Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
No changes today.
TERM DEPOSIT RATE CHANGES
Kiwibank chopped between -1 bps and -20 bps from most of their term deposit rates yesterday. Today, HSBC made similar reductions on rates to 1 year, and Heartland Bank also did the same for rates out to 5 years.
A MARCH BONANZA
A bumper kiwifruit harvest and higher prices for milk powder and meat saw our exports reach $5.8 bln last month. So we went into the lockdown with a trade deficit for the year to March of -$3.456 bln, the lowest March year result since 2015. Imports for the year were unchanged at $64.1 bln (but up +61% in ten years), but the real star is exports which were up almost +4% to over $60 bln for the first time ever. Annual exports are up only +53% in ten years however.
MORTGAGE MONEY FLOWS STRONGLY INTO LOCKDOWN
New figures show the banks wrote out the biggest amount for mortgages in a March last month since 2016; first home buyers had a pre-lockdown surge.
MORE CHINA
That same trade data shows that the trade surplus with China rose from +$1.98 bln in the year to March 2019, to +$4.11 bln in the to March 2020. For Australia, our trade suplus shrank from +$1.7 bln to +$1.3 bln. For the USA, our trade deficit shrank from -$0.9 bln to under -$0.7 bln. And for Japan our trade deficit also shrank from -$1.1 bln to -$0.5 bln. Fonterra is reaping benefits from its China exposure.
MORE RURAL
Exports from our rural sector made up almost 73% of all goods exports in the year to March 2020, and that was higher than the just over 71% in the same year to 2019. With the demise of tourism, and the struggles of the education sector, rural exports are sure to become an even larger proportion of how New Zealand earns its way in the world.
TOUGH GOING, BUT NO DOWNGRADE
Credit rating agency S&P has been reviewing the prospects of the big Aussie banks. They see big credit losses, especially as they expect Aussie house prices to fall by -10% in 2020. But they also see these banks strong enough to not only survive, but also retain their existing credit ratings (AA-). Separately, ratings agency Fitch is warning that corporates in our region are under increasing liquidity stress.
BIG BILLS
The RBNZ has reported a very large rise in the number of banknotes in circulation as at the end of March. This was caused by an unprecedented demand for cash from system participants (banks, retailers, the public) in the days leading up to the COVID-19 pandemic lockdown on 25 March 2020. They expect a large portion of this increase will be returned to the Reserve Bank once the pandemic is over. The number of $50 notes in circulation rose +17% and the number of $100 notes rose +12%, both reversing atrophy in prior years. These two high-value denominations now represent 42% of all banknotes in circulation and 77% of the value of all banknotres in circulation.
BNZ BEEFS UP 'SUSTAINABLE FINANCE'
BNZ has appointed Louise Tong as General Manager Sustainable Finance, Corporate & Institutional Banking.
LOCAL UPDATE
There are 1474 Covid-19 cases identified in New Zealand, with +2 new cases today and less than yesterday's +3 increase. Nineteen people have died, unchanged from yesterday, all geriatric patients. There are now just 6 people in hospital with the disease, with now none in ICU. Our recovery rate is now up over 83% and rising.
AUSTRALIA UPDATE
In Australia, there are now 6731 cases (up +11), 83 deaths (+1) and a recovery rate of just under 84%, unchanged. 109 people are in hospital (-4) with 42 in ICU (-1). [Note that, like most countries, Australia only counts confirmed cases. New Zealand on the other hand counts both "confirmed and probable" cases which is why we sometimes get negative numbers - some 'probables' aren't and so get removed from out tally.]
GLOBAL UPDATE
The latest compilation of Covid-19 data is here. The global tally is now 3,116,000 and up +78,400 from earlier today which is a faster rate of growth. Now, just under 33% of all cases globally are in the US, which is up +25,000 since this time yesterday taking the total to 1,012,500 and the first country to exceed 1 mln cases. This is a slower rate of increase however. US deaths now exceed 58,000. Global deaths are about to exceed 217,000. Russia (+6500 in a day) now has more cases than China. Brazil is another country getting a very fast rise in cases, up about +5000 today alone and it has been climbing steeply recently. More than 5000 people have died in Brazil so far. These numbers will undoubtedly be much higher because the President in Brazil is quite dismissive of the impact it is having on his population ("just the flu").
EQUITY UPDATE
The NZX50 Capital Index has lost some ground today after its recent strong showing, down -0.8% so far. Today, the ASX200 is up +0.8%. Overnight, the S&P500 fell -0.5% after European markets rose about +1.5%. At their opening today, Shanghai is up +0.4%, Hong Kong is up a minor +0.2%, while Tokyo is flat.
