A review of things you need to know before you go home on Friday; many rate cuts, consumer confidence soggy, branches closed, savings grow faster, lending slows, swaps flatten, NZD holds, & more

A review of things you need to know before you go home on Friday; many rate cuts, consumer confidence soggy, branches closed, savings grow faster, lending slows, swaps flatten, NZD holds, & more
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Here are the key things you need to know before you leave work today.

MORTGAGE RATE CHANGES
BNZ has today trimmed a couple of fixed rates, bringing them into line with their main rivals.

TERM DEPOSIT RATE CHANGES
Westpac's Notice Saver account has had its rate trimmed. (BNZ cut TD rates yesterday.) TSB cut their at-call rates. First CU cut rates too. There will be more reductions on Monday.

THE IMPROVEMENT STOPS
The ANZ-Roy Morgan consumer confidence survey hasn't produced a further improvement. ANZ says: "Consumer confidence was basically unchanged at 104.3 in July, still well under its historical average but also well off its lows. The net proportion of households who think it’s a good time to buy a major household item gave up 5 points, falling to 0%, a recessionary level. Just like the ANZ Business Outlook survey, it looks like the bounce may be done, and incomplete. Household incomes will come under more pressure from a weaker labour market as wage subsidies roll off."

FITNESS PIVOT
Credit Union Baywide, the country’s largest credit union has shuttered 10 of its 31 branches, in Whangarei, Otara (with 3 other Credit Union Baywide branches remaining in Auckland), Hamilton, Opotiki, Te Puke, Wairoa, Taradale, Dannevirke, Masterton and Porirua. This comes after a review of what their 60,000 member customers need for services. At the same time they are adding 34 staff in their Contact Centre and Digital Services teams.

FUZZY LINE IN THE SAND
The RBNZ's Geoff Bascand says the central bank doesn't want a cliff end to mortgage repayment deferrals. He also says the implementation of 'aspects’ of new bank capital rules shouldn't be further delayed.

BUILDING CASH RESERVES
Household deposits are rising fast again. There are up +$1 bln in June from May, and up +14 bln in a year to $195 bln. The year-on-year growth of +7.9% is the fastest expansion in nearly three years.

THE SLOWDOWN SPREADS ...
Debt growth (the basis of bank earnings) is slowing. Bank mortgage debt rose +$1.2 bln in June from May and apart from the April blip, that was its smallest rise since early 2019 and the smallest June rise in five years. The year-on-year rise of +6.1% was the slowest gain of 2020.

... AND SPREADS FURTHER
Meanwhile, the growth in business debt has evaporated, falling -$1.8 bln since May, and that is on top of the -$1.3 bln fall in May from April. The Government's IRD bank option (interest free and probably payment free at some point too, undermines the commercial basis of SME business lending). Year-on-year this is +2.7% and the slowest annual growth in six years.

SERIOUS PORRIDGE
A Dunedin Ponzi operator has been sentenced to eight years and ten months’ imprisonment, with a minimum non-parole period of five years and four months. Barry Edward Kloogh (57) who ran a Ponzi scheme for more than 20 years was sentenced today in the Dunedin District Court. He had previously admitted to charges of ‘False accounting’, ‘False statement by promoters’, ‘Theft by person in special relationship’, ‘Obtaining by deception’ and ‘Forgery’ brought by the Serious Fraud Office.

EQUITY UPDATES
The S&P500 ended the session earlier today down by -0.4%. After the close, some major tech firms reported results. The futures index indicated tomorrow will open -0.5% lower. Shanghai has opened today flat, Hong Kong is alos flat, but Tokyo is a sharp -2.2% lower. The ASX200 is tracking down -1.6% and is heading for a weekly decline of -1.3%. The NZX50 Capital Index is flat close to the end of trade, and is heading for a +0.5% weekly gain.

SWAP RATES UPDATE
Swap rates were probably much flatter today with most of the reductions coming at the long end. We don't have final wholesale swap rates movement details yet, but we will update this later in the day if they show a significant different movement. The 90-day bank bill rate is unchanged at 0.30%. The Aussie Govt 10yr is down -4 bps at 0.83%. The China Govt 10yr is firmer at +1 bp at 2.97%. And the NZ Govt 10yr yield is down a sharp -5 bps to 0.77% and the lowest since late May. The UST 10yr has also fallen a sharp -5 bps and is now at 0.53% and an all-time record low.

NZ DOLLAR HOLDS
The Kiwi dollar has firmed today and is now just on 66.9 USc. And against the Aussie we are little-changed at 92.8 AUc. Against the euro we are marginally weaker at 56.3 euro cents. And that means the TWI-5 is unchanged at 69.7.

BITCOIN STAYS FIRM
The price of bitcoin has hardly moved today, now at US$11,018. For the week however, it is on track for a +14% gain. The bitcoin price is charted in the currency set below.

This soil moisture chart is animated here.

