A review of things you need to know before you go home on Tuesday; some key rate cuts, house inflation reviving, bank reputations improve, ugly Fonterra drop, swaps firm, NZD stable, & more

A review of things you need to know before you go home on Tuesday; some key rate cuts, house inflation reviving, bank reputations improve, ugly Fonterra drop, swaps firm, NZD stable, & more
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Here are the key things you need to know before you leave work today.

MORTGAGE RATE CHANGES
ANZ has cut two of its key home loan rates, with the two year fixed rate going down -16 bps to 3.59%. More details here.

TERM DEPOSIT RATE CHANGES
ANZ has also cut most of its term deposit rates with the popular 6 month and one year rates now both set at 2.80%. But they still have their 8 month 'special' running at 3.00%. The Co-operative Bank has cut rates for its 2, 3 and 4 year TDs with the main rate now only 2.75% across all terms. FE Investments has trimmed its six month rate.

'SIMMERING'
ASB economists see 5%-6% nationwide house price inflation next year, with falling interest rates and population growth reviving the Auckland market and keeping regional markets 'simmering'.

'RETIRING'
Dunedin South MP, Claire Curran has announced she will not be standing for re-election. She was first elected in 2008. "Now is the time to move on to other pursuits," she said. Prior to being elected, she was a union pr spindoctor.

BACK TO NORMAL?
Roy Morgan Research is reporting that the Net Promoter Score (NPS) levels of Australia’s banks, including the big four banks, have increased significantly since the Finance Royal Commission was handed down in February. In July the NPS® of the big four banks was 2.1, up a significant 3.7pts since February 2019, and the NPS® of banks as a whole was 8.5, up 3.2pts over the last five months. The improvement in NPS® scores has returned the measure to a level comparable to that at the time the Finance Royal Commission was established in late 2017.

SLIPPING FROM 'NORMAL'
Auckland's water storage is now up to 77%, a rise of +4% in a week. But this is the usual time of the year when these reservoirs fill and the 'normal' has now jumped to 90% (from a 'normal' of 77% last week). New Zealand's hydro lakes are also 'normal' for this time of year.

HEIGHTENED RISKS
The US-China trade war poses a "significant risk" to Australia (and the rest of the world), the Reserve Bank of Australia has warned. And their research suggests consumers are still reluctant to spend their recently acquired 'helicopter money' from their tax refunds, undermining the supposed benefits of 'helicopter money' when there are heightened economic concerns by consumers.

THE EQUITY MARKET SCORES
Wall Street ended up +1.1% earlier today on perceptions that a reconciliation was possible in the trade war between the US and China. But it seems to be only a US perception, not yet shared by China. Time will tell. But Shanghai is now up strongly as well today, up +1.8%. Tokyo is up +1.2%. Only Hong Kong is struggling to keep pace. Locals the ASX200 is up +0.5% and the NZX50 is up +0.8% so far.

$1 BLN LOST IN ONE MONTH
A feature today in local markets is the continuing sharp fall of the Fonterra share price, now at a seriously worrying $3.15 and a drop of another -8c today alone. Investors are fleeing fast. The company's capitalisation is now only $5.077 bln and that is $1 bln less in just one month. This is a company that had a capitalisation of $10.7 bln in January 2018. It has halved since then.

SWAP RATES RECOVER SOME
Wholesale swap rates rose today, with the two year up +2 bps, the five year up +4 bps and the ten year up +4 bps. These rises are about half of what they fell yesterday. The 90-day bank bill rate is down -1 bp at 1.19%. Australian swap rates fell about -2 bps across the curve, again in contrast to New Zealand. The Aussie Govt 10yr is down -8 bps at 0.89%. The China Govt 10yr is unchanged at 3.07%, while the NZ Govt 10 yr is down -6 bps at 1.08%. The UST 10yr yield is up +4 bps to 1.53%.

NZ DOLLAR HOLDING
The Kiwi dollar is unchanged again at 63.8 USc. Against the Aussie we are down by -½c at 94.3 AU cents. Against the euro we are firmer at 57.5 euro cents. That puts the TWI-5 little-changed at 69.1.

BITCOIN BLIPS DOWN
Bitcoin is softer today than at this time yesterday, down -1.9% to US$10,248. The bitcoin price is charted in the currency set below.

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The last time Australia did real helicopter money they gave the money directly with clear instructions on what to do with it. They should do it again if they want an effective result.

I was living in Australia at the time. It was quite a thing, thousands in free money directly from the govt.

It was mostly spent on pingers, sleeve tattoos and trips to Bali.

We put ours into housing, and I think a lot of people did that. It was pretty much when the housing bubble started ramping up, between that free money and the doubling of the first home owners grant around the same time.

