A review of things you need to know before you go home on Wednesday; no retail rate changes, labour force growth stalls, truckometer decelerates, commodity prices up, swaps hold, NZD firms, & more

A review of things you need to know before you go home on Wednesday; no retail rate changes, labour force growth stalls, truckometer decelerates, commodity prices up, swaps hold, NZD firms, & more
ID 22702269 © Daniaphoto | Dreamstime.com

Here are the key things you need to know before you leave work today.

MORTGAGE RATE CHANGES
No other bank has responded to the Westpac one year fixed rate 'special' of 2.29% yet.

TERM DEPOSIT RATE CHANGES
No changes today.

A SHARP FALL
Our working age population rose just +7900 in the December quarter, a huge fall from +27,800 in the December 2019 quarter and even the +18,000 in December 2018. Closed borders has sharply constricted immigration, choking off almost all labour force expansion. (It will also mean our population will age quickly as a result, putting very sharp pressure on Government finances; less workers, more retirees on benefits - and much more pressure on those working to pay these benefits.)

NOT WORSE, BUT NOT IMPROVING EITHER
Data released by Stats NZ today for dwelling tenure shows the home ownership rate at 64.5% and the fall away we witnessed between 1991 and 2012 has essentially ended. But it hasn't recovered either in the past eight years. (For reference, the US says its home ownership rate is 67.4% and improved quite quickly in 2020.)

NEW ANZ TREASURER
Penny Dell has been appointed as Treasurer at ANZ, replacing Paul Daley who is retiring. Dell is Wellington-based and is an internal promotion.

SAGGING AFTER THE POST-LOCKDOWN BOOST
ANZ's truckometer data monitoring is out for December today. It shows the Heavy Traffic Index (for commercial goods) was still +5.4% higher than a year earlier, but the overshoot has faded from three months ago, when it was up nearly +10% year-on-year. For the December quarter as a whole, the Heavy Traffic Index fell -2.6%. This is consistent with ANZ's forecast of a mild fall in GDP following the massive Q3 bounce. Both the car traffic and goods traffic indexes are higher than a year ago, but the overshoot is easing.

PRICES FIRMER BUT TRADE CONSTRICTED
The ANZ World Commodity Price Index ended 2020 with a +1.8% gain in the month of December, to finish the year virtually unchanged. Dairy, forestry and aluminium were the sectors that pushed the index higher. ANZ also noted that locally we continue to have delays at the Port of Auckland* and several ports in China are also highly congested. Access to shipping containers remains an issue due to the slow turnaround times, and some vessels not back-loading empty containers. (*The December attempt to import via Whangarei was a logistical failure, is no solution, and won't be repeated.)

A LEADERSHIP FAILURE - HOW TO LOSE FRIENDS
In 2020, only one in four people approved of American leadership in New Zealand, a very sharp fall from four years earlier. In Australia it was 30%. But both are far higher than in Europe where in some countries it is less than one in ten. In New Zealand more than two of every three people disapprove of Trump leadership. In contrast, New Zealanders are among the most accepting of migrants, but Europeans the least. (Perhaps it is recent European migrants here who drive the enmity to other arrivals here?)

WORKERS IN DEMAND
In Australia, new official data out for job vacancies in the November quarter shows not only the expected very strong rebound from the previous (August) quarter, but also a strong rise from the year-ago levels as well, and far above expectations.

WINNERS & LOSERS
In Australia, the latest release of RBA credit card data shows the BuyNow/PayLater (BNPL) sector eating into bank credit card business quickly. Credit cards charge businesses 2% or 3% as fees and also charge interest on unpaid balance by consumers. But BNPL services charge about 5%/6% to merchants but nothing for customer/users (other than late-payment fees, which can be substantial, but no-one thinks they will be stung). The result is fast declining credit card transaction balances in Australia, with the average transaction now less than A$100 and down from A$145 in 2011. The amount outstanding on credit cards in Australia has slumped by more than -20% in little over one year.

UK PANDEMIC VARIANT GETS CLOSER
In Brisbane there is a bit of a crisis at a quarantine hotel after more cases of the UK pandemic strain were detected there, and all 'guests' and staff at the facility are now subject to a much stricter 14 day isolation. Travelers arriving from the UK are putting all of us at risk. (Oddly, Murdoch media outlets are now calling lockdowns and quarantines "bordermania". Go figure.)

EQUITIES UPDATE
Wall Street ended today flat, unable to sustain a trend either way. The ASX200 is down -0.2% in early afternoon trade. The NZX50 Capital Index is also unchanged with the steam expired in the recent profit-taking selloff. Shanghai has opened flat, Hong Kong has opened up +0.1%, while the very large Tokyo exchange is also up with a very minor +0.1% gain in early trade there.