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42 Comments

Insurance co, AMP, fell 11% today.
Aside from the fact it hasn't managed itself well, one of the things stressed consumers give up is - insurance. That car that had Comprehensive Insurance? 3rd Party will do etc.
https://nz.finance.yahoo.com/quote/AMP.NZ?p=AMP.NZ&.tsrc=fin-srch-v1

Personally as an investor, I wouldn't touch AMP with a bargepole. However given Audaxes comments below this is just a another early signal of financial retrenchment.. note I didn't say collapse. The Grim Reaper is just giving his horse a brush, he hasn't yet loosed the Dogs of War. There is much consternation yet to come

Huh. Just took out a policy with AMP this week. This time last year I switched to youi just before they got bought by tower. Obviously the insurance companies should pay me to take my business elsewhere...

Household deposits are rising fast again. There are up +$1 bln in June from May, and up +14 bln in a year to $195 bln. The year-on-year growth of +7.9% is the fastest expansion in nearly three years.

And yet again the collective NZ bank balance sheet contracted, with the reduction in declared debt securities more than offsetting household deposit growth. I guess some of the redeemed bond proceeds found their way into the banking system.

If anyone is wondering, "Deposits (with depository institutions)" includes balances held at the RBNZ - QE credits for bonds sold.

Furthermore, the move to increase the HQLA "Debt securities" asset position is preferred to expanding loan growth.

The size of the combined bank balance sheets is measured by their Assets (ie loans & advances). These are the parts contracting. Customer deposits sit as liabilities and can be offset by wholesale or offshore borrowings. Customer deposits can grow without the "Banks balance sheets" growing.

Did I say anything to contradict your claim, other than debt security liabilities contracted more than the growth of customer deposits? And maybe some of the redeemed bond proceeds found there way into customer deposit accounts.

Comment from Aussie celebrity economist Stephen Koukoulas:

"It's odd how people are gleeful that the 2020 COVID Depression will lower house prices - they are effectively saying 'I hope so many people are unemployed & bankrupted they have to sell their house at a huge discount'. Mind numbing stupidity."

Stupid for the wrong reasons. The Kouk is trying to emotionalize the issue. The real issue is what the impacts of lower perceived wealth are on consumption (which is not really in the public debate yet).

25
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You can frame the hope that house prices don't go down in the same kind of emotive terms: 'I hope that many hardworking younger people are locked out of having a stable place to raise their families and building the cornerstone of a decent retirement for years to come.'

Well yes. There's that too. His audience is likely to be older home owners, not younger non-home owners.

Point still remains though: Everyone gets whacked. The young may get lower house prices, but the economy is screwed through the disintegration of the wealth effect. Double-edge sword and they're unlikely to be better off.

Lesson learnt: Don't start and promote stupid asset bubbles in the first place if the impacts are going to widely spread and felt. People like to project and tut-tut about the 2017 crypto bubble, but at least it wasn't go drag the whole economy into the swamp.

Humanity is more irrational than what we would like to believe we are - we each think we're smarter than one another ('I'm just trying to get ahead by buying another rental'). That mindset eventually results in a system that will fail due to the interdependent reality of the world we live in.

14
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Humanity is highly irrational. Even before we had all the quantitative data to prove it, we knew that we were a bunch of meme-driven reactionists. And those that do see the reality are ostracised so that we are never quite adequately prepared and able to learn from our mistakes. No one ever invited Cassandra to the parties.

12
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Ooh ooh I know this! Cassandra - blessed with the power of foresight, and cursed with nobody ever believing her.

e.g. when I tell my mates that interest rate suppression, money printing and the resultant malinvestment is driving us into a depression they tell me they saw a cafe today with plenty of customers.

ding ding ding

And the weird thing is that it is not independent thinking.
Most people take the news/trends as portrayed in the Herald, on Stuff or on TV as gospel.
Not only that, they focus on the topics that the these sources focus on.
Herd/ sheep/ lemming like behavior. This is not a recipe to be in first or to have independent thought

It's not weird if you look at our evolutionary environment and neurology. It's all there and we are quite predictable in that respect. It's just our brain has evolved in a way that we we aren't usually aware of the extent of our herd/sheep/lemming predispositions. We *believe* that we are individual and independent thinkers, but we aren't at all really. We aren't a solitary species and would never have survived as one. We spent millions of years evolving traits that adapt us to optimal group syncretism. We weren't the best most adapted hunters, we weren't the best most adapted specialists, we weren't the strongest... we were just the most able to coordinate as a group, to communicate and share information. Which has been our evolutionary adaptive strength. We can figure stuff out and better yet, communicate it, remember it and pass it on. Our brains pass on stuff virally because that was useful when we were hunter gatherers living in smaller bands. We're hard wired to tribal and meme thinking.

Agree. There, I just did it again.

