Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
There are no changes to report today.
TERM DEPOSIT RATE CHANGES
There were none here today either.
NERVOUS WAIT
Darling dairy company A2Milk (ATM) is in an unexpected trading halt. The share price was $14.12 at that halt. Little has been revealed by them as to the reason, but Synlait (SML) has suggested A2Milk has sales level issues. SML's share price was at $5.40 before the announcement and has fallen almost -7% since in today's trading. Investors will be watching nervously for the updates by both companies.
BACK IN GROWTH MODE, JUST
The New Zealand economy expanded a record +14% in September quarter from the prior June quarter when it contracted -11%. Year-on-year it is now +0.4% up after being -12.4% lower in the June quarter. This is better than the expected -1.3% y/y result.
A STRONG RECOVERY, EXCEPT FOR PRICES
There were 199 farms sold in November, the best November since 2016. Of those, 27 were dairy farms. Finishing and grazing units sold especially well. But average prices were unremarkable. In fact average dairy farm sales prices on a $/ha basis were down -15% from November 2019, and the lowest November average since 2010. Prices $/ha for finishing farms are at a three year low, and for grazing farms, also the lowest since we tracked them starting in 2009.
A RECORD HIGH?
Lifestyle block sales were also very buoyant in November, with 1157 farmlets sold in the month, the highest of any month since our records began in 2003.
LOCKED BORDER CONSEQUENCE
Our migrant population is down by more than -53,000 since March. And the number of people in this country on work visas sank by almost -28,000 between March and November.
EASY MONEY
There was another $650 mln tendered by Treasury today in four maturities. This set attracted $1.7 bln in bids, leaving $1.1 bln unsatisfied. The May 2024 maturity went for an average yield of 0.30% pa, the May 2031 maturity went for a yield of 0.94% pa, and the May 2041 tranche went for 1.73%. All were higher yields than at the equivalent previous tenders. There was also an inflation-linker bond offered and it was very popular. The $50 mln attracted $224 mln in bids and went for -0.09% plus CPI. The equivalent prior one of these was at -0.01% plus CPI.
SME's GET GROWTH AGAIN
Xero's Small Business Insights report shows a revenue uplift of +3.2% year-on-year in November, resulting in six straight months of year-on-year revenue growth. Similarly, small business jobs rose in November with the expected seasonality boost seeing a +2.4% climb over the month, with small business employment now +3.2% above the pre-crisis level in March.
CASE CLOSED
The SFO says it has found no fraud or illegality in the Christchurch mayoral Dalziel donations case.
$20 MINIMUM
The Government has signaled that the minimum wage will increase by +5.8% to $20 an hour on April 1, 2021 as per Labour's pre-Covid and pre-election commitments.
DAIRY PERSPECTIVES
The dairy industry peak bodies have released updated industry stats today. There is a lot of detail. But at the most senior level, dairy farms account for less than 6% of New Zealand's land area, or less than 16% of New Zealand's farmed area. And that area has shrunk (by a tiny amount) each year after peaking in 2015/16. It however has been basically static for seven straight years. What is marked however is the efficiency. Cow numbers peaked in 2014/15 at just over 5 mln, and have declined to just over 4.9 mln now. In the same period, milksolids production has risen slightly but dairy export values have risen a remarkable +32%. Milk powder may be the dominant export, but our cheese exports alone are larger than our wine exports, and our infant formula exports are larger than our seafood exports. New Zealand's lifestyle (including benefit transfers) is only affordable because of dairy export earnings.
RECORD HIGH
In Australia, updated September data shows that their household net worth rose to a record high AU$11.4 tln as at September, or a +3.5% gain in a year. It was a rise driven by rises in housing values, cash deposits, and superannuation balances.
AUSSIE BREAKOUT
NSW is having a small community COVID outbreak that has officials scrambling to contain it. It is the sort of event that may delay a Trans-Tasman travel bubble. Before that, other states may well first close their borders to NSW.
EQUITIES UPDATE
The S&P500 ended up just +0.2% in Wall Street trade earlier today while they await Congressional stimulus. Shanghai has opened +0.2% higher, Hong Kong is flat, and Tokyo is also up +0.2% at their open. The ASX200 is up +0.6% in afternoon trade while the NZX50 Capital Index is up +0.7% near our close, and despite the ATM/SML issues (above).
SWAP & BOND RATES STABLE
We don't have todays swap rate movements yet. If there are material changes when the end-of-day swap rates are available, we will update them here. The 90 day bank bill rate is up +1 bp at 0.26%. The Australian Govt ten year benchmark rate is up +2 bps at 1.01%. The China Govt ten year bond is little-changed at 3.32%. And the New Zealand Govt ten year is up +8 bps at 0.96% and now well above the earlier RBNZ-recorded fix of 0.92% (+4 bps). The US Govt ten year is up +2 bps at 0.93%.
NZD RISES
Against the US Dollar, the Kiwi dollar is up at 71.3 USc. On the cross rates we have also firmed against the Aussie, now at 94 AUc and against the euro we are also firm at 58.4 euro cents. That all means our TWI-5 is now at 72.8.
BITCOIN GETS FOMO SURGE
Bitcoin is now at a new record high of US$21,695 and up +11.9% from this time yesterday. 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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27 Comments
Man this one day summary is not looking good for NZ farming, and the Dairy industry especially.
High number of farm sales, at lower prices than last year. Farms getting out of the industry due difficulties regarding regulation, staff problems (skill level and lack of people) and the future uncertainties coming form central government.
So much heat on NZ dairy farms which are the most efficient in the world, and only account for a small portion of both land use and overall farming in NZ. On the climate front, they get all the blame while Transport and energy are the underlying problems. But the all you have to do to get out of the ETS and be carbon neutral is just buy some more farm land and plant a few trees, no need to actually be more efficient or reduce emissions.