SWAP & BOND RATES HOLDING
We don't have today's swap rate movements yet. They were marginally firmer across the curve yesterday, although quite strong at the 10 year end. If there are material changes when the end-of-day swap rates are available today, we will update them here. The 90 day bank bill rate is unchanged at 0.27%. The Australian Govt ten year benchmark rate is softer by -1 bp at 1.09%. The China Govt ten year bond is also down -1 bp at 3.17%. The New Zealand Govt ten year is up +2 bps at 1.10% and the same as the earlier RBNZ fix also at 1.10%. The US Govt ten year is down -4 bps at 1.11% but it did reach almost 1.19% earlier in the day.

NZD FIRMS
The Kiwi dollar has recovered some ground today and is now at 72.2 USc. On the cross rates we are unchanged against the Aussie at 93.1 AUc. Against the euro we have risen to 59.2 euro cents. That all means our TWI-5 is now at 73.4 and a relatively small daily rise.

BITCOIN -5% LOWER
The bitcoin price is sliding lower again, now at US$32,908 and down -5.0% from this time yesterday. It is now near its 24 hour low. Yesterday the FMA released a Statement saying: "New Zealanders considering purchasing cryptocurrencies, such as Bitcoin, should be aware that these are high risk and highly volatile assets. Cryptocurrencies are not regulated in New Zealand and are often exploited by scammers and hackers."

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49 Comments

34
up

Interested to see who they actually interviewed in relation to the migrant acceptance data... in the renting and first home buyer groups I am socialising in I would argue that anti migrant sentiment is growing in New Zealand... not against the migrants themselves but more at government policies that have allowed such rapid growth... possibly we are just a couple of years behind the other countries with our sentiments...

25
up

The survey asked whether people think migrants living in their country, becoming their neighbors and marrying into their families are good things or bad things. I'd say most New Zealanders have no problem with the migrants themselves, just the extremely large numbers causing rapid population growth and all its subsequent problems.

People fail to realise that in the long term migrants significantly reduce the average age and the percentage of people that will be paying for NZ super. Short term pain for a very important long term gain.
Of course we could achieve the same (if not better) outcome by encouraging our own population to have kids. The tax system doesn't help: single income families often pay the top tax rate even though all of their income goes in expenses and WFF doesn't really apply to most working people.

20
up

And what's your plan when the migrants get old? Keep bringing in more and more, exponentially growing the population? Already we've created ourselves another demographic bulge from the spike in migration over the last decade, which will have to be dealt with 30 or 40 years down the track.

How about we try some smart solutions. Embrace technology and encourage older people to keep contributing - many want to but are shut out of the workforce.

Good point. If migration is creating a new bulge instead of flattening the existing boomer bulge then that is an issue.
However our population could increase a fair way from here without issue (as long as we can build the infrastructure). There are countries much smaller than us with a lot more people.

27
up

No Jimbo. The massive population growth is the cause of many problems we have.
As for infrastructure - the growth creates costs but no contribution to those costs.
New Zealand was better with fewer people.

people have short memories. In the 80s and 90s we were very nearly broke, before that we only survived because Britain bought our stuff.
If places are better with less people why not move to northland, west coast, etc? Maybe it’s the lack of jobs, lack of things to do, etc?

people are literally doing that now, that's why house prices in the regions have exploded

20
up

If anyone thinks our country would be a better place with more people, I encourage them to move overseas to any number of crowded places just waiting for them to squeeze in.

Yes we have many wonderful immigrants that contribute, we see some on this site who are obviously very clever. But every extra person is another burden on the environment. I think we should all place a very high value on keeping ourselves "100% Pure" as advertised.

NZ's biggest asset is (was) its lack of people. I would welcome anyone here to put forward an argument otherwise.

Actually Beanie, look at Auckland over the past 25 years.
Once it was wonderful

Tokyo is a great place with 15x the population of Auckland. Auckland could have been great with the current or bigger population, but we blew it with sprawl and car dependence.

Can't argue with that JJ. The impact of urbanisation on our productive urban periphery is little discussed these days. What happened to that wonderful idea that Auckland's expansion would be addressed by making better use of land within the MLS and, further out, by French/English-style villages surrounded by productive land? Oh... perchance to dream of an urban intensification approach that wasn't based on continual subdivision of the already subdivided lot!

Japan is different in culture, manners and law are extremely important. In Western countries we don't have the same outlook. The Japanese people I know hate Tokyo, small apartments, crowded and competion is feirce.

And in the longer term they retire and get superannuation. I know because I arrived in 2003 and have been getting super for years. Does your 'average age' figures allow for children of migrