What happened Wednesday

A review of things you need to know before you go home on Wednesday; no rate changes, dairy prices up, job ads down, few farms sell, Aussie confidence low, swap rates up, NZD down, & more

22nd Jan 20, 3:59pm by David Chaston

Here are the key things you need to know before you leave work today.

MORTGAGE RATE CHANGES
No changes to report today.

TERM DEPOSIT RATE CHANGES
Nothing here either.

DAIRY PAYOUT SAFE
Dairy prices were up +1.7% in the latest auction with WMP prices up +2.4%. That means from the start of the 2019/20 dairy season in September, prices are now up a net ... +7%. Since the start of 2020 they are up +4%. Forecast farmgate dairy payout prices of about $7.50/kgMS are now pretty safe - especially given we are now well more than halfway through the current season on a volumes basis.

MAIN CENTRE MALAISE
According to the latest Seek Job Ad data, the number of job ads in Auckland, the Bay of Plenty, Canterbury and Otago all declined year-on-year in Q4 2019. Wellington was the main centre with the largest increase (+5.8%) closely followed by Hawkes Bay (+5.2%). They were flat in Waikato.

WHO WANTS TO BUY FARMS?
There were only 153 farms sold in December, the lowest December since 2011 and -16% below the same month last year ... and -20% below the average December over the past four years. The number of dairy farm sales of just 23 was the lowest since 2009. If it wasn't for a big surge (74) in grazing property sales (to be taken out of production so they can harvest forestry tax benefits by foreigners?), the sales in December would have been dire.

LIFESTYLE BOUNCE
Sales of lifestyle blocks in December were reasonably strong, after a few soft months.

ANZ NZ APPOINTS NEW CHIEF RISK OFFICER
ANZ NZ has appointed Grant Knuckey Chief Risk Officer succeeding Bruce Macintyre who departed at the end of last year. Knuckey, who will also have responsibility for risk in the Pacific, has worked for ANZ for more than 20 years including in New York, Tokyo, Phnom Penh, China, Hong Kong, Singapore and Wellington. Starting on February 3, Knuckey will be based in Auckland. His appointment has received a non-objection from the RBNZ.

EQUITY MARKETS WOBBLE
Asian equity markets are lower yet again today, especially Shanghai. The Wuhan coronavirus threat is really messing with confidence in Chinese financial markets. Today in early trading Shanghai is down -1.2% and that means that all the trade deal gains have all been reversed in the past few days. It is a spreading infection; Wall Street closed down -0.3% earlier and may take another hit tomorrow if Shanghai suffers serious jitters today. (To be fair, so far today both the ASX200 and NZX50 are showing good gains today.)

NOT FEELING LUCKY
In Australia, consumer sentiment as measured by the Westpac-MI index is down sharply again. It is now near GFC lows. It is a similar result to the weekly ANZ-Roy Morgan index. By any measure, Aussie confidence is on the skids and the bush-fire situation isn't helping.

LOCAL SWAP RATES UP
Wholesale swap rates have lower today. The one and two year tenors are down -2 bps, and longer tenors are all -3 bps lower. The 90-day bank bill rate is unchanged at 1.27% after falling -2 bps yesterday. Australian swap rates are down about -5 bps across the curve. The Aussie Govt 10yr is down a sharp -6 bps at 1.11%. That has compounded to a -20 bps drop since the start of the year. The China Govt 10yr is staying lower at 3.09% although unchanged today. The NZ Govt 10 yr yield is down -3 bps at 1.53%. The UST 10yr yield has fallen today, down another -2 bps and now under at 1.78%.

NZ DOLLAR SOFT
The Kiwi dollar is slipping away today, now down to 65.8 USc and that is now its lowest in a month. Against the Aussie we are unchanged at 96.3 AUc. Against the euro we are at 59.4 euro cents. That means the TWI-5 is now just over 71.1.

BITCOIN HOLDS
Bitcoin is little-changed at US$8,724. The bitcoin price is charted in the currency set below.

This chart is animated here.

