A review of things you need to know before you go home on Tuesday; BNZ and TSB cuts rates, housing markets perks up, fruit & veg prices down -9%, rent rises slow, swaps lower, NZD lower, & more

A review of things you need to know before you go home on Tuesday; BNZ and TSB cuts rates, housing markets perks up, fruit & veg prices down -9%, rent rises slow, swaps lower, NZD lower, & more
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Here are the key things you need to know before you leave work today.

MORTGAGE RATE CHANGES
BNZ has followed ANZ down on fixed mortgage rates, also adopting 3.69% as its one year fixed 'special'. It cut almost all other fixed rates too. TSB has ended its "Price Match Promise" today. It has also launched new lower rates, passing on 'only' -40% bps on their floating rate and cutting the fixed rate 'specials' for terms from 6 months to three years. Update: Westpac has also met the market with its 'specials'.

TERM DEPOSIT RATE CHANGES
BNZ has also followed ANZ down on almost all term deposit rates, except 4 & 5 year terms. ICBC has trimmed almost all their term deposit rates as well as taking their on-line call rate down -20 bps to 2.05%. TSB has also cut term deposit rates taking their six month rate down -10 bps to 2.90 and their one year rate down 1-5 bps to 2.85%

PERKING UP?
REINZ today reported that the housing market perked up in July with highest July sales in last three years. Housing sales volumes were up in July but price signals were more mixed. Analysts were divided on what this data is really telling us. Kiwibank economists say it is a 'good sign'; Westpac economists are more cautious in their optimism.

HEALTHY FOOD PRICES DROP SHARPLY
Food prices increased just +0.9% overall in the year ended July 2019. For fruit and vegetables, prices fell hard, down -9.3% pa., for meat, poultry, and fish prices, they increased +5.4%. Grocery food prices increased +2.1 in a year, while restaurant meals and ready-to-eat food prices increased +3.0%.

RENT RISES SLOWING, EVEN DROPPING BACK
Statistics NZ updated their Rent Index today for July. Nationally, the rise in rents of properties that changed tenants was an annual +3.7%, the lowest since this series started. In fact from June, they show a -0.7% decline, the third month in a row of a drop. The largest drop is recorded in Canterbury of -2.6% since June, and an annual rise of just +2.1%. But be careful of this data, it does tend to jump around on a month-on-month basis depending on the types of properties being rented.

REALISTIC MARKET CAPS?
Fonterra's share fell yesterday to $3.56 after their terrible write-down news and implications. But they are up +7c so far today, now at $3.63. The market capitalisation of Fonterra is now $6.2 bln (FCG + FSF). For A2Milk it is $11.2 bln.

EQUITY MARKET UPDATE
Following the grim retreat on Wall Street last night (S&P500 ended down -1.2%), Asian markets have also retreated in opening sessions by about the same amount. For the month of August so far, the S&P500 is down -3.3%, Shanghai is down -4.6%, Hong Kong is down -8.3% and partly due to the disruption of street protests (and a six month low), Tokyo is down -5.0%. In comparison, the ASX200 is -3.5% lower and the NZX50 is flat, having shed nothing.

RBNZ MAKES AN ENEMY AT THE VERY TOP END OF TOWN
The NZ Initiative "is concerned about the RBNZ direction" on monetary policy. They don't like the prospect of unconventional monetary policies such as negative interest rates and quantitative easing and are calling for "an urgent clarification of the Remit given to the RBNZ’s Monetary Policy Committee".

WESTPAC 1, ASIC -1
In Australia, regulator ASIC has lost specatcularly in its landmark prosecution of Westpac under their responsible lending laws. Not only did the judge agree with how Westpac assessed a borrowers living expenses, he ordered ASIC to pay all Westpac's costs of defending what he regarded as a very flawed case. He even accused ASIC of not understanding the law on which their case was based.

SWAP RATES LOWER
Wholesale swap rates are lower today for rates five years and less by a bit more than -1 bp. The 90-day bank bill rate is also down -1 bp to 1.21%. Australian swap rates are back up +2 bps across the board so far today retracing yesterday's fall. The Aussie Govt 10yr is down -2 bps to 0.95%. The China Govt 10yr is down -3 bps at 3.02%, while the NZ Govt 10 yr is also down -3 bps at 1.09%. The UST 10yr yield is down -10 bps from yesterday, now at just under 1.65%.

NZ DOLLAR LOWER
The Kiwi dollar is lower than where we started today, now at 64.5 USc. Against the Aussie we unchanged at 95.4 AU cents. Against the euro we are softish at 57.6 euro cents. That means the TWI-5 is now at 69.7.

BITCOIN STABLE
Bitcoin is also unchanged this afternoon from where we started this morning, now still at US$11,365. The bitcoin price is charted in the currency set below.

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Daily exchange rates

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USD 
NZD
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Source: CoinDesk

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We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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15 Comments

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Rents are def. dropping, when you see the volume of houses for rent that are currently available.. that is stress on landlords as well as with negative gearing, they will have to bear the loss..

with the increase in supply coming on, this will put further stress on the situation, hence rents dropping eventually..

Not sure about that Dgm.we've got a property in Hamilton and lodge have told us our flats are too far under rented and have suggested we increase them now at 20 per unit.that's $140 increase.If we decide to go ahead we'll be yielding 10.7 percent.when we purchased nearly 6 years ago we bought at 7.2 percent.not all landlords are negative geared.

Fonterrible directors and suppliers take note : the share market tells you what it thinks of you for good reason : ..

... your co-op sports a market capitalistalisation of one half that of your much smaller rival A2 Milk ...

Why do you think that is ?

"But, but, but, we're professionals", they will say. "All of our decisions were checked by experts. No one could have seen what was coming."

A2 Brute?

Brilliant comment. Genius!

Another big day for gold and silver ETFs on the ASX. Perhaps Interest dot co dot NZ should be paying more attention to this. Interestingly, the yen is strong but no appreciating today despite the regional turmoil.

With a paper to silver ratio of 197:1 and a paper to gold ratio of 109:1 I'd be buying the physical stuff.

EFTs on precious metals are one big massive ponzi.

Every commodity is leveaged. Regardless, If tomorrow there is a mass claim on physical (like a bank run), there would be market chaos beyond the gold market. Furthermore, the whole banking system is far more leveraged than physical metal ETFs.

https://etfdb.com/etfs/commodity/gold/?search%5Binverse%5D=false&search%...

Yes another day, another record price for gold in NZ$ terms (NZ$2,369 as we speak). I did flag this up to them a few days ago, but they seem to have lost interest after publishing the NZ$ price for a few days. I guess the publisher just sees it as a barbaric relic.............

The Reserve Bank who have stated that they want GDP back to 3.0 percent to create or enable a little inflation,and have decided to pursue house price inflation as the usual means to have growth,( there can be no other reason for last weeks panic) , will appreciate that although GDP/ housing wealth ratio has incessantly increased, with all the attached benefits , from 2.08 in December 1998 ,down to 1.95 in 2001, thru to 3.14 in 2013 reaching a spectacular peak of 3.82 in 2016 and again in 2018 the ratio has now stalled. Unless we figure out a way another way, and quickly, to increase GDP , we will need to add about 80 -100 billion in housing wealth, a rise of around 7-8 percent over the next year to prevent GDP from at best falling further, requiring further OCR cuts. Any fall in aggregate housing wealth,even modest will have a significant impact.

Fonterra, Fletcher's, Waikato Hospital Board are all from the same stable. All with recent-past head-hunted chief executives from overseas, most likely recruited by some expensive Human Resources firm.
All these high-flyers turned out to be abysmal failures but costing their companies, shareholders, taxpayers squillions.
Any directors involved in the recruitment process should have fallen on their swords by now.
Moral of the story is recruit from within company, pay top managers well and let them compete for the top job.
Never listen to Management or Human Resources Guru B--- S---. They like to think they are the high priests of the corporate world but its all mostly psycho-babble.
As far as Fletchers is concerned, someone who has run a corner dairy shop, and with a few years building experience would be ideal.
WaikatoHBd, after being burnt by a plausible "flash Harry" has at least had the sense to bring on someone who has worked his way up the from within the industry.
As for Fonterra.....words fail me.

HR people are dreadful. They're the epitome of the emptiness of the corporate world. It will be unknown as to how much potential has been lost because of these gatekeepers.

FYI Christchurch City Council has recently appointed a new CEO from the UK on a $500,000 annual salary. Will be interesting to see what happens there.

The Dow is down over 100 pts already in early trading