAYMENTS NZ GETS CONDITIONAL AUTHORISATION
The Commerce Commission says it has reached a preliminary view to grant conditional authorisation for the bank-owned Payments NZ to jointly develop, with application programming interface (API) providing banks and third parties such as fintechs, and subsequently apply, a new partnering framework relating to the provision of API services by API providers to third parties for open banking. The Commission says potential benefits include the potential to reduce the transaction costs associated with partnering between API providers and third parties for access to API services, and the development of more efficient contract terms for such partnering. The potential detriments, which the conditions are designed to address, primarily relate to potential conflicts of interest in the partnering framework’s decision-making processes. The Commission is proposing to authorise the arrangement for 18 months. Payments NZ had sought a five-year period.

KIWIBANK DIRECTOR LEAVES
Kiwibank says Scott Pickering has resigned as a director of the bank, effective August 31. Pickering is a former CEO of the Accident Compensation Corporation and has just been appointed Chairman of Evolution Healthcare.

GUILTY OF FRAUD
A former Contract Manager at Broadspectrum charged by the Serious Fraud Office has pleaded guilty to fraud and corruption charges relating to the awarding of road maintenance contracts. He is the fifth and final person involved in the case to plead guilty. Jason Koroheke pleaded guilty to three charges of obtaining by deception and 14 charges of acceptance of gifts by agent between January 2015 and November 2018. Koroheke was the primary offender in several schemes where he accepted gifts in exchange for awarding work and submitted false invoices to obtain significant benefits for himself. Subcontractors submitted invoices to Broadspectrum, both real and fake, which Koroheke authorised. Once Broadspectrum paid the subcontractors, they used this money to provide gifts to Koroheke in the form of cash, goods or services worth over $1 million. Broadspectrum used to be named Transfield Services. It is now owned by Ventia.

SWAP RATES FIRM
Wholesale swap rates are likely to be firmer on the extending global rate moves. Our chart below will record the final positions. The 90 day bank bill rate is unchanged at 5.63%, a level it has hovered around for 120 days now. The Australian 10 year bond yield is up another +8 bps from this morning at 4.43%. The China 10 year bond rate is down -1 bp at just under 2.20% and a new all-time low. The NZ Government 10 year bond rate is up +1 bp at 4.74% and the earlier RBNZ fix was at 4.69% and up +2 bps from Friday. The UST 10yr yield is up +7 bps from yesterday at 4.34%. Their 2yr is now at 4.75%, so the curve is less inverted at -41 bps.

EQUITIES MIXED
The NZX50 is up +0.7% today in late trade. But the ASX200 is down -0.4% in afternoon trade. Tokyo is up +0.3% at its open. Hong Kong is closed for a public holiday, and Shanghai is up a mere +0.1% to open their week. Singapore is up +0.2%. The S&P500 futures is suggesting Wall Street will open tomorrow up +1.4%.

OIL LITTLE-CHANGED
The oil price is up +50 USc at US$81.50/bbl in the US, and just over US$85/bbl for the international Brent price.

GOLD UNCHANGED
In early Asian trade, gold is unchanged since opening this morning at US$2326/oz.

NZD LITTLE-CHANGED
The Kiwi dollar is marginally firmer from this morning's open, now at 61 USc. Against the Aussie we are a mere +10 bps firmer at 91.4 AUc. Against the euro we unchanged at 56.7 euro cents. This all means the TWI-5 is still at 70.5.

BITCOIN RISES
The bitcoin price has risen +1.6% from this morning's open, now at US$63,250. Volatility of the past 24 hours has been moderate at just under +/- 2.6%.