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28 Comments

by Kezza R | 22nd Jan 20, 4:15pm 1579662916

Last night there wa a minister on the news artical about getting more apprentices in the building trades and asking skilled workers to get back on the tools.
I got offered a job today as a qualified licensed build for $25 an hour. In April that rate will be $6.10 more than minimum wage but as a LBP carpenter I would be responsible for that job for 10 years after completion.
It's not worth going back on the tools till it is at least $35 an hour on wages. NZ is looking at bring in staff from overseas that will undercut me.
The dollars need to increase before they get some real progress, untill then I'm out.
Time to get a house and do a reno and flick it on.

by rastus1 | 22nd Jan 20, 4:29pm 1579663788

Just imagine what would happen to inflation if the cheap labor and mass immigration scheme was dealt with. The country is run by b#####tters.

by Kezza R | 22nd Jan 20, 5:22pm 1579666926

I had an idea that I'll jump back on the tools for a year or two and have some serious work life balance with zero stress, 4 days a week with three day weekends. That is compleatly off the table now unless I can find something for $35 plus an hour. Basically I'm forced to buy a old dunger house and reno it and sell paying the 30% tax or hold and rent it out. At present it's not that hard to add $100k value to a house after a good well thought out renovation if you know what you are doing. One down the road just made $350k over the price paid with a $50k reno at the most, still a $200k payday after reno costs and tax. At $100k I keep $66k of that and I've made more in three months than I would have made in a year.
Looked at a 5 bedroom house this morning $175k on a1000m2 section 40 mins out of town. I'll split it down the middle with a fire wall and add an extra bathroom / kitchen and rent out each dwelling and in the process doubling the value of the property due to ot now have basically twice the rental value.
Sorry Mrs Minister with manicured eyebrows and a hibiscus flower in your hardhat you aren't getting me back on wages.

by brisket | 22nd Jan 20, 6:53pm 1579672418

$25 is pretty paltry for a qualified builder.
You get that in a pretty average white-collar job that requires fewer skills and less responsibility.
Surely you could make more freelancing on some small jobs -- too much hassle?

by Lapun | 22nd Jan 20, 7:09pm 1579673367

See yesterday's report https://www.tvnz.co.nz/one-news/new-zealand/scammed-chinese-workers-wer… - quote "".. workers paid roughly $50,000 dollars each for visas and jobs in New Zealand "". You can't expect honest Kiwi workers to be able to compete with 3rd world immigrants on 3rd world wages. Other OECD countries are wiser.

by Kezza R | 22nd Jan 20, 7:22pm 1579674121

No need to pay the $50k 1100 wanted for Dunedin alone at zero dollars and I'm sure there will be some relocation / accomodation ncentive.

Everyone goes on about Trump's wall but if it was your job being values on what someone from another country would you object?

by Lapun | 22nd Jan 20, 9:27pm 1579681652

My son is an apprentice building worker. I would prefer his earnings to be related to what other Kiwis can earn for similar effort and experience. I fear his wages and his opportunities are set by the comparatively small immigrant work-force from 3rd world countries.

by Kezza R | 22nd Jan 20, 9:34pm 1579682097

I've done very well as a builder but it requires some serious hard yards renovating at night and all weekend for a 10 years and then throw a subdivision into the mix. That was the plan from the beginning though.

by Nzdan | 22nd Jan 20, 7:51pm 1579675882

I started on that 8 - 10 years ago sitting behind a desk all day doing entry level internal sales.

by youngdumbandbroke | 22nd Jan 20, 4:41pm 1579664494

Wonder how many of these overseas staff are competent and qualified in their trades? I'm guessing zero

by Kezza R | 22nd Jan 20, 5:12pm 1579666353

There are very few countries with regulations as high as NZ. They will get arround this by the company being compliant and staff paid to sign off. I dont think they understand the risk they are taking by doing this. They might get an extra $5 an hour to run these guys and take the risk.

by Becnz | 22nd Jan 20, 7:59pm 1579676351

Good luck with getting $35 per hour it seems Labour and National are keeping the flood gates open to keep the ponzi scheme of 100 000 plus per year to make our economy look strong to the rest of the world going. The average person will become poorer well the wages are kept low to benefit the big business owners who profit from this cheap flow of desperate labour from overseas who will work for less than locals because the conditions in there own countries are so poor.

by Kezza R | 22nd Jan 20, 9:11pm 1579680684

I guess that Jacinda isn't as pure as she makes herself out to be then.
I wonder how much a half page advert in the local paper of a highly contested area would cost. $3k - $5k... I'm sure I'll get a quarter of a page for that.

by Te Kooti | 22nd Jan 20, 9:21pm 1579681268

KR, I had no idea just how endemic cheap foreign labour is within NZ industry - it's an absolute scandal. Apparently there are very few apprenticeships offered these days, why bother when you can get cheap labour at the drop of a pin. This is crying out for a decent investigative journalist to run with.

