A review of things you need to know before you go home on Tuesday; big new gas discovery, tough economic choices, new support for uni students, record high immigration, NZD rising, & more

A review of things you need to know before you go home on Tuesday; big new gas discovery, tough economic choices, new support for uni students, record high immigration, NZD rising, & 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.

TERM DEPOSIT RATE CHANGES
None here either. Nelson Building Society (NBS) has trimmed -10 bps from its six and nine month TD offers to 2.55%.

SIGNIFICANT FIND
The local oil and gas exploration industry has just got some positive news. OMV has today announced a positive result from the Toutouwai-1 exploration well which drilled 50km off the Taranaki coast. Preliminary results show positive findings for hydrocarbons (natural gas and oil). We haven’t had a commercial discovery since 2006 and this one look like breaking the drought. OMV have yet to confirm commercial development, but if they do it secures our natural gas supply for a long time yet.

TOUGH ECONOMIC CHOICES
Treasury sees unemployment returning to normal in four years after hitting a potential high of almost 10%, and nominal GDP returning to present levels in two years' time - provided there is much more government support; Finance Minister says additional support is "well advanced". Westpac thinks Treasury is looking at a "massive" +$20 bln in extra economic support for the economy.

DROPPING TO A DEAD STOP
Total visitor arrivals fell steeply in February, down -45,200 (-11%) to 372,700 when compared with February 2019 – the biggest drop in arrival numbers for any February month on record, Stats NZ said today. But of course March will be much worse, and April will see this data fall to virtually zero.

A RECORD HIGH - BEFORE A RECORD FALL
The same Stats NZ data for migration showed provisional estimates for the year to February that indicated +65,200 more migrant arrivals than migrant departures. At that level, annual net migration may be the highest on record, surpassing the previous peak of about 64,000 in mid-2016. When the borders reopen, only returning citizens will be arriving - and there may be more of them than you might otherwise assume, keeping the migration growth bubbling despite closed borders.

ME TOO
Non-bank lenders are pleading for Government support to "help them" provide working capital support for SMEs - just as the Australian Government has done. Here, non-bank lenders have been left out of the Business Finance Guarantee Scheme, just as building societies and credit unions have been left out of the mortgages deferrals scheme.

HERE'S $50 MLN
Southern Cross Health Society has "pledged to return $50 mln to its members" and business customers as a result of the coronavirus pandemic. They feel their members need the funds more than they do at present. They have 880,000 members and 4000-plus business customers. It won't be a cash refund, rather their plan will see a credit based on a percentage of each policy’s premium applied as soon as possible. Members who have experienced a loss of income and are no longer in paid work can put their policy on hold for up to six months, while members who have not lost their income but are otherwise experiencing financial hardship can put policies on hold for up to three months. But, and its a big but, those who do this cannot make claims while their premium payments are on hold.

SUPPORT FOR STUDENTS & UNIVERSITIES
The Government has announced two programs to help the tertiary education sector. The cost of the package is $35 million in operating funding and $98 million in capital expenditure. For students, they are increasing the student loan amounts available for course-related costs for full-time students from $1,000 to $2,000, on a temporary basis; and making support payments for students unable to study on-line, for up to 8 weeks.

LOCAL UPDATE
There are now 1366 Covid-19 cases identified in New Zealand, with another +17 new cases today and lower than the +19 increase yesterday. That is the lowest daily increase in more than three weeks, since March 22. The number of clusters is up to 15. Five people have died here now. There are now 15 people in hospital with the disease today, with three in ICU. Far more people recovered today (82) than were infected and our recovery rate is now up to 46% and rising fast.

GLOBAL UPDATE
Worldwide, the latest compilation of Covid-19 data is here. The global tally is now 1,920,000 and up +23,000 from this morning. 30% of all cases globally are in the US and they are up +30,000 in one day to 588,000. The Americans are still claiming the disease is peaking there, but there is no real evidence of that yet. China claims its recovery rate is now up to 94%. Australia now has over 6300 cases, a peaking, and 61 deaths. Australia's recovery rate is 28%. Global deaths now exceed 120,000.

GOING SEPARATE WAYS
The S&P500 ended its session earlier today down -1.0% after clawing back some of its earlier losses. Shanghai (+0.7%), Hong Kong (+0.7%) and Tokyo (+1.9%) are all higher today in early trade. Locally, the ASX200 is up +0.6% and the NZX50 is up +1.8% so far.