Lifestyle blocks going up, Why farm when you can just sell your land off to all the rich townies who want a slice of the country and will grow houses all over it?
Minimum wage going up... great, now farmers have to pay more to get untrained staff that can be useless (to put it nicely).
And no immigrants that actually want to work coming into the country at all. Look at the crisis in the fruit picking industry last year when we had open borders, now make that 20x worse. And what happens then, prices increase and are passed on to everyone who just bitches and complains about the primary industry ripping everyone off.
Just cant win.
Some dairy farmers are horrible payers, I talked to a young guy who worked on a dairy farm this year and only worked out at $8 an hour after all the overtime he ended up doing. The funny thing is he was working for his family, up sticks and is trying something easier with more leisure time, YOLO.
The other issue is increased cow performance in the USA, up about %5, in-fact all dairy exporters have increased production this year.
Labour are going to force environment change on farmers.
"But the priority will be cleaning up the waterways. Sir Michael’s Tax Working Group estimated that a $2 per kilogram charge on leached nitrates could raise approximately $270 million per annum at current leaching rates and assuming 100% coverage. That could be expensive for some farmers. A Lincoln University study in 2017 found that intensive Canterbury dairy farms leached between seven and 16 tonnes of nitrates a year. That would mean they could face taxes of between $14,000 and $32,000 annually. And the Group supported the idea of auctioned tradable water rights."
Continue reading at https://www.politik.co.nz/2020/12/16/david-parkers-big-oppurtunity/ | Politik
"Minimum wage going up... great, now farmers have to pay more to get untrained staff that can be useless (to put it nicely)"
Pretty much sums up the attitude of many dairy employer's. It gets no sympathy from me. Equally I'll give no sympathy to the Hort industry and it's self inflicted staffing problem.
There are good workers out there and recognising them and paying them well with good conditions would be a good start.
did you see this on the Waimea dam, Nelson rate payers are going to have rates double over ten years, plus borrow an extra 50 million to cover cost overruns.
https://www.stuff.co.nz/business/123725529/tasman-ratepayers-may-face-a…
A tsunami of rate rises nationwide is building out there. One figure I heard was an average of 20%p/yr nationwide - and many councils left with no reserves. All because of water reforms - then add in climate change. By and large we are told that NZers want water reforms - 'hit 'em hard and hit em fast' and the same for climate change. But what has never been told is the cost of all of this to ordinary NZers. Let's get the true figures out there and then survey the public as to how much they are willing to pay and indebt future generations, to massage current ministers egos and govt virtue signaling. Yes, there does need to be improvements made but it should not be done by bankrupting future generations.
People who think that pay is the only consideration are also part of the problem. You can pay really well but be a bad employer. Many people now look to the whole package being offered as opposed to just pay rate. Yes there are good workers out there - just not enough in the regions with low population and that is the issue. It is not just about pay for some but opportunities too. e.g. DairyNZ Southland set up Spanish speaking discussion group https://www.odt.co.nz/rural-life/dairy/virtual-meeting-spanish
Interesting that the comment should include benefit transfers . I was wondering what percentage of income people receive from benefit transfers (WFF, rental allowance etc) and how this has changed over time. A quick Google search didn't bring anything up. Is anyone aware of any statistics or papers on this topic.
Unless Aussie gets more QE from the central bank, AUD could get to parity with USD. Article is a little loaded with Coolabah's spin (well Chris Joye but he's put on a puppet portfolio manager up front) but an interesting scenario.
https://www.livewiremarkets.com/wires/unless-we-get-more-rba-qe-aussie-…
It's not a scam at all. It's simply the token of the world's leading tech companies Ripple developing payment protocols. The same company that partners with SBI and is advising central banks on bridging CBDCs with the digital world. And its price appreciation in 2020 is almost exactly that of BTC, even though they're completely different. Anyone who thinks Ripple Labs would be running a scam really has no understanding of the crypto world.
That all depends on how their software is applied. Ripple has their own toolset for implementing CBDCs. https://thepaypers.com/online-mobile-banking/ripple-to-offer-banks-a-to…
Unfortunately this is Twitter nonsense.
- Ripple and XRP are essentially a centralized network. Ripple keeps approx 50% of XRP supply for liquidity purposes. Releasing XRP suppresses the price and XRP owners should know that. If you don't like it, don't buy it.
- In Q3 and Q4, Ripple has been buying XRP, not selling it. https://www.fxempire.com/news/article/primexbt-research-will-ripples-xr…
- As part of the consensus protocol, the XRP community has the power to extinguish the 50% of coins held in escrow by Ripple.
https://modernconsensus.com/cryptocurrencies/ripple/ripple-cto-communit…
Ahhh your a ripple shill. That explains all your other comments. No doubt it will go up in price because all the retarded newbies to the crypto space see it so cheap and say "I can buy 10,000 xrp which is way better than 0.000xx BTC" but screw holding that for any length of time.
Dating back more than two years now, gold prices have been pushed higher by deflationary expectations like those embedded within lower and lower risk-free rates represented in the longer UST’s. Gross financial distress of the global dollar shortage kind, totally the opposite of the inflationary flood we keep hearing about.
Gold is actually rising instead on concerns that central banks and governments around the world will fail in their collective efforts to support already deflationary economies…As always, money-less monetary policy comes down to ridiculous, easily disproved deception. Other than that, there’s nothing else in the official central banker toolkit. Realizing this, you might then understand exactly why gold and bonds are being bid concurrently in this way.
Now that gold prices are falling, you hear very little about them – in favor of the increasingly ridiculous BOND ROUT!!!! resurrected by this Inflation Hysteria #2 which suddenly can’t include rising gold prices. Link
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