by Kezza R | 22nd Jan 20, 11:15pm 1579688110

I rang around a few labour hire companies this afternoon, start at $25 to $28 supplying your own hand and power tools. I would have over $5000 in tools and need a van to transport them, these all need replacing and they need to be electrically tested to be on site. I am liable for the work I carried out on the job for 10 years. I.e. if I clad a house and used 60mm nails as the council approved plans stated and the law changed a day before, I would have to pay to totally record the house and repair any damage (plans always state 'all work to NZ 3604 standard), $20k would be just the start of something like that and much more when lawyers and damage has occured below the cladding. $70k it cost a mate of mine a year ago with the very same example. Insurance doesn't cover it because as the plan stated all work must be compliant to NZ3604 and that was not done.

They are screaming out for builders but as I told them it's just not worth my time when I could easierly find my own work at $55 hour.

by Kate | 22nd Jan 20, 9:50pm 1579683039

Can't believe it - have rates gone that backwards since the flood gates opened on cheap labour?

Check this out from 2004 -

https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=3609844

by Kezza R | 22nd Jan 20, 10:28pm 1579685282

I think those are charge out rates, wages would be lower. In that time frame I was charging out $45 an hour in Wellington. I think it's arround $50 - $55 now. Still not much of an increase v the price of everything now. 2004 a pie for lunch was $2.50, now $4.50.

by Lapun | 22nd Jan 20, 10:28pm 1579685314

Thanks for the link. I hope Ms Ardern is reading your comment.

by Andrewj | 22nd Jan 20, 4:21pm 1579663283

Central banks fuel ponzi market

https://www.guggenheiminvestments.com/GuggenheimInvestments/media/PDF/C…

by streetwise | 22nd Jan 20, 6:11pm 1579669892

If the country hits the skids what happens to all the young building apprentices we've being churning out. Do they know they've been trained for a boom-bust industry; the two options I see would be:
Fixing our hospitals and being employed in infrastructure developments.
Renovating all the investment houses that have been bought by absentee owners who won't, or don't know how to, look after them. There are plenty around. I live in a 'leafy' central suburb and you can tell at a glance the ones which are tenanted. I have two cousins who own life-style blocks on the same road in a rural South Auckland.

They were telling me that two properties on the same road that are owned by absentee overseas owners are in a disgracefully neglected condition...wildly overgrown road frontages and not even a goat to help keep the tangled growth down.

by brisket | 22nd Jan 20, 6:56pm 1579672569

Maybe it's all part of the plan -- commence Kiwibuild for real once market demand has tailed off, avoid unemployment and increase housing supply without the capacity problems KB faces atm.

by Nzdan | 22nd Jan 20, 7:50pm 1579675827

Complete with Dandelions that resemble sunflowers?

by J.C. | 22nd Jan 20, 6:41pm 1579671680

Schiff animated as usual.

“I think if Trump is not re-elected, if we get like, President Sanders, gold should go above $2,000 this year, and if it’s not above $2,000 by election, it should be $2,000 election night once we get the results,”

https://shorturl.do/Q3mnf

by solardb | 22nd Jan 20, 8:13pm 1579677192

I think anyone, trying to run a trial with no evidence and no witnesses allowed, would become "animated".

by GV 27 | 23rd Jan 20, 7:04am 1579716261

Funny to see the knives come out for Sanders from the Democrat stalwarts once he starts getting momentum up, like clockwork. Yesterday Clinton saying no one likes him, Schiff today. How Americans don't see it for what it is remains baffling to me.

by fat pat | 22nd Jan 20, 10:25pm 1579685106

Re: Coronavirus. 14 healthcare workers infected by a single individual! If the morality rate is high this will be a huge global event.

by Pragmatist | 22nd Jan 20, 11:37pm 1579689438

morality rate? aren't we at all time lows already? :)

Mortality rate.. now that is an interesting one. This could be the solution to the housing crisis! If Wuhan flu kills off 20% of the population, the housing crisis is resolved in one fell swoop. Not the solution anybody would wish for, but it might be what nature provides.

by fat pat | 23rd Jan 20, 12:14am 1579691687

ha auto-correct. Yes indeed, morality's at an all time low. I think 1.5 billion dead might be deflationary for everything. More central bank easing required?