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. There were huge falls yesterday in wholesale swap rates. The two year was down -11 bps, the five year was down -9 bps. And the ten year was down -5 bps. The 90-day bank bill rate is unchanged today at its record low 0.26%. The Aussie Govt 10yr is also unchanged at 0.92%. The China Govt 10yr is also unchanged at 2.52%. The NZ Govt 10 yr yield has reversed yesterday's very sharp, up +10 bps to 0.83%. The UST 10yr is down -3 bps from this time yesterday at 0.62%.
NZ DOLLAR GAINS
The Kiwi dollar has risen sharply today, back to 60.9 USc and in a volatile phase. Against the Aussie we have stopped falling and now at 93.4 AUc. Against the euro we are up at 56.2 euro cents. That means the TWI-5 is up to 66.8.
BITCOIN FIRMER
The price of Bitcoin is up +1.7% from this time yesterday to US$7,841. 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 ».
64 Comments
This winter is going to knock farming due this enormous drought, it's going to take kind weather for a few years to get back on our feet.
The backlog in the States caused by meat processors closing and delays in Brazil could flood the market, never been in this position before, so it's all new, many countries will be fighting recession, if the 50 million job losses in the States get reflected in other economies I'm definitely not going to be optimistic.
At present my options are limited by the place looking like a desert.
Donald to the rescue
https://www.zerohedge.com/markets/trump-invokes-defense-production-act-…
In their forecast as to how climate change would effect NZ, NIWA stated some years ago that the east coasts of both the south and north islands and the northern part of the north island would get progressively drier and drought prone as time went on.
So as predicted by NIWA this is now apparently happening. And seemingly farmers are scratching their heads over this.
Whocouldhaveknowd..........
'There(sic) guess as good as yours'?
I think I can see the source of your problems as to why you aren't processing all of this very well.....maybe you should toddle off to California (but best check the long term forecast there before you go - I believe they are having the odd drought/fire problem too).
The problems we face in the immediate future are caused by excess credit creation. That excess credit creation give us short term wealth but long term less so.
And yes, making predictions about the future is little more than a guess, whether it's NIWA, me or Wall street
Biological Senescence could be a big part of why we do what we do.
This is the bull sh@t of the fanatic climate changers. California has more to do with people building in forests and pine beetle. I expect climate to change, in 1918 my grandfather drove his model t across our local lake and that has never happened since.
The world weather is incredibly complex out more than a week
It's still climate change, AJ, and it's human-forced. The other problem is the lag-time, so even if we stopped emitting now, it would get worse before it got better.
The good news is there's a good chance we have seen peak energy use (looks like 2018) and tís unlikely we'll get back up there before the lid comes down to meet us.
We've just stopped picking blackberries and apples, and the preserving frenzy has subsided. Mild autumn hereabouts so far.
NZX is starting to do well because people are re-buying high performing securities (A2, Spark) and those with strong cashflow/dividends (e.g. utilities) that where indiscriminately sold off when people panicked in late March.
Excuses like restructuring, difficult market conditions, transition/transformation, regulation etc. won't cut it for the next few years. Executives have to show that they can put their foot on the accelerator pedal or step aside to let someone who is willing take a turn in the drivers seat. Results will determine valuations, hopefully that startles awake those who have been asleep at the wheel for the last few years.
Not sure if you're on any of the Facebook investor pages - but literally every day there a new members (like a lot of them) coming on and asking 'I've never invested before - should I be buying x.y.z stocks?'.
Then hatch and sharsies adds appear to be showing up everywhere. So I just wonder if there is a lot of new money getting pumped into the market, thinking we've seen the crash and its all upwards from here - while the older more experienced investors I've been talking to think we've got another leg down to go yet.
'I've never invested before - should I be buying x.y.z stocks?'.
Personally I think A2 is overhyped. Fantastic company, product, and brand. Not much they do that doesn't appear to be good. Yet my intuition says all is not as it seems. Ultimately that means that I believe consumers see A2 milk as a 'nice to have' product, not as something they cannot do without.
That's the question right....think you just have to risk weight things...so there's a chance a bank TD could take a haircut, but at 2.5% interest is that worth the risk over risk free 0.5% kiwi bond? I've got both + a few shares, a few bonds, foreign currency and gold in USD. Hopefully between that I can preserve capital for whatever is coming our way.