NEAR DEATH
In Australia, airline Virgin Australia is in a trading halt pending a existential reorgainsation. The big question is, will there be a bailout? And if so, Qantas will demand one too. It could get ugly and expensive either way.

SWAP RATES UPDATE
We don't have wholesale swap rates movement details today yet. We will update this later in the day if they show a significant change. The 90-day bank bill rate slipped -1 bp to 0.44%. The Aussie Govt 10yr is down -5 bps at 0.92%. The China Govt 10yr is unchanged at 2.55%. The NZ Govt 10 yr yield is down -2 bps at 0.96%. The UST 10yr is up +2 bps today to just under 0.77%.

NZ DOLLAR RISING
The Kiwi dollar has been rising today, up more than +1c to 61.2 USc. Against the Aussie we are soft at 95.3 AUc. Against the euro we are firm at 55.9 euro cents. That means the TWI-5 is now up to 67.2 and a one month high.

BITCOIN HOLDS
The price of Bitcoin is marginally firmer now than where we opened this morning at US$6,885. The bitcoin price is charted in the currency set below.

This soil moisture chart is animated here.

The easiest place to stay up with event risk today is by following our Economic Calendar here ».

Our exchange rate chart (including bitcoin) is here.

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77 Comments

17
up

Do we want warm, dry houses, or not? I lived through the transformation caused by abundant North Sea gas piped throughout Britain. Over a period of 20 years, every house went from cold, draughty and damp, to warm and dry. Canada and the US use gas heated air flowing into every room, again, giving them warm, dry housing. Why do we not have this?

.yeah okay Roger, but what do we do with the carbon ...or amidst the excitement of the virus have you forgotten about the real curve that needs flattening?

I think we would be better suited to doing that with electricity. A ducted heat pump costs about $6k to install, much cheaper than getting gas to every property. And the heat pump will be mostly emissions free.

how much will it cost to run it?

13
up

A heat pump is not an efficient way to heat a home, unless you have lived in a radiator centrally heated house, you might think that a giant hairdryer on your wall is effective heating, but it isn't it causes cold spots, it leaves no radiant heat. It's drying. SIGNIFICANTLY less healthy and pleasant than radiators. Water is a much more efficient heat conduit than air, plus heat travels upwards so having your heating near the ceiling is inherently inefficient.

However, you can have radiator central heating without gas. I radiator system can be heated via more sustainable methods. In time the costs of those will also come down.

I've lived in so many house in NZ with heatpumps, but as soon as I bought my own place, I had radiators installed. There is no comparison. The floor ducted heaters are better than the wall mounted systems, and don't cause the cold spots if they are well positioned, but air is still less efficient than water for holding and transmitting heat.

I have lived in the UK and yes radiators are fantastic. But ducted heat pumps are pretty good too, and they provide cooling which is starting to become a necessity especially this year. Couple them with a heat exchanger and you’re getting nice fresh warm air throughout the whole house without that much operating cost. We have friends with an old villa and they decided to spend their money on a grand heat pump system rather than insulation. There house is always a great temp day and night and while it isn’t cheap to run without the insulation it’s not as bad as I suspected.

18
up

Yes, we want warm, dry houses. We do that by raising their insulation standards, not by blasting hot air into them to seep out through the cracks.

Insulation alone does bugger all. You still need a source of heating and what most NZ houses lack is a central form of heating that heats the entire house to an even temperature day and night. Ducted heat pumps do a pretty good job of that.

Insulation does bugger all? Yarn

Insulation does bugger all? Oh man, you might want to google passive homes.

Alone is the key word. Passive houses aren't insulation alone, low air change is critical as is allowing for the effects of solar gain.

Yes indeed, I remember as a child getting central heating installed. Every year the man from the gas board came to check that the boiler and the gas fire were working correctly. One hell of a shock when we came to NZ and there was no heating at all. Funny moment though in a high end store in Newmarket a few years ago when we were admiring a tall radiator on display.... the young 20 something assistant went onto explain that central heating was a new concept! Maybe here in New Zealand I replied but in the UK we have had it since the 1970’s..... she seemed genuinely surprised!

Nonsense. We had diesel-fired central heating in the early 60's.

But perhaps you folk ought to think about how long the North Sea fields will last. Britain is at the end of a long gas line from Russia, last I looked.

https://www.bbc.com/news/business-43421431

Air source heat pump, ground source heat pump, Brits are converting to these systems away from Gas.

Start with architects and builders and monopolies in building materials first..