"Prior to being elected (Claire Curran), she was a union pr spindoctor." - I don't think you could be more perfectly qualified to be a Labour party member than that!

I told her she was a wasted space years ago.

And I'd tell most 'pollies the same, if asked. And most of our current media. Every now and then you hear a peep, then back to the mantra. And we're on borrowed time.

If anything is evident after last 2 years it is that Labour absolutely have to cut some dead wood and renew their talent pool. They desperately needs to scrap it's existing candidate selection processes and start recruiting more diverse and capable candidates with demonstrated leadership ability and broader industrial or private sector management experience rather than tribal public sector and union fluffers.

I'm content with union officials especially if they have actually worked before they joined the union. Totally agree about labours need for private sector management experience. NB the current reports that immigrants are given priority having their residency visas approved if they have a government job offer - why another public servant is more important than a business searching for a unique skill I can't fathom.

They are certainly short on talent at the moment. The calibre of some of the ministers - mediocre.

“population growth reviving the Auckland market”
I suppose you could say that 2020 forecast of rising to zero from negative is reviving the market, almost.

But Winston promised....

https://time.com/5661230/amazon-trade-war-donald-trump/

An interesting article on what Trump's shake up of trade rules might mean down the track for "carbon economies" countries

Good time to buy Fonterra shares?

... if the SPCA had dropped the price on their ugliest smelliest mangey flea bitten old mongrel by 50 % would you think " bloody ripper , you beaut , what a bargain ... can't wait to get that home . .. the wife and kids are gonna shower me with praises and hugs " ...

If you think that , buy Fonterrible right now ... back up the truck. . Load up all you can ... fill your boots me old son ...

Don't think so. As water quality regulations are introduced I suspect a lot of farmers will downsize their herds/production and even more shares will be looking for a buyer;

https://www.stuff.co.nz/environment/115127565/north-canterbury-nitrate-r...

I wouldn't be surprised if they halted trading at some stage.

.. only a matter of time before they collapse and Fonterra gets an injection of foreign capital and a new direction ...

From Fonterra , to FONG Corp . . Foreign Owned Noodle Group .... guess what nationality the new owners will be ? .. WOW ! . .. correct , first shot out of the barrel..

But to feed all the parasites on farmers back they need to produce more, do you not understand that Kate.

Not all - those without the high debt loads will be fine.

Some places, infact many places, dairying should never have been allowed.
$3.15. won't be much left by September 11

Why don't Fletchers and Fonterra, join together ,change their economic model, borrow a stack load of very cheap debt from those Australian banks and buy up swathes of NZ real estate. I hear next year should be a ripper for returns. Forget that white gold shite , cowpats and building shenanagans .
Contact Energy should replace Fletchers in November in a number of global funds.

You're way behind. I remember a Fed Farmers spokesperson some time prior to the '87 crash, urging farmers to forget farming and get into the sharemarket.

ASB economists see 5%-6% nationwide house price inflation next year, with falling interest rates and population growth reviving the Auckland market and keeping regional markets 'simmering'.

Firstly, if domestic banks extend credit mainly for consumption, then final demand increases by the amount of loans, but there is no increase in available goods and services. Hence prices have to rise. This consumer price inflation scenario is the first one would normally think of when considering an expansion in the money supply. But it is a special case. In the UK, more common is the second case: The majority of bank credit creation in the UK is not even used for transactions that contribute to and are part of GDP, but instead is used for asset transactions. They are not part of GDP, since national income accountants require a ‘value added’ for inclusion in GDP, not just the shifting of ownership rights from one person to another. When bank credit for asset transactions rises, asset prices are driven up, because the loans do not transfer existing purchasing power, but instead constitute an increase in net purchasing power: money is being created and injected into asset markets. When a larger effective demand for assets is exerted, while in the short-term the amount of available assets is largely fixed, the price of assets must rise. Link

Government should instruct the RBNZ to regulate banks to lend predominantly to productive GDP generating enterprises.

Wouldn't that freeze up the home mortgage market entirely for quite a while if they were also still required to comply with Basel III capital adequacy ratios?

Extensive research by economists like George Borjas and analyst Steven Camarota reveals that the country’s current mass legal immigration system burdens U.S. taxpayers and America’s working and middle class while redistributing about $500 billion in wealth every year to major employers and newly arrived immigrants. Similarly, research has revealed how Americans’ wages are crushed by the country’s high immigration levels. Link

3% term deposits, going, going, gone (nearly). When will we see them back? My guess somewhere between 2 and 20 years with the stagflation we have with globalisation, the internet, and technology. Hopefully we dont do a Japan a la 1992 for 20 years or more.

stagflation could be less likely than deflation,

I think stagflation in NZ is very unlikely.
I just think we'll have stagnant all around. Low growth, and low inflation.
Rather than the low growth + high inflation of stagflation.