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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39 Comments

by Foxglove. | 1st Jul 24, 4:18pm 1719807539

The guilty of fraud as above is a reminder of the scale of the same sort of activity in the USA and that activity, huge and corrupt, is what drives the politics there from the bottom up. New mayor, new state senator etc means new civil positions which in turns means contracts for services and maintenance, all and sundry, can be expected to divert to those favoured by said new civil positions and “winning” those favours is an art form in itself. So in simple terms that is why voters support willy nilly one party or the other, purely out of self gain with the anticipation that their trough will now be filled and they can snout up accordingly. Way back Alexander Hamilton opined that corruption had been sewn into the very fabric of the constitution. Well he didn’t live that long, but his prediction there, certainly has.

by M0ralHazard | 1st Jul 24, 4:29pm 1719808178

I wonder how many of those 100MW batteries we would need scattered about the country to help solve the cold winter morning issue where spot prices go to the moon? Better than firing up a fossil fuel powered peaker plant?

by KH | 1st Jul 24, 5:59pm 1719813558

Solar with small battery in households would fix it. But sadly there is no ticket to clip there for the big players.

by Pa1nter | 1st Jul 24, 6:35pm 1719815734

In winter?

by solardb | 1st Jul 24, 6:49pm 1719816573

Solar performs well in the cold, increase their output. But would need battery for early morning/ night.

by Pa1nter | 1st Jul 24, 8:58pm 1719824293

In winter solar produces about half what they do in summer. While your energy demands are higher.

by KH | 1st Jul 24, 9:37pm 1719826659

Simple. For each household it takes off the peak demands. And as such good for the country.

by Colonial Viper | 1st Jul 24, 10:16pm 1719829011

Sure, if the setup and the electronics can cope with fluctuations so if there is a grid problem, the solar doesn't end up making everything worse.

by powerdownkiwi | 1st Jul 24, 11:31pm 1719833476

KH is correct in this instance.

I am completely off-grid, and have run the last several days (short and almost zero clean sun) on my 300 watts of PV alone (the micro-hydro switched off, not needed, but capable of doing it alone if needed).

Batteries still full, after all that time - all 400 Ahr of them....

Hard to convince folk, though...

by pacifica | 2nd Jul 24, 5:29pm 1719898170

Solar does really badly in the day during winter when it is in high cloud cover or permanent shadow... I thought anyone with half a clue and some basic knowledge about solar generation would know you need sunlight to generate solar power but then there is a moron born every second who thinks every house including those with no sunlight access can use solar.

Given many days there is less then 1 hr of indirect clouded shaded sunlight across many NZ homes, esp those in poor neighbourhoods, that vitamin D tablets are commonly prescribed by GPs down south in winter so the chances of heating the homes needing the power and heating the most is nil. There are far better renewable generation options and distributed small renewable power generators for a Whole community would be far better then yet more inequity played out in power sector where the poorest coldest households suffer while the wealthy with wide sunny spaces benefit from free grants. Lets fund community renewable power generation with options that actually work more in winter, rather then claim its ok as the wealthy households are alright up North with solar. eh. Lets consider reality and admit solar will never work for many households and for those who rent they will never be able to install them even if the house was suitable. Lets actually fund more realistic renewable power generation for the communities who need affordable power the most and cannot even afford to have the lights & heater on at night when it reaches below 3C, let alone a replacement roof suitable for mounting, large batteries & solar panels (that often don't capture much light in winter and even in summer).

by pacifica | 2nd Jul 24, 5:30pm 1719898249

There are far better renewable generation options and distributed small renewable power generators for a Whole community would be far better then yet more inequity played out in power sector where the poorest coldest households suffer while the wealthy with wide sunny spaces benefit from free grants for their own personal solar. Lets fund community renewable power generation with options that actually work more in winter, rather then claim its ok as the wealthy households are alright up North with solar. eh. Lets consider reality and admit solar will never work for many households especially for those who actually need the power for heating the most and often have housing in which solar will never be suitable for.

Lets actually fund more realistic renewable power generation for the communities who need affordable power the most and cannot even afford to have the lights & heater on at night when it reaches below 3C, let alone a replacement roof suitable for mounting, large batteries & solar panels (that often don't capture much light in winter and even in summer).

by IT GUY | 1st Jul 24, 4:46pm 1719809210

In June, only 6,965 new cars were registered (compared to 17,302 in June 2023), only 7,489 used imports registered (16,680 in June 2023). Respectively these are -60% and -55% less than in June 2023.

wow that pretty off the charts, was it this bad in the GFC?

by Jonny.Foe | 1st Jul 24, 5:10pm 1719810618

Pretty similar drop (relatively) in 2009 from a quick look.

by Silvi | 1st Jul 24, 5:31pm 1719811918

Things are bad. Oh Jacinda, "Not too much petrol in the tank"

by Uninterested | 1st Jul 24, 5:49pm 1719812958

I know that the fund needed a bit of top up but the clean car tax/discount would have been fairly neutral in its effect on overall sales. Less petrol/ diesel, more Electrics.