No, upgrade house quality and insulate property first. It's criminal how poor our housing stock is.

My current house was originally built in the 50's and was cold and was the epitome of cold and draughty when we purchased it. Almost immediately after buying it my wife and I began retrofitted insulation in roof, walls and underfloor and doing some serious draught-stopping. The first winter we lived here (before the renovations) our kitchen would get down to 8C overnight in winter. Since our modifications, I've never seen it lower than 16C (with no supplementary heating). In winter we passively heat with sun on clear days with no heating in the evenings or overnight (in the South Island).

It's really not rocket science. The amount of houses that people do 'cosmetic' work but fail to improve the thermal performance of the house appalls me. Three owners prior to use did nothing about these massive issues. The other thing is most people have no clue how to use curtains effectively, they need to touch the floor to prevent a convection loop from forming and to seal an air pocket. When I drive at night in winter I'm shocked to see so much bare glass or poorly fitted curtains, these people are just hemorrhaging heat from their homes.

Start with low-hanging fruit.

I agree, but the main issue is cost (and in some cases access).

Roger, we dont have warm, dry houses because NZ has a collective psychosis that the country is located on the equator.

2020 and the current standard for heating is a heat pump in the living room. This is the equivalent of a single coal fire.

Until the penny drops that central heating is essential we will forever live in cold homes albeit modern insulation may make them slighty warmer than those built in the 80s and 90s.

12
up

With all the projected job losses coming I expect that immigration will grind t a halt too.

No point moving here if there are no jobs

Unless you are a Kiwi expat and returning for the dole or a cashed up Kiwi expat returning home to be safe.

Kiwis who leave this country tend largely to be skilled workers who move away for better employment prospects. That's why it's called the brain drain.

To be safe would be a good reason to come back.
Then we have the quick jump unskilled Mozzies.

Disregarding family reasons, I don't see many coming back. The only way I can see that happening is if mass job losses overseas bought a massive nationalistic movement in these countries.

Even then, doubt it will happen here in Australia.

Agreed anyone thinking 600000 Kiwis will flock back like sheep are dreaming we will only get people who have no jobs/money coming back otherwise most will stay put with a house and a job where they are now.

Correct. Pretty hard to spend given the current climate, so the reality of a paycut/reduced hours isnt as bad as it seems for most people. Even the kiwis in Australia with hours reduced to zero are getting 3k per month until September from the government.

With things like the jobkeeper grant and access to super here in Australia youll need worst case scenario before people look to head home.

That will be a wait and see what happens in the US. If they can not keep infections rates there, the Kiwis in Oz will head back home to get out of harm's way.
I very much doubt it that the US have seen even a quarter to the real amount of infections and deaths that they will see yet.

I doubt it. The incentive to be in NZ has just got much stronger. No job in NZ is much better than no job in 3rd world countries especially if you have children needing educating or health conditions needing treatment.
I'd be happy if INZ offers resdency to all the nurses in our care homes who are currently on work visas.

They should get one with the work they do. Special times why not.

34
up

covid 19 is doing what a lot of political parties said they would do but failed to. ie the cutting of importing a low wage workforce and our high immigration settings

20
up

The silver lining in a very dark cloud.

26
up

Burger King was a large user and abuser of imported labour for the last few years so interesting to see them fall over while trying to use the cheapest possible labour they could find ????.

10
up

There is an incredibly clear connection between junk food and a whole host of health issues. If fast food joints fail, we will see less obesity, diabetes and heart disease. More wins!

A month of no fastfood will break addictions to fastfood which I hope people keep away from after lockdown.
But I am sure they will have a huge marketing spend and slash prices to draw back many who like you say are suffering from these food chains.
Also these same people are some of the higher risk from CV19 not that our PC government will admit it as they will prob be called fat shaming.
https://www.bloomberg.com/news/articles/2020-04-09/u-k-may-warn-the-obes...

yep..double the gst on fast food and completely take it off fresh fruit and veges and other nutritious foods. Right now current tax policy promotes a massive unhealthy lifestyle by taxing foods that are nutritious at the same rate as chemically processed, cancerous, obesity causing convenience foods.

Lets replace those low-paid immigrants with some of the top flight down-right brilliant experienced engineers and scientists laid of by many collapsing businesses world wide - for example some of those Indian PhDs made redundant by airlines and who never have considered NZ will now give us a chance. Its criminal that the best of India has gone to California while we got the pleasant middle-class middle-ability workers you find in petrol stations and my local New World checkout. Low paid workers from wherever took Kiwi jobs and various governments allowed it because they couldn't care less.

