A review of things you need to know before you go home on Wednesday; FSR updated, mortgage lending booms, investors up their share, good company results, swaps up, NZD stays high, & more

A review of things you need to know before you go home on Wednesday; FSR updated, mortgage lending booms, investors up their share, good company results, swaps up, NZD stays high, & more
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Here are the key things you need to know before you leave work today.

None here today.

Bank of India cut TD rates today. CU Auckland has also cut its call rate today.

In its Financial Stability Review, the RBNZ notes the risks associated with sky-rocketing house prices, but doesn't ask for a debt-to-income ratio tool to be added to its macro-prudential toolkit.

Latest Reserve Bank monthly mortgage figures show over $7.8 bln advanced for mortgages last month - beating previous record set only a month earlier. Investors are on the march.

Residential real estate investors are now getting 24% of the value of mortgage lending in October, which is average for the whole period since these records started in 2014. But that is up from under 20% a year ago and under 17% two years ago in October. On the other hand, first home buyers are getting 18% now, similar to October 2019 and October 2018. The recent LVR clampdown is designed to restrain lending to investors.

The same data shows that first home borrowers borrow more on average than investors do. In October, the average loan for FHBs was $479,000 (up +12% in a year from $429,000) whereas the average loaned to an investor was 'only' $445,000 - but that was up +22% in a year from $363,000.

Fisher & Paykel Healthcare (FPH) announced its results for the first half of the 2021 financial year, which ended 30 September 2020. Net profit after tax was $225.5 mln, up +86% over the same period in the previous financial year. Operating revenue was $910.2 mln, up +59%. The company’s directors have approved an interim dividend of 16 cents per ordinary share, an increase of a third. A reduction in gross margin for the six-month period to 62% was due to the increased use of air freight and the elevated costs associated with it. FHP is the largest company listed on the NZX.

Local insurer, Tower Limited (TWR) has announced underlying profit excluding large events increased +23% on the prior year to $34.7 mln, underlying profit including large events increased +3% on the prior year to $28.4 mln. This was at the top end of its profit guidance. They claim digital and data strategies is delivering strong customer and profit growth.

New Zealand's cyber security agency CERT is reporting that there were 6909 reported incidents in the year to September, with nearly 40% of them coming in Q3-2020. Phishing and credential harvesting was the most common attack vector (1064 cases reported) with malware close behind (886 cases reported). It seems likely many (most) cases are going unreported however. This is a timely reminder to report all cases. That way official resources will be targeted if the full extent of the risks and vulnerabilities are known.

Global airline trade association IATA is signaling that airline industry losses will be much greater than originally estimated. They now say a net loss of US$119 bln is expected for 2020 (deeper than the -US$84 bln forecast in June). A net loss of US$39 bln is expected in 2021 (deeper than the $16 bln forecast in June).

The price of gold has fallen in Asian trade, now at US$1812 and down by -US$15 from this time yesterday but little-changed from today's closing New York price of US$1809. However, the New York price was +US$9 higher than the afternoon London fix.

The S&P500 ended up +1.6% at its session close today. The ASX200 is up +0.8% in early afternoon trade, while the NZX50 Capital Index is up +1.0% near its close. Tokyo has opened up +1.9% and Hong Kong has opened up +0.9% while Shanghai is down -0.3%, all in early trading.

Yesterday, the two year swap was up +8 bps, the three year was up +9 bps the five year was up +11 bps as is the ten year, also up +11 bps. If there are material changes today when the end-of-day swap rates are available, we will update them here. The 90 day bank bill rate is unchanged today at 0.25%. The Australian Govt ten year benchmark rate is up +4 bps to 0.94%. The China Govt ten year bond is little-changed at 3.33%. And the New Zealand Govt ten year is up +8 bps at 0.99% and far above the earlier RBNZ-recorded fix of 0.89% (+7 bps). And the US Govt ten year is up +9 bps to just under 0.90%.

The Kiwi dollar has held at the level it was this time yesterday at 69.8 USc. But on the cross rates it has slipped more than -½c against the Aussie at 94.7 AUc. Against the euro we have dipped to 58.7 euro cents. That all means our TWI-5 has also dipped to 72.4.