That’s why many people including me have stopped watching and reading the NZ “news”. Aimed at 10 year olds and designed to keep you dumb. Look at what is happening to our major trading partners around the world and how this is affecting the lives of people who we need to buy our products. TV news won’t do that but they will headline their daily news with articles like Woman airlifted off remote island with broken arm (Show woman with arm in sling walking to helicopter) and how to slice a cake. Unbelievable! Thank goodness for Interest!

The Epstein/Maxwell files just got unsealed and released.

Could be an interesting few weeks/months.

Interesting slash super gross. Epstein/Maxwell just being utterly gross. Euuurrrrghhhh. Corruption, exploitation of young girls, collusion. Super gross.

But friendly with Donald Trump....go figure.

He cut him in 2004 when he tried recruiting at Trumps club in Florida. Its all in todays release.

Only one person from Epsteins black book has volunteered to be interviewed by the FBI. Want to take a guess who that was?

Donald Trump is/has always been friendly with anyone who has power or influence. He never cared which side of the political or moral spectrum a person was on.

and with Bill Clinton as well - even more so .. bit inconvenient huh ?

Why is Bill Clinton any more or less inconvenient? Please don't assume that a critique of Trump's game would somehow negate a critique of Clinton game. Trump buddied up with the Clinton's way back when too. There are no moral/political sides for the elites. Trump isn't any more a Republican than he is a Democratic, he swaps teams as suits his needs. Clinton equally played anyone and everyone. That's the game.

10
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I wouldn't want to be Clinton, Obama, the DOJ or FBI right now.

Horrid.

Nobody hopes that people will go broke and have to sell their house for half price, as Mr Koukoulas well knows. But if that does happen, and it wasn't my fault, I will take advantage of the situation as best I can.

11
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Are there still people who don't know that Trumpie threw Mr Epstein out of his resort as soon as he found out about his predilection for younger girls? Or do they know, and repeat the lies as they suit the barrow they are pushing? The interesting bit will be further exposure of people already having been mentioned on Epstein's passenger plane list. If they are not totally hammered by these papers, then we will know they have been withheld, altered, falsified.

Todays release also shows one of the victims saying her statement from 2016 to the FBI is incorrect and requires amending.

She said Trump never touched nor flirted with anyone. The original FBI report stated the opposite.

Almost every news site you open these days is wall to wall Orange Man Bad with zero objectivity.

Some of it justified, but most of it just totally over the top Trump Derangement Syndrome that keeps the clicks flowing from idiots.

Watch "Person, Woman, Man, Camera, TV: The Movie" on YouTube
https://youtu.be/LhZyHIZpzoM

FYI. PM's on a run up at present.

Yes, seems to be based on people getting out of currencies that are being printed/debased in truck loads. A thought that occurred to me today is that, in the context of the new cold war (US vs China), if one of those sides accumulate a strategic advantage over the other in gold holdings, perhaps the other will make a play to drive gold's value down by pushing to get their new digital currency adopted as much as possible.

Huge uncertainties about what the new world order will look like. I don't think there will be a lot of physical cash around...

By currencies being debased, you mean all fiat currencies then?

Some colorful charts showing the rather extraordinary recent monthly changes in bank balance sheets.
https://www.rbnz.govt.nz/-/media/ReserveBank/Files/Statistics/tables/c52...

Indeed, and scary. The growth rate for lending for all types (except one) is dropping dramatically. Two of these means less investment in the productive sector of the economy - agri and business lending. However for housing, growth rate in lending is still positive. So less productive capacity to pay for unproductive parts of the economy.

That will not end well.

Yes had same thoughts looking at that. Again it’s unsustainable long term. Guessing that is similar data to what RBNZ is looking at and worried about.

Up sh*t's creek with A Orr

How does this work?...

Auckland health officials are now testing the close contacts of a person who tested positive for coronavirus after flying from Auckland to Sydney.

The New South Wales government said a person who flew on an Air New Zealand flight from Auckland to Sydney on July 6 had tested positive for Covid-19 in the Australian state.

https://i.stuff.co.nz/national/health/coronavirus/122317608/coronavirus-...

How about a test prior to hopping on plane.
Like contact tracing someone in-another-country and weeks after the event it doesn't seem have success written anywhere near it!

What does the head of NZ covid Response say, - can you find them?

What the.....

The Southern DHB has named 11 places and businesses in Queenstown visited by a traveller in early July who has since tested positive for Covid-19 in South Korea.
DHB to ramp up targeted virus testing in Queenstown
The 22-year-old man flew out of the country from Christchurch Airport on July 21.

Dr Michael Butchard, the Public Health Physician for the SDHB, today advised people who were in Queenstown, Te Anau and Milford on July 1-4 and have Covid-19 symptoms, or have had possible symptoms since July 2 to be tested.

https://www.odt.co.nz/business/korea-covid-case-places-man-visited-queen...

Where is the leadership.

Sylvia Park, not the person.

No new cases in here,
just new cases from here.

It's a plot by the COL to create the second wave offshore and make nz look "100% pure"

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