Very interesting watching NZX and most other markets going up at a pace that seems to think everything is back on track ????
Watching AUD gain against NZD is maybe signaling more confidence for Aussie as they will be back open to business with most of the world while we will be stuck in limbo waiting for a possible vaccine.
Next few weeks are going to start showing more failures just today Burger King today which will flow through secondary suppliers who may all be in trouble if BK has not been keeping up with payments to suppliers.

tesla jumped a huge amount over the last week and reports are coming out that they will only make 1/2 the amount of cars as last quarter, sometimes people are looking for good news that is not there

Tesla was interesting that it boomed just before this crash started and now it seems to be showing us again that people are still very bullish or maybe crazy to buy in at these level again ????.
Even AIR is going up like they have no problems maybe I am missing something that everyone else knows or maybe your revenue falling from 6 billion to 500 million is a good thing in this day and age.

Well, take a look at this report on the Chinese new car market. Tesla sales are now booming there and apparently people now want a car to travel in not public transport due to fear of germs. This Covid is certainly having some unexpected outcomes.
https://electrek.co/2020/04/13/car-boom-begins-in-china-with-a-wave-of-n...

by Becnz: Burger King had already well and truly lost the plot; who do you know who's bought a burger from them in the last decade? I suspect its suppliers have known for ages that the writing was on the wall.
The share markets will always bounce back if you look at historical statistics.

I actually like his idea. As someone with financial education and qualification background, i have been thought again and again that shareholders of an entity are entitled to their profit because they are totally unprotected for risks. At the same time, as a human being, consumer etc, i hate to see companies providing goods and services fold and people lose their jobs.
Nationalising these entities will achieve both objectives. A) allow all equity to wipe out as it should B) deal with creditors for a fair price of a debt that would never be recovered C) continue to operate the entity until it can operate on its own feet again and then sell it back as a profit (for all taxpayers to share).
As for banks, I think the government must at least force them for extra taxes on their future profits, impost a very heavy tax on high incomes of its people (lets say 60% at more than $500k a year and 90% at more than $1m)

Just as long as Air NZ does NOT decide to buy it. RIP Ansett.

Don't bail it out. Let the investors, bond holder etc wear it. If it's got any potential then it will be purchased by someone with more finance and more skills at running a business.

You think a bunch of politically appointed govt folk could run an airline?

" the acquisition of property on just terms from any State or person for any purpose in respect of which the Parliament has power to make laws."
Kind of what I meant by Nationalisation.

The new owner couldn't keep the name, but. Think about it.

Tremain though of that one first - we lost him through excessive PC'ness. Pity, when society can't laugh at itself any longer, it's in trouble.

I wonder about the companies, and there is a NZ version, that specialise in dressing up IP and increase the paper value of companies. These valuers are surely toast?

The rumour is that Cruella at ANZ might have a valuer in her little black book that will put whatever value is required on paperwork...

AI will sort it out...where are all those robots? Who turned them into ventilators - pure genius!

14
up

Can someone in the media hold the government to account over the record immigration figures... ...anyone?.....crickets.....

16
up

Nah they have all bought into the high immigration / high house price ponzi.
Or they are lefties who think it's *racist* to question very high levels of immigration.
Anyway it's all rear view mirror stuff, immigration will be dead for a long time.
The virus has done what our useless, lying politicians couldn't do

Are the numbers affected by returning kiwi? Otherwise yes damn straight.

we have always had a negative fiqure for kiwis ie more have left than returned, that will change for a short period

What is wrong with the Aust medical attitudes.?
https://www.google.com/amp/s/www.dailymail.co.uk/news/article-8163143/am...

https://www.google.com/amp/s/www.perthnow.com.au/news/coronavirus/corona...

I have experience of the Burnie Tasmania, hospitals mentioned in the last web site.
Travelling there 3 years ago I damaged my leg in a bush accident. I quickly drove to their A&E and presented. Straight out of Little Britain, I was standing, dripping blood on the floor as the old crone said "Computer says No" as I had no Medicare Card.
After half an hour of me getting fainter and trying to make sense of various paperwork a young assistant came to my side and the crone returned to her sudoku.

Speaking to friends about my experiences they said the hospital had a bit of a rep as a place to avoid.

Just a standard Ozzy attitude.