Bitcoin is up marginally from this time yesterday, now at US$18,960. The bitcoin rate is charted in the exchange rate 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 ».

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Great explanation about the downward trending gold price from Lyn Alden (quoted on this site today I notice) about the inverse relationship between the gold price and the inflation adjusted 10-year Treasury rate (still below breakeven inflation expectations).


What's going on here? - I see the 10-Year Breakeven Inflation Rate as a different set of numbers.

Gold: Big Difference Which Kind of Hedge It Truly Is

I've observed, as a former Gold holder, its volatility is low. Though Gold can move substantially over a year [even a 6 month period], it doesn't drop 10% in a day, not even 5%. FYI: Has a lot to do with paper Gold.

History tends to repeat. After the GFC gold had a huge run up, unfortunately for bullion investors so did the NZ Dollar [approx 0.90 US cents}. Then Gold headed right BACK DOWN, Profits were curtailed.

I called time on gold last week, I've had a great run. I'll happily dollar-cost-average back in if/when prices decline. I've had Gold for years - it's been a great store of value.

Interesting bidding war in the Maldives with increasing Chinese influence displacing that was traditionally the prerogative of India.
China built a $200m bridge to curry favour; India has now had to counter this time with a $500m bridge.
The Maldives population of 500,000 (a land area of less than 300km2) must be smiling in amusement.
A lesson for us: already Chinese bidding and influence is well entrenched in Pacific nations eroding New Zealand's long held position. Could prove to be expensive for us!


China doing Maldives a favour. Time for them to be really worried.
They are now just a fish on thehook.

I made my first foray into the share market today. Set up an account on Sharesies and threw some money in. Decided an ETF was the go. Smartshares NZ Top 50 seemed patriotic.

It was a wild ride going from -0.02% to a high of +0.41% and eventually ending at +0.21% +0.42% woohoo!
I would have to say it is a lot more fun than term deposits.

I was a bit concerned that the web site didn't auto logout but then I realised it was so you could always see your portfolio value going up and down. If you need to buy and sell you would need to enter your password. Thinking of putting a permanent screen on the wall dedicated to this. Yes, a lot more fun than term deposits.

Not only a lot more fun, should prove to be more profitable with continuing central banks actions seeming limited to be only about reducing interest rates and money printing.

Good for you. I was one of the first investors in Smartshares NZ Top 50 back in 07. Direct debit monthly until mid-2019 then sold up. Underrated product and surprised how few people actually use it outside institutions.

Sharesies is quite a good user experience. Good on you for being patriotic, however with NZD high atm it could be good to get some US shares too. Have fun.


Emerging Markets ETF is a great one to have. Sharesies allows you to build positions, so regarding equities, maybe start with the NZX.
For someone getting into stocks right now I'd suggest T&G Global, Scott Technology and Fonterra - those three would make a nice combo while you're feeling the market out.

As Warren Buffet says; 'invest in what you know'. That way if prices go down you won't be bothered and may average down [buy more stock].

When placing orders on Sharesies, keep in mind you don't have to do buy now 'market-orders'. But yeah, have fun.

Interesting - BTC hit $19,451 on bitmex today. I'm not sure what the actual ATH is, but by some metrics, that has cleared it? Or perhaps we need to hold on the daily?

There are zero days closed above the current price. Rat poison is effectively at ATH.

Told ya, they are floating the idea of bringing back CGT again

Well as everyone knows. The best way to lower prices is to whack on a tax...and Labour know best.

Yes, Australia's lovely, lovely clean burning coal is now stranded. I find this a bit funny. I mean, the Chinese are comically obstinate at times and Australia is befuddled by its own greed. Surely that's worth a lol

Gotta love Wolf Richter. This comment of his is so simply OTM ('on the money').

You know that you’ve got a problem if home prices rise 2% a month,right? Because wages don’t rise 2% a month. They might not even rise 2% a year. So after a while of these kinds of house prices surges, demand at these prices collapses

Not if you can use your existing leverage of your current house... just keep shoving more money into the collated piggy bank... until a government says you cant.

Oh yeah right. The ol' dream of perpetual leverage