A review of things you need to know before you go home on Wednesday; more rate cuts, inflation rise, Harmoney gets new boss, China data surprisingly weak, swaps firm, NZD unchanged, & more

A review of things you need to know before you go home on Wednesday; more rate cuts, inflation rise, Harmoney gets new boss, China data surprisingly weak, swaps firm, NZD unchanged, & more
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Here are the key things you need to know before you leave work today.

MORTGAGE RATE CHANGES
Westpac has cut its fixed mortgage 'specials', matching the ANZ levels.

TERM DEPOSIT RATE CHANGES
ASB has trimmed some savings rates. They took a full -50 bps from their Headstart account, with the new rate now down to 0.25%. And the Firefighters Credit Union has trimmed its TD rates for 1 year and longer.

WHO IS PUTTING ON THE PRESSURE
The independent ANZ monthly inflation monitor for July shows it it +3.0% in the past year (the July index is 1378 compared with 1338 a year ago). This was driven by property rates, vehicle licensing fees, domestic airfares, and housing related costs. Most readers will notice that this inflation pressure is driven by the public sector's appetite for 'cost recovery' or the State-owned airline.

WINDING DOWN
The tourism industry posted only modest growth in June as measured by accommodation 'guest night' data. It was up just +1.4% from a year ago, with North Island growth up +2.7% and the South Island shrinking -1.0%. Occupancy by domestic guests was up +3.8% while that by international visitors was down -3.0%. This data is about to be be canned with Stats NZ saying they are "under significant cost pressures and is no longer able to run them based on present funding". The Minister can fire the Chief Executive, but underfunding the official statistics agency won't improve outcomes no matter who holds this role. Proper funding is a political decision.

FLAT Q3 EARNINGS FOR BNZ'S PARENT
BNZ's parent National Australia Bank (NAB) has posted flat unaudited third quarter cash earnings of A$1.65 billion. NAB reiterated that customer remediation programs and regulatory compliance investigations are continuing with potential for additional costs.

HARMONEY BRINGS IN NEW CEO
Harmoney says David Stevens will take the reins from founder Neil Roberts as CEO early in 2020. The licensed peer-to-peer lender says this will free up Roberts, who is also Harmoney's biggest shareholder, to focus on strategy and product. Stevens most recently led the start-up MiFund, a medical payment options provider for patients in Australia. There he was "instrumental" in securing the Bank of Queensland as a 35% equity holder in MiFund, Harmoney says. Prior to that role Stevens was CFO of FlexiGroup, leading the negotiations when the Aussie firm bought Fisher & Paykel Finance.

EQUITY MARKET UPDATE
Asian equity markets have all opened strongly today, taking the lead from Wall Street. Both Shanghai and Hong Kong are up more than +0.5% in early trade. But locally, both the ASX and NZX aren't joining in with both these markets flat/unchanged.

FONTERRA WATCH
Their main share price (FCG) is down to $3.55 in late trade today which is a -4c or a -1.1% fall since yesterday. The FSF share is also down to $3.55 which was at $3.61 yesterday, a -1.7% fall. At the start of 2019 these shares were priced at $4.67 and $4.64 respectively. At the start of August there were at $3.77 and $3.76.

PUBLIC SECTOR WINS
In Australia, new data shows that wages rose +2.6% in the past year "on the back of strong public sector growth" and focused on the "health care and social assistance industry".

SENTIMENT BOUNCE
And staying in Australia, consumer confidence has bounced up according to the latest Westpac Melbourne Institute monthly reading, reversing a -4% drop in July.

SHARP CHINA SLOWING
China is not only dealing with unrest in Hong Kong, its economy is slowing faster now too. Industrial production data has posted its worst growth since 2002, up only +4.8 in the year to July. Analysts had expected this to rise +6.0% and down from +6.3% in June. That is a fast decline. And that wasn't the only sharply negative data; retail sales rose 'only' +7.6% in July from a year ago and way below the +8.6% expected and the June rise of +9.8%. At least the Chinese aren't gilding this data.

SWAP RATES FIRM
Wholesale swap rates are up by +1 bps across the curve today. The 90-day bank bill rate is down however by -1 bp at 1.20%. Australian swap rates are up a similar amount. The Aussie Govt 10yr has firmed +1 bp to 0.96%. The China Govt 10yr is also up +1 bp to 3.03%, while the NZ Govt 10 yr is up +4 bps to 1.13%. The UST 10yr yield is up +2 bps from yesterday, now at just under 1.67%.

NZ DOLLAR LITTLE-CHANGED
The Kiwi dollar is unchanged at 64.5 USc. Against the Aussie we softer at 95.1 AU cents. Against the euro we are firmer at 57.8 euro cents. That means the TWI-5 is now at 69.8.

BITCOIN SINKS
Bitcoin has sunk quite noticeably over the past 24 hours, now at US$10,582 which is a -6.9% fall in that time. It has been all one-way traffic lower and virtually no rallies at all in the period. The bitcoin price is charted in the currency set below.

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17 Comments

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Highlight new comments in the last hr(s).

FYI: Term Deposit rate cuts from Westpac today - 12 months through to 5 years now all 2.75% - 1 month through to 9 months also cut (or was that yesterday and we missed it?)

Re Statistics NZ: "underfunding the official statistics agency won't improve outcomes"
Nor will it be attracting potentially the best of possible CEO applications - just those desperate for any CEO role or a career ending missionary zeal to take on an apparent basket-case both under-funded and with poor performance with failures not only with the Census but immigration etc as well.

Tourism statistical data being canned by Stats NZ for lack funding. I own a motel, every month WE fill out all the details and email the form to Stats NZ, all they have to do is collate them...

Most readers will notice that this inflation pressure is driven by the public sector's appetite for 'cost recovery' or the State-owned airline.

Nonetheless, unavoidable costs for most of us - RBNZ is deeply into real negative OCR yield territory, as are NZ government 10 yr notes. This causes the government to seek higher income to fund it's ever rising net present value liability costs.

“Most readers will notice that this inflation pressure is driven by the public sector's appetite for 'cost recovery' or the State-owned airline.”

From an academic view point what is driving the inflation pressure may be of interest to those who pursue such things – however the simple fact of the matter is that it is “there” - hitting wallets and affecting spending/consumption.

Is there inflation – “yes” – are wages and salaries keeping up – in general “no” – will this “problem” be offset by never ending interest rate cuts - “no”.

And now heaven forbid, constant chatter of “negative interest rates” - in my mind this is completely nuts and solves nothing, apart from appeasing the mindless masses that the authorities are on top of it.

Fonterrible Watch : share price $ 3.55 today , down 24 % since starting the year at $ 4.67 ..

... A2 Milk up 45 % in the same time frame , from $ 11 to $ 16 today ...

Dont cry , Fonterrible shareholders... it'll be OK ... you have multi-millionaire salaried experts at the helm
. ... Moo hooo .... hoooooooooo ...

Fonterra is contemplating a reassignment of its multimillion dollar IT service contracts from NZ-based providers, namely Datacom and DXC to Indian outsourcing companies in a push to cut costs.

Looks like after selling out its shareholders in pursuit of worthless foreign ventures, Fonterra will soon expand its scope to include other domestic companies in the damage.
What after this, plans of selling a controlling stake of the co-operative to Chinese investors?

DXC is not an NZ company, they are a global IT company based in the US. Extremely doubtful Fonterra will be able to cut any costs from this move either.

the South Island shrinking -1.0%. Crikey, can't have statistics like that. So that's why the CEO had to go and their funding gets cut. It won't do at all.

Who ends up holding the bag?
they’re spreading the risks to investors by packaging their loans into subprime auto-loan backed securities, of which the highest-rated tranches have AA or even AAA ratings. And these securities are everywhere, from bond funds in the US to some pension fund in a Scandinavian city.

That's oddly familiar!

Why are poor figs always called “surprising” or unexpected? And saying that China did not gild the figs simply begs question: how do you know?

It's "data", not Data - the CCCP spin cycle at work.