A review of things you need to know before you go home on Friday; some TD cuts, wholesale trade growth slows, more Northland pork, Fonterra stumbles again, swaps leap, NZD stable, & much more

A review of things you need to know before you go home on Friday; some TD cuts, wholesale trade growth slows, more Northland pork, Fonterra stumbles again, swaps leap, NZD stable, & much more
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Here are the key things you need to know before you leave work today.

MORTGAGE RATE CHANGES
No changes to report today, so far.

TERM DEPOSIT RATE CHANGES
Kiwibank trimmed most term deposit rates although they left their ''special' unchanged at this time.

ATROPHY
The level of wholesale trade in the June quarter was growing but at a weaker rate, continuing a downward growth trend that essentially started in December 2017. The weakness was driven by falling vehicle sales.

THERE WILL BE NO SHORTFALL THIS SUMMER
Auckland's water storage situation is nearly back to normal. Recent rainfall has these storage reservoirs over 80% full and normal for this time of year is 90% full. At current usage rates, these lakes will now supply about 150 days of normal use without further replenishment (taking them down to half levels - obviously all the water in them isn't accessible).

NORTHLAND PORK
$98.4 mln of taxpayers money will be "invested" in the Auckland to Whangarei rail line from the NZFirst re-election fund (PGF).

SUE CHETWIN AND MICHAEL STIASSNY JOIN FMA BOARD
Sue Chetwin and Michael Stiassny have been confirmed as new members of the Financial Markets Authority Board by Commerce and Consumer Affairs Minister Kris Faafoi. Chetwin is chief executive of Consumer NZ, a director of the Banking Ombudsman Scheme, and a member of Food Standards Australia New Zealand. Faafoi says she brings a strong consumer perspective to the FMA that's independent from industry. Stiassny is an experienced company director and insolvency specialist. Faafoi says his wealth of governance and professional experience will provide considerable value to the FMA.

ANOTHER BLACK EYE
Fonterra has pushed back reporting its audited financial results for the year ended 31 July 2019. It was to report on September 12 but now won't do so until a new unspecified date, although it says it wan't be later than September 30. Apparently management haven't completed the accounts for the auditor to assess. Recent writedowns and writedown assessments by the board are behind the delay. It's a terrible look.

BROKER HONEYPOT
Metlifecare is to issue up to $100 mln in a new seven year secured, unsubordinated fixed rate bond (ranking the same as the company's bank). Metlifecare don't have an existing bond maturing about now, so this is 'new'. It will be priced at swap plus a margin which hasn't be advised yet. But it is likely to be heavily subscribed, not least because the brokers are heavily incentivsed (as usual) to commit client money. Brokers are being promised "0.50% brokerage plus 0.50% on firm allocations" - and on $100 mln that is a $1 mln honeypot.

SIMPLE LEGAL WORD, HARD TO INTERPRET
The Commerce Commission has filed High Court proceedings against UDC Finance, still a wholly owned subsidiary of ANZ, alleging that it charged unreasonable default fees. The Commission alleges that UDC’s dishonour fees and late payment fees were "unreasonable", in that they exceeded UDC’s reasonable costs and estimate of losses. UDC is defending the charges. The dispute is over the law's definition of 'reasonable'. The parties can't agree so they are asking the Court to decide. The Commission’s proceeding do not challenge the categories of costs that UDC has sought to recover in its late payment fees. Instead, the issue raised by the Commission relates to the way in which UDC averages costs across borrowers, and whether separate averages should be calculated by reference to differing periods of default, all quite technical.

GAS TO THE RESCUE
A new commercial natural gas field in the Bass Strait is to be brought into production to ease Victoria's shaky dependence on renewables, now that they are losing their taste for coal as a baseload provider.

WORLD-LEADING BENCHMARK
The NZX50 is ending today up about +1%. That takes it to another new all-time record. That is a remarkable +23% gain in the past year. Benchmarked, that compares with the ASX200 which is up only +8% in a year, the S&P500 which is up +3.4% and the Shanghai composite up +11.1%. The FTSE100 is down -0.7% in the past year.

