A review of things you need to know before you go home on Wednesday; worse median multiples, RBNZ's swelling wallet, money launderers nabbed, swaps stable, NZD firm

A review of things you need to know before you go home on Wednesday; worse median multiples, RBNZ's swelling wallet, money launderers nabbed, swaps stable, NZD firm
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Here are the key things you need to know before you leave work today.

MORTGAGE RATE CHANGES
None to report today.

TERM DEPOSIT RATE CHANGES
Heartland Bank reduced many rates today, but it still has maintained it premium position compared with most of its rivals. WBS and the Midland Mortgage Trust have both trimmed rates.

A CERTAINTY FOLLOWED BY UNCERTAINTY?
Ratings agency Fitch sees the NZ Labour Party winning this Saturday's election and has kept its overall short-term political risk index (STPRI) score at 84.0 ahead of the polls. Their score for "policy continuity" lags at 80.0 to reflect short term uncertainty brought on by election cycles.

MORE ASSET PRICE INFLATION EVIDENCE
The latest REINZ data has allowed us to update the median multiple calculations for most New Zealand urban centers. Nationally, house prices are now 7.25 times more than gross household income. It is back similar to the record high in April 2020 and significantly above the 6.5 time in September 2019. In September 2015 it was 5.8 times. The second-toughest place to buy is central Auckland at 12.2 times household income. Hamilton is 7.4 times, Tauranga is 8.7 times, Napier is 7.6 times. Wellington is now 7.2 times. Christchurch is 5.4 times and Dunedin is 7.0 times. (The outlier is Queenstown at 14.2 times.)

SENTENCED
A former assistant of the Māori King has been sentenced to 12 months’ home detention and 300 hours of community work. He was also ordered to make full reparation for stealing approximately $111,000 of charitable funds and lying to the Serious Fraud Office. Te Rangihiroa Whakaruru (57) committed the offences while he was employed by a charitable trust that provided financial support to the office of the Māori King. He pleaded guilty in December last year to five charges of ‘Obtaining by deception’ under the Crimes Act and one charge of ‘Supplying false or misleading information’ under the Serious Fraud Office Act.

LOCAL LIFE INSURER SURVIVING WELL
Fidelity Life issued its financial results today reporting a fall in NPATx to $17.9 mln for the year to June 2020 from $20.9 mln last year. But they claim they are making progress post lockdown. They recently grew by acquiring Farmers Mutual Life, Tower Life, and Lumley Life. Fidelity is owned 41% by the NZ Super Fund, 8% by FMG Insurance, 31% by Jeffrey Meltzer among others.

AFTERPAY GETS ALL CLEAR FROM AUSTRAC
Australian anti-money laundering regulator AUSTRAC says after considering an external audit report on Afterpay, and improved compliance from the buy now pay later service provider, it won't take any further regulatory action. AUSTRAC ordered the appointment of an external auditor to Afterpay in June 2019. AUSTRAC says the situation serves as a reminder to new and emerging financial services businesses that they may have obligations under the Anti-Money Laundering and Counter-Terrorism Financing Act.

MORE LOCAL CURRENCY INVESTMENTS, FEWER FCY INVESTMENTS
The Reserve Bank's balance sheet took another step up in September with total assets reaching $62.5 bln and another record high. That is up +$3.5 bln in one month and up +$35.5 bln in one year. The run-up started in March 2020 and now their Large Scale Asset Purchase (LASP) holdings exceed $41.1 bln, up +$7.4 bln in September alone. Their foreign currency asset holdings fell -$3.4 bln in September from August, and have fallen -$18.8 bln since March.

FX SWAP VOLUMES HIGH
NZD FX currency swap activity came in at its second highest level since 2014 in September. Activity for spot and forward transactions were unremarkable however in the month.

POLICE SWOOP
Six people have been arrested and properties and vehicles totalling around $5 mln has been seized following an ongoing investigation into alleged money-laundering activity. This morning, officers from the Financial Crime Group carried out search warrants at six addresses across Auckland. Today’s arrests are the culmination of a long-running investigation - named Operation Brookings - into individuals primarily involved in money laundering offences and was launched at the beginning of 2020. The Police Asset Recovery Unit has restrained three properties, in Half Moon Bay, Te Atatu and New Lynn, worth at least $3.3 mln in value.