Likely to be two more legs down. When bad results start coming in and people are either forced out or leave by fear there will be a bad leg down. The second leg down will hopefully be enough to squeeze the last fools out and end the bear market. From what I've seen in the markets there are a lot of people with no idea of how bad it can get. So there could be multiple legs down before rock bottom.
I would say that in most countries people are irrationally optimistic because they have only seen the first wave and not what is coming beyond that. This story still has to play out, we are still about 2 standard deviations away from trend so there is a long way down from here: https://www.advisorperspectives.com/dshort/updates/2020/04/01/regressio…
This relief rally in stock is pumped by fed policies and is not on fundamentals of the company so good possibility that market may fall again and retest the old or new low.
Current relief rally, which like the fall is steep and fast may be used to book profit or loss as the market will throw many opportunity in future for long term investors but for short term and day traders is giving enough opportunity now with high volatility.
The latest from the Chinese embassy, an interesting read going forward
http://www.chinaconsulate.org.nz/eng/fyrth/t1774380.htm.
https://www.newshub.co.nz/home/politics/2020/04/coronavirus-sir-john-ke…
What a great, great man and what a terrible shame we don't have him anymore in such difficult times
So what did Merril Lynch have to do with the GFC, Yvill?
And what, exactly, did the fellow ever do that was productive?
Given that currency trading is 100% parasitic, banks are 100% parasitic, and airnz (I think it is lower-case now, no?) just burned a finite source of carbon en route.
The thing about being a prime minister is that its like being a tiny rudder on a massive ship. What you do makes very little difference. John Key or Adern won't make much difference in the long term outcome from this and if you differ it would be interesting to see how you would objectively measure the benefit. Would housing inflation be the key metric for success under a John Key government by chance?
The mess the poster-child of neoliberal stupidity (or was that ruthless arrogance?) left us in post Douglas.
Auckland homeless and shelters and food parcels since. Income disparity since. Debt-shifting since. The hollowing out of the middle class, via debt.
I'm no leftie, but I watch things. The joke is that a sinking ship takes all passengers. No gated community, no bunker. These folk were short term clever and long-term ignorant. Game over time.
The most likely thing to cause poverty in NZ is over priced housing which the last National government failed to addresss after setting out to, then when they realised they'd failed declared that it was something worth celebrating. If that isn't a massive fail, I'm not sure what is.
But its bigger than either political party Yvil - I think we've got to the point where we might be deleveraging - i.e. our debts have become greater than our ability to service them. If that isn't dealt with well, then that could the biggest cause of our poverty going forward. But it could be beyond the governments ability to manage. Its probably been about 75 years in the making (Bretton Woods 1945- now).
most of the poverty in NZ is down to house prices being out of step with wages, we are spending to much on houses in price and rents and most of the money heads offshore as profit for the big banks.
national kept crapping on about supply to bring the prices but did nothing about that side of the equation and made dam sure demand side was always ahead of it with open door policy, unwillingness to stop overseas buyers and reluctance to change treatment of tax on investment properties
you only have to look at the boards of all the banks in NZ to see vested interest in keeping the funds flowing
the simple solution is a massive government house building programme, building whole subdivisions selling some above cost to FHB and keeping some for social housing
The fear of China that NZ politicans have is evident from WP statement that I have China's permission to go against them :
https://www.newshub.co.nz/home/politics/2020/04/coronavirus-china-promi…
It goes to prove that now no NZ politicans can go against China. Interesting time ahead.
China has an equal chance of not surviving this. Not in its present form, at least. Globalism probably peaked in 1996 - its been in trouble ever since, on steroids for a decade and just been dealt a body-blow.
Can China exist in a non-global world? Not for long - the post-peak degrowth is exponential too, but the wrong way. Will the US go down without a fight? Unlikely. Will the Third World starve quietly, in place? Unlikely too. Interesting times.
The aussies are surprisingly pushing ahead with asking for an investigation into what happened in Wuhan. The Chinese are getting a bit agitated calling Australia "gum stuck on shoes".
Surprised the ockers didnt retaliate by calling China " the virus stuck on the worlds lungs"
maybe it has to do with all the law suits headed china way
https://www.dailysabah.com/world/africa/nigerian-lawyers-sue-china-for-…
https://www.bbc.com/news/business-52364797 Missouri sues Chinese government over virus handling
https://www.scmp.com/comment/opinion/article/3080920/americans-can-forg…
register of pecuniary interests came out today
poor SB and PB didnt get any gifts but Judith got heaps
https://www.parliament.nz/media/6387/summary-report-2020-final.pdf
seems like concerts, tennis, rugby and league is the way to make a MP listen to your pitch
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