SWAP RATES LEAP
Wholesale swap rates are up sharply today in a steepening bias. The two year is up +4 bps, the five year is up +6 bps and the ten year is up +9 bps. The 90-day bank bill rate is unchanged at 1.17%. Australian swap rates are up by similar levels to the NZ ones. The Aussie Govt 10yr is up a steep +16 bps to 1.09%. The China Govt 10yr is down -4 bps at 3.05%, while the NZ Govt 10 yr is up +13 bps to 1.19%. The UST 10yr yield is up another +6 bps to 1.58%.

NZ DOLLAR FIRM
The Kiwi dollar is little-changed at 63.8 USc. Against the Aussie we are a little firmer at 93.6 AU cents. Against the euro we are unchanged at 57.8 euro cents. That puts the TWI-5 up at 69.2.

BITCOIN STABLE
Bitcoin is at US$10,680, hardly changed from this time yesterday. The bitcoin price is charted in the currency set below.

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12 Comments

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Highlight new comments in the last hr(s).

Brokers are being promised "0.50% brokerage plus 0.50% on firm allocations" - and on $100 mln that is a $1 mln honeypot.

That constitutes serious slippage in this low interest rate environment for investors contemplating an investment of this type. In fact too much if one is concerned about return of capital.

The NZX50 is ending today up about +1%. That takes it to another new all-time record. That is a remarkable +23% gain in the past year.

Fools and their money could easily be parted, going forward.

...the iron law of investing is that a security is nothing but a claim on a future stream of cash flows. Valuation is a crucial determinant of long-term returns. The higher the price an investor pays for those cash flows today, the lower the long-term rate of return earned on the investment..

The corollary is also true. The lower the long-term rate of return demanded by investors, the higher the price moves today. So clearly, changes in investors' attitudes toward risk will strongly affect short-term returns. If investors become more willing to take market risk, it is equivalent to saying that they are demanding a smaller risk premium on stocks (that is, a lower long-term rate of return). Prices rise as a result. Now, the fact that current stock prices are higher also implies that future long-term returns will be lower, but that's part of the deal. Link

You haven't heard? Everything must go up.

Yes. This is what concerns me. The "everything bubble" is getting out of hand. Gold and silver got b-slapped last night and today, but you hardly argue that they're in the same boat as equities and the ludicrous house price malarky.

I'd like to think the PM's are different. Sometimes I think they're as rigged as the other markets, just in the opposite direction.

Not if you've been in it for the longterm. Same as having a house as an investment. Things go up and down. But holding for a long time is the key factor in successful outcomes.

With 49 Deals in 30 Hours, U.S. Corporate Bond Market Ignites

Companies are borrowing $74 billion in the U.S. investment-grade bond market this week, the most for any comparable period since records began in 1972. Since Tuesday, corporations including Coca-Cola Co., Walt Disney Co., and Apple Inc. have sold notes as yields have dropped.

And the frenzy isn’t letting up. At least another $50 billion is projected for the rest of the month, and the activity is spilling over to junk bonds and leveraged loans as well. With more than $16 trillion of bonds in Europe and Asia paying negative yields, investors worldwide are snatching up debt that offers relatively higher returns, keeping demand strong in the U.S.

Oi ! ...Winsome Peter's... yes you ... $ 98.4 m . for a rail upgrade . Serious , bro ?

.. the Gnats had a plan for a 4 lane super highway between Whangarei and Orc Land ... $ Billions in the upgrade ...

How many people have to die on this stretch of road before someone takes it seriously ... the Gnats were finally onto it .. Jacinda and Julie think we should catch a bus .... sigh , tisk tisk !!!

The Nats also had a plan to build several new bridges in Northland. Do you know how many were built......

.. yes , I do know ... but we're not talking about the sideshow here , a few bridges... the topic is the main road link between Whangarei and Orc Land ...

That is an upgrade which will boost Northland enormously... and save some lives on that treacherous stretch of 2 lane hell ...

You seem to have been fooled by politicians - reading elsewhere it would seem as if the $94m will merely be maintenance - the alternative being no railway at all. There may be a case for having a railway (gut instinct say yes) but an actual upgrade with speeds matching other countries and increasing double track, removing tight bends and replacing level crossings with bridges etc needs a seperate justification - but at least it would be a rail upgrade.

You do all know that Labour was going to shit can the whole new motorway project from Puhoi to Warkworth had National not started it just in time ?