I would think thats the end of thermal coal in New Zealand,

And the world...

Lockdown looks longer.

https://vimeo.com/nzparliament

Sounds like the public health response system is not yet up to it. Cannot support a release from lockdown.

Tracing system is poor & described as being built and of the bit being built, yet to be tested. It's a mix of dhb and moh, they have no app yet. It's not clear if they have determined its spec yet.

Aged & care facilities processes are too variable, and process of good facilities are yet to be transferred to other facilities.

Generous Test kit resources & supply chain capacity not yet operating.
Broad regiment of testing including Sentinel testing not yet operating

https://vimeo.com/nzparliament

Form your opinion of calibre of govt. private sector engagement.

I formed my opinion of the take-down of publicly-owned infrastructure, by self-serving privateers, a long time ago.

As I watched the commercial-governance model being applied to health, and partially-applied (school BOT's) to education. The problem is with the myopic focus of 'business' - the aim is efficiency, which is the opposite of resilience. Add to that the push from private medicine (represented by Woodhouse) to oust public by making it wither and die.

Then you say compare?

Well, when every three years folk screech "TAX CUTS!" over everything else, it's unsurprising that we now discover the downside to that. There's a long way to make up.

Rubbish. This has nothing to do with tax or funding cuts - and everything to do with incompetence.

the 'me too' non-bank lenders - looks to me that perhaps less than 25% of their book relates to SME business;

https://www.rbnz.govt.nz/financial-stability/overview-of-the-new-zealand...

Has everyone forgotten South Canterbury... lost to Country about $1.5B. Then all those other non bank lenders that went down the tubes..... let them all go down and let the businesses come to the "normal" banks.

Hopefully Kiwi Bank and the Co-Op and away from the Ozzie banks.

SCF lost 600 million in the end and the people that brought the assets of the receivers made a fortune
https://www.nzx.com/instruments/SCL
https://www.dairyholdings.co.nz/about-us
https://en.wikipedia.org/wiki/Helicopters_(NZ)
there was a bit of profit making as the receivers just sold assets for what they could get for them in the midst of the GFC

i expect to hear a mike hosking rant tomorrow how essential he is, "this is bs and unlike normal people i shouldn't be included in this"
NZME has requested all staff on a salary of more than $50,000 per year take a 15 per cent pay cut for 12 weeks
The request from NZME matches similar measures taken by MediaWorks, which asked its staff in early April to take a 15 per cent pay cut or face widespread redundancies.
.https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=123...

They've also already made lots of staff redundant. But redundancy has been a constant cloud looming for NZME staff, this was just the last straw. They have long been a dead man walking.

How is media works still around?

End of last year they were bleating they might not see in 2020. Now they seem to be all happy.

Have I missed something?

Re OMV Gas: "but if they do it" should read 'But if they are allowed to do it'. There'll be Snails....

I'd say the Maui dolphin will cause enough of a roadblock

Michael Reddell is not best impressed with the Treasury lotto dip.
My bolding.

....the basic level of shock underlying them all still looks as though it is a bit optimistic – less perhaps about the June quarter ... but about things like the pervasive level of economic uncertainty that seems likely to persist (and be reflected, for example, in a willingness to invest and to lend). Perhaps one way of seeing that is to do the thought experiment of what if domestic interest rates were assumed to fall by another 500-600 points (and some associated fall in the exchange rate). Then the speed with which economic conditions get back towards normal in these scenarios might have seemed more plausible – consistent with past serious recessions. As it is, it looks a bit as though they have – consciously or not – assumed away some of the severity of the problem, in turn keeping the spotlight off the Reserve Bank and off their Minister who has the power to compel the Bank to act.

Are Burgerking and Blackstone the ultimate in reasons to shut down overseas "investment". Where's the OIO?

I'm not sure Treasury understand what they write either.

WTF, Chinese wet markets have reopened in Wuhan, with WHO's backing.
Once again...WTF

Rediculous decision. but wait, it's the US fault though isn't it! (Sarcastic grin).

Google search algorithms as usual make it hard to find anything that CNN and the Democratic Party don't want you to find so please find the full media briefing below.

So Jacinda blocks China travel in early February and we support it saying it's the right move. It was the right move IMHO. Trump blocks china travel late January and is labeled racist. Media state the briefing below as propaganda? What isn't these days? I enjoyed the explanation. Kudos to all those on the front line everywhere!

https://video.foxnews.com/v/6149155379001#sp=show-clips