Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
No changes to report again today.
TERM DEPOSIT RATE CHANGES
FE Investments have brought back their 3.80% six month rate offer.
PERSONAL LOAN 'SPECIAL'
NZCU Baywide (and cousin NZCU South) has a personal loan 'special' that has rates that start at 8.90%, a full -1.00% lower than their previous rate. The personal loans business is under serious challenge from Buy Now Pay Later schemes.
NEARLY CHEQUE-FREE
Kiwibank is now less than a month away from going cheque-free. It is encouraging customers to bank any remaining cheques they might have before 28 February 2020. It first announced the cheque-free status in May, 2019, and now has only a small handful of hold-outs to transition away from the historic payment method. After the end, it won't issue or accept cheques from anyone, including competing banks. Cheques have never been legal tender in New Zealand.
LISTING JUMP
The housing market should be buoyant over summer with an increase in new listings in January although overall stock levels remain tight.
EARLY SIGNS AREN'T NOTABLE
December labour market data released today via StatsNZ and MBIE shows that it held up moderately well but unspectacular. Although there was an unusual drop-off in year-on-year employment in the rural sector, some of that may be explained by early November hiring. Goods-producing industries saw modest employment growth, and service sector firms also are hiring more, and a little more than seasonal factors suggest. However earnings growth, while still positive, was up at its slowest page in 2019 since 2012. Full labour market data will be released on Wednesday.
VERIFONE SEEKS COMCOM CLEARANCE TO BUY SMARTPAY
The Commerce Commission says it has received a clearance application from Verifone New Zealand to acquire the assets used by Smartpay Holdings Limited and its subsidiaries to operate the Smartpay business in New Zealand. Verifone, through subsidiary Eftpos New Zealand Limited, supplies terminals directly to merchants under the EFTPOS brand. It also supplies payment terminals to resellers on a wholesale basis and provides payment processing services. The parent company of Verifone New Zealand, Verifone, Inc., is a global manufacturer and supplier of terminals and payment processing services. Smartpay is also a supplier of payment terminals to merchants in New Zealand.
HARD TO KNOW
In Australia, building consents dipped less than expected in December and ending a poor year for home builders. This follows a sharp +11% jump in November. Analysts had been looking for a -5% pull back but in the end it was only -0.2%. But still, NSW data is messing with the interpretation given some major administration shifts there. Without those, the decline was more like -1%.
FACTORIES SLOW
Things are hardly better in their manufacturing sector. The AiGroup PMI came in very weak, contracting sharply at 45.4. Five of their six sectors shrank. Their internationally benchmarked PMI contracted too, but not as sharply.
SAVED BY HOUSES
But Australia's housing market confidence is rising. The national home value index up by +0.9% over the first month of the year, taking the annual growth rate to 4.1%; the fastest pace of growth for a twelve month period since December 2017. In Sydney, that rise was almost +8%; in Melbourne the rises was marginally higher.
RAIN, BUT LESS WATER
And significant rain in NSW has come at a crucial time. But it isn't widespread. Their water storage is now down below 42% capacity and still falling quickly (almost -0.5% per week). It is not yet clear whether today's rain will fix anything however.
DOWN, BUT IT COULD HAVE BEEN WORSE
The NZX (-1.5%) and ASX (-1.2%) have opened sharply lower today in early trading following Wall Street's sharp sell-off (-1.8%) at the end of last week. The very early opening indications are that Tokyo (-1.0%), Hong Kong (+0.4% and Shanghai (-7.4% after opening down -9.1%) are also moving aggressively. Shanghai of course involves a catchup after the weeks-long holiday. It is unclear how a Beijing 'put' (Beijing-directed buying to hold up prices by State Owned Enterprises) in affecting markets.
LOCAL SWAP RATES STAY DOWN
Wholesale swap rates are very much lower today, dropping -5 or -6 bps for all tenors. These are sharp falls and the 1-5 curve has turned negative again, for the first time since October 2019. The 90-day bank bill rate is unchanged at 1.26%. Australian swap rates are also lower across the board but by only by -1 bp in early trade. The Aussie Govt 10yr is down -6 bps today to 0.92%. The China Govt 10yr isn't being quoted yet. The NZ Govt 10 yr yield is down -7 bps at 1.25%. The UST 10yr yield sank lower to under 1.51% earlier but is at 1.53% now.
NZ DOLLAR SOFTER
The Kiwi dollar is little changed so far today at 64.6 USc. And we have unchanged against the Aussie at 96.5 AUc. Against the euro we are down to 58.3 euro cents. That means the TWI-5 is still lower at 69.9 and a -2.4% devaluation since the start of the year.
BITCOIN UP
Bitcoin has resumed rising, up to US$9,393. The bitcoin price is charted in the currency set below.
This chart is animated here.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
22 Comments
1) More houses listed - comparing January with December and it's up by only 3%
2) Housing stock down 21.7% compared to the same month a year ago.
Both are factually correct.
Each person has their own choice of which data point they believe is more relevant for their own purpose.
A review of things, lots of things
https://youtu.be/AuO2ZQBN9gI
Comedy Gold.
The second half, from minute four 4.
A routine that Leslie Neilsen would be pround
More questions over Auckland skyscraper project's building standards
https://www.rnz.co.nz/news/national/408740/more-questions-over-auckland…
Those photos are enough to shake you to your very foundations.
Bad news.
Peak Prosperity
Confirmed cases mainland china: 16,615.
Now showing 17,422.
Politics and the Coronavirus:
If NZ avoids any cases of Coronvirus you will surely see Labour win the election. In particular NZ can then promote itself to tourists as a safe place to visit.
If we get just one case then the COL is dog tucker. I am worried that the COL has left precautions a little too late, and don't seem to be ruthless enough with quarantine procedures. Compare our precautions to Indonesia's.
You forgot the debt
https://www.reuters.com/article/us-global-debt-iif/global-debt-shatteri…
So almost all the claimed GDP is actually negative.
Shanghai (-7.4% after opening down -9.1%) are also moving aggressively. Shanghai of course involves a catchup after the weeks-long holiday. It is unclear how a Beijing 'put' (Beijing-directed buying to hold up prices by State Owned Enterprises) in affecting markets.
Who is holding up market values?
Baby Boomers Paid A 6.6x PE For The S&P In 1982. Millennials Have To Pay 31x
Yet 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
Saw a comment where government agency in China is restricting short selling in China markets until 7 February. Also dissuading long selling. Difficult to implement for mutual funds if they're experiencing redemptions or investors switching out of equity funds into bond funds / cash funds.
"The very early opening indications are that Tokyo (-1.0%), Hong Kong (+0.4% and Shanghai (-7.4% after opening down -9.1%) are also moving aggressively. Shanghai of course involves a catchup after the weeks-long holiday"
The market price changes in the mainland Chinese stock markets (Shanghai and Shenzhen reflected in CSI 300 Index) are an illustration of effective supply vs underlying supply. Market prices are impacted by effective supply, not underlying supply. Note that underlying supply is effectively unchanged from seven days ago - i.e there has been little or no issuance of new shares into the market. However effective supply has increased. This is how market price changes occur in free markets.
Some questions to think about:
1) Now can an imbalance between effective supply and effective demand happen in housing markets?
2) What are the necessary conditions for an increased probability of an imbalance between effective supply and effective demand in housing markets?
Many active sellers in Chinese stockmarkets were unable to sell.
https://www.bloomberg.com/news/articles/2020-02-03/trading-china-s-wors…
"Many traders unable to exit positions fast enough at reopen"
"Though investors turned on computers hours early to tee up their sell orders, many of them couldn’t exit the market fast enough. All but 162 of the almost 4,000 stocks in Shanghai and Shenzhen recorded losses, with about 90% dropping the maximum allowed by the country’s exchanges."
One other experience from history. During the Asian Financial Crisis in 1998, some South Korean owners of property in NZ were forced to sell their property located in NZ due to cashflow strains in their home country in South Korea.
Could NZ property owned by non resident and offshore owners who have financial commitments or financial stresses in their home country be forced to sell?
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