Now that its gone and road user taxs in, there is a level playing field.

Which is good in my view except for one thing: the proliferation of cancer causing exhaust smoke from all the diesel utes driving around the cities.

by KBKIWI | 1st Jul 24, 6:46pm 1719816378

Saying “level playing field” but then commenting about a large unpriced negative externality (cancer causing exhaust smoke from diesel) pretty much says it all.

by pacifica | 2nd Jul 24, 8:18am 1719865132

Saying “level playing field” but then denying disabled people transport access and applying thousands of taxes on those with the lowest incomes just for basic access to living needs so they die quicker then cancer instead is not a level playing field. Dying of sepsis or lack of income causing homelessness & medical trauma is no less painful then your imagined risk, of which we have a greater risk of cancer from clothing & cooking utensils. Yet I don't see you claiming the poor should be paying thousands in taxes for those either or any limits to their sale and use in NZ. Yep if you really cared about a “level playing field” you would care one ounce for equitable accessible transport... yet you really don't give a damn. Pretty much says it all.

by KBKIWI | 2nd Jul 24, 7:44pm 1719906240

LOL WTH is this reply about??? Never said I was for or against any of the myriad of things you are talking about their buddy. Are you sure you are replying to the right person?

by lonewolfnz | 1st Jul 24, 4:47pm 1719809248

""The S&P500 futures is suggesting Wall Street will open tomorrow up +1.4%The S&P500 futures is suggesting Wall Street will open tomorrow up +1.4%."

Last two times I read this I went to sleep happy and woke up with 5 figure losses when the markets blew up in NZ morning time. Hope this time is different.

by IT GUY | 1st Jul 24, 4:55pm 1719809721

3rd Q opening day, place your bets.................. Bonzai

by J.C. | 1st Jul 24, 4:52pm 1719809535

Japan revises Q1 GDP down -2.9% on construction data.

Fire up the printers.

https://www.reuters.com/markets/asia/japan-downgrades-q1-gdp-annualised…

by IT GUY | 1st Jul 24, 4:56pm 1719809815

Thats from the You cannot make this sh*t up school of stats, so they made it up.... 2.9% FFS

by bw | 1st Jul 24, 5:03pm 1719810191

"The trade deficit, a negative factor for gross domestic product, reflects the growing economic pain associated with Japan’s beleaguered currency"

And that from an article a few weeks back when their currency was then 10 yen stronger than today.

https://www.japantimes.co.jp/business/2024/05/22/economy/japan-trade-de…

by Colonial Viper | 1st Jul 24, 10:18pm 1719829124

The Japanese economy has been imploding for about a decade, it's pretty near super-critical now that it can no longer generate foreign exchange surpluses because China and South Korea ate their lunch...

by kiwikidsnz | 1st Jul 24, 4:54pm 1719809686

Oz Juice media takes on the corporate capture of AI (4 minute video)

Caution: NSFW or kiddies

https://youtu.be/TtVJ4JDM7eM?feature=shared 

by J.C. | 1st Jul 24, 5:01pm 1719810114

Kainga Ora CEO throws in the towel. Andrew McKenzie. Never heard of him. Wonder if's another of these 'failing up' people.

https://www.newstalkzb.co.nz/news/politics/pm-christopher-luxon-faces-m…

by Poppyc | 1st Jul 24, 5:09pm 1719810588

He was once CFO of Auckland Council

by J.C. | 1st Jul 24, 5:14pm 1719810877

Public sector top brass make out like bandits. Not answerable to stakeholders in any meaningful way. Much like bankers.

by Uninterested | 1st Jul 24, 5:52pm 1719813129

OMG really!

That explains everything.

by pacifica | 2nd Jul 24, 9:19am 1719868791

6months salary remuneration is well over 350k! lets just ditch the board & CEO who are part of the reason why there is so much debt. WTH was his actual value, any fool can say lets clear the old, build a mix of inaccessible apartments to be sold for a profit & even less accessible KO ones with an infinite debt piggy bank. He poorly managed KO to such a level now most the nation sees their housing with such stigma that all residents suffer, waitlists exploded and those most in need died in some of the most horrific, destitute and degraded conditions they breached the UN conventions. In fact KO to this day also denies access for disabled people to over 85% of all new builds so they cannot even visit them, also breaching UN conventions.

In that vein perhaps he got bonuses while the death, discrimination and stigma he caused occurred. It is not like he made any significant difference outside of that. In fact given the entire board's culpability they should all face termination in disgrace, not a resignation with benefits.

There was very little real benefit from any of the management levels of KO. The only ones who provided significant value where the trade experienced assessors, maintainers & planners, of those there were very few in the org. I really hope the upper management has to be homeless for a significant period in their older lives. Their karma debt is huge.

by Baywatch | 1st Jul 24, 5:10pm 1719810641

Prime Minister Christopher Luxon has unveiled the Government’s action plan for the next three months, giving itself a mark of 35 out of 36 for its April through June efforts.

Luxon said there was no doubt Kiwis were struggling with the cost of living, repeating what he said yesterday about changes coming into force today including the scrapping of the Auckland regional fuel tax and an increase to paid parental leave.

Luxon claimed the quarterly plans enhanced focus and created momentum.

So looking forward to the next quarter then.....back on track..?

by solardb | 1st Jul 24, 5:20pm 1719811245

That should improve his popularity, everyone loves a winner.

by Cur8or | 1st Jul 24, 5:43pm 1719812604

ENJOY YOUR LONG WEEKEND

by J.C. | 1st Jul 24, 6:06pm 1719814012

A 10-story property in Manhattan’s Hell’s Kitchen neighborhood has just sold for USD50 million - a 67% discount to the USD153 million paid for the property in 2018.

Location, location, location.

https://propmodo.com/the-bargain-hunters-scooping-up-discounted-office-…

by IT GUY | 1st Jul 24, 6:36pm 1719815792

Boy we are lucky we do not value rental properties by yield,

What do we value them by J.C. or Yvil?

by J.C. | 1st Jul 24, 7:34pm 1719819270

Based on that price, yield should have gone up.

by NZGecko | 1st Jul 24, 8:16pm 1719821762

Yvers prefers trickery pricing and buys at a 2.8% yields .... thinking all is just totally dandy.

No wonder he bristles at the generic term/noun of "Useful Idiot"

I would not recommend becoming one.

Buyers beware, yield is coming back into fashion again (how on Earth did it fall out??) - don't be a Useful Idiot and buy anything less than 5% (must have exceptional future potential) to 7% yields minimum.

They will be the norm again and you don't want to be left high and dry on the sandbank, with your "beached as" and negative equity dinghy, stuck, when they arrive.

by J.C. | 1st Jul 24, 8:10pm 1719821449

yield is coming back into fashion again (how on Earth did it fall out??)

Because it was all about the capital gains. Doubles every 7-10 years kinda appeal. You know how it works.

I don't dispute the 7-10 year theory. But I don't think it's the work of a spiritual being either.

by pacifica | 2nd Jul 24, 8:51am 1719867081

Office buildings though... when the need for much of the office space has rapidly dropped while companies realize they can have the employees pay for most of the needed office space, cleaning, power, & facilities in their own homes; saving companies millions in leases, maintenance and costs.

Office buildings now represent "redevelopment potential". But trying to catch the falling knife might not end so well. Best to see how many companies try to rationalize the long lease terms they got themselves into while more employees are pulling out.

At least the WFH movement is more environmentally friendly, more productive and better for staff wellbeing for those who look beyond the financial implications alone.