CORRECTION: WE HAD OUR INSURANCE REVIEW WRONG YESTERDAY
This is what it should have said: The latest RBNZ monitoring of the insurance sector shows year-on-year tax paid profit for the industry were $0.9 bln in the year to June 2018, rose sharply to $1.2 bln in the year to June 2019, and then fell back to $0.9 bln in the year to June 2020 after a tough March 2020 quarter. This was after net earned premiums fell -1.2% in the year to June 2020. Life sector premiums fell, but there were +4.4% rises in net earned premiums for the non-life insurers. It is an industry that still achieves a 13.8% return on net assets, and is still managing a 5.0% return on its investments of $16.7 bln.

GOLD PRICE LOWER
The price of gold is now at US$1890 in early Asian trading, and down -US$31 from this time yesterday and similar to the closing price in New York and the London afternoon fix.

EQUITIES UPDATE
Wall Street ended its session down -0.6% for the S&P500 earlier today. Shanghai has opened down -0.6% after yesterday's strong showing. Hong Kong is also down -0.6%. Tokyo is down another -0.2% and adding to yesterday's small drop. The ASX200 is flat in early afternoon trade. The NZX50 Capital Index is up +0.3% in late trade.

SWAP & BOND RATES STABLE
We don’t have the final data for today yet and if it is significant we will update it here. The 90 day bank bill rate is down -1 bp today to 0.27%. The Australian Govt ten year benchmark rate is up +1 bp at 0.85%. The China Govt ten year bond is also up +1 bp at 3.22%. Meanwhile, the New Zealand Govt ten year is down -1 bp at 0.58% and the same as the earlier RBNZ-recorded fix of 0.58% (unchanged). The US Govt ten year is down -2 bps at 0.74%.

NZD FIRMER
The Kiwi dollar is firmer today at 66.6 USc but really, it is little-changed. Against the Aussie we are quite a bit firmer at 92.9 AUc from this time yesterday. Against the euro we are also firmer at 56.7 euro cents. That all means our TWI-5 has risen to 69.9.

BITCOIN UNCHANGED
Bitcoin is unchanged at US$11,455. The bitcoin rate is charted in the exchange rate set below.

This soil moisture chart is animated here.

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28 Comments

"(The outlier is Queenstown at 14.2 times.)"
Yes. It's funny old place. The first thing they ask you when you want to open a bank account after getting off the international flight is "Do you want to pay tax at 2%?". Heaven on Earth after 48%.
https://www.bnz.co.nz/support/investments/essentials/explaining-nrwt-and...

NRWT and AIL are amounts withheld on interst payments made in NZ to non-residents. The lender therefore is not a NZ resident and will likely pay tax in another tax jurisdiction (unless based in a tax haven).

No NZ tax resident can pay tax at the AIL rate of 2%.

Four Square Named As Top Employer In Australia And New Zealand By Kincentric For Third Year In A Row

The best employers were judged on employee engagement, agility, engaging leadership and talent focus

The top-notch leadership must've come from all the permanent visas they have sponsored for retail managers in NZ over the years.

"Six people have been arrested and properties and vehicles totaling around $5 mln has been seized following an ongoing investigation into alleged money-laundering activity."
Good to see anti-money laundering legislation is working - this investigation with the increasing number of prosecutions will have no doubt been prompted by red flags from banks, lawyers and REA.
Our Australian banks will be very keen to play by the requirements following Westpac being recently fined $A1.3 billion in Australia for not reporting breaches.

I'm sure its just chance but in the article here:
https://www.stuff.co.nz/national/crime/300132434/auckland-gang-members-a...
it shows a nice new Merc being one of the items seized. And in the article above one of the revolving ads is for new Mercs directly below that piece! Haha.

This academic believes that parents feeding their children cake and pizza for dinner are actually the victims here.

Anyone not buying into this BS stance is coming from a place of privilege.

https://www.newshub.co.nz/home/politics/2020/10/nz-election-2020-judith-...

Oh my!!! This made me laugh so much. "BIG CARBS" lololol. Small carbs never lead to weight gain, only the big ones according to Collins.

The Social Dilemma is a must-watch for everyone. Sobering - even for this non-connected sceptic. It explains how the advertised-to haven't a chance. They can't see it coming and they can't out-think it.

https://www.nzherald.co.nz/entertainment/the-social-dilemma-why-everyone...

And Hugo said you go
and I said no you go
and soon he was back
And he wasn't exactly slim
from memory....

Thanks for the link!
I'm not sure about your comment though, sarcasm?
For me, yes, please bring back some personal responsibility instead of blaming everyone else!

Yep. Ardern and Peters have to be very careful in playing the victim card in terms of others who are fat. There will be many many people who quietly 100% agree with Collins.

I laughed when a commentator on the radio yesterday, said that obesity was a disease, surely if it was then we could catch it off one another. The underlying root cause, the freely available cheap ultra processed crap in the supermarkets, and fast food joints. By eating around the edge of the supermarket you can avoid most of the rubbish. Stick to meat, veg and avoid all white carbohydrate. (Luckily the wines at the edge of the supermarket...).

If you believe CocaCola then we just need to exercise more, and that the sugar has nothing to do with it. However anyone who has spent time on a treadmill knows that the time to walk off calories is nearly impossible. Sure no one has a gun to their head forcing them to eat, but by stuffing yourself with rubbish carbohydrate, spikes insulin, then a bloodsugar spike and crash, at which point the cravings start (hangry).

So is she implying that she and her deputy are therefore weak as any doctor would have no hesitation in calling Judith and Gerry obese and morbidly obese respectively..

Possibly but you completely miss the point, the point is to take responsibility for one's own actions and Judith admits that she's overweight because of what she puts in her mouth

Maybe you miss the point that she's a complete hypocrite?

How is she a hypocrite if she admits that her being overweight is her own doing???

I'm sorry but you miss the point too, it's not about being overweight, this is only an example, the discussion is about taking responsibility for one's own actions, rather than blaming others

I'm not sure that simply admitting to something is actually taking responsibility is it?

I guess she will be voting yes to cannabis reforms then?

Firstly, JC is not an expert on obesity, whether she takes responsibility for her own weight or not, her comment about "big carbs" was farcical. WTF even are big carbs?
I do agree we all have huge personal responsibility for our own health but we don't speak about smoking addiction in this glib way. It was acknowledged that tobacco companies had lied, that the power of advertising influenced consumption. It was acknowledged that reducing smoking required policies that tackled complex issues across several areas (advertising, banning social smoking, providing quitting support, taxes etc). Food effects all the addiction/pleasure centers in the brain (in some more than others), genetically some people have a harder time with their endocrine system, predisposing them to weight issues, especially with the modern diet of high frequency, highly processed and hyper palatable food, which causes hyperinsulinemia. Just like some people experience more profound alcohol or drug addictions dependent on their genetics, epigenetics, childhood and personality profile, some people struggle more with weight. None of that negates personal responsibility but neither does it mean that the obesity epidemic is an easy fix in the way the Collins states. I don't expert a politician to be a health expert but i expect them to be good at processing the advise they receive from the health experts rather than trivialising one of the most serious health issues we face.

Where has she come out and stated she herself is obese? Regardless, the medicos today have stated her statements are extremely simplistic when it comes to the obesity epidemic and I would have to agree.

It's quite obvious she is...too much cheesecake

Two good proxies for the broader NZX (DIV and FNZ) have been performing strongly since the low in March. DIV up 18% in P3M and 21% in P6M. FNX up 14.2% and 24.2% respectively.

I know most people don't invest in NZ shares or NZ funds independently, but haven't seen this mentioned in the media.

San Francisco’s sky-high apartment rents are falling fast, up to 31% yoy for monthly median rates.

https://www.bloomberg.com/news/articles/2020-10-13/san-francisco-studio-...

Noticed - Boatman the Greenhithe Rancher has disappeared

Latest Fidelity report says investors should consider Bitcoin allocation of 5%.

https://www.fidelitydigitalassets.com/bin-public/060_www_fidelity_com/do...

Both the NZX50 and SP500 are off on extremely optimistic (i'd call them stupid) trajectories. The long term question is, are central bank balance sheets just going to grow and grow until a currency collapses, or will a correction eventually be allowed to occur.

I'm not sure that's a 'long-term question.' I think it's 'in the now.'

Premier warns NSW 'on the verge' of another virus outbreak, delays easing restrictions
NSW has recorded more locally acquired COVID-19 cases than Victoria, prompting Premier Gladys Berejiklian to hold off easing restrictions until several growing clusters are under control.
only a few days ago she was chastising queensland on being cautious with NSW
https://www.theage.com.au/national/nsw/premier-warns-nsw-is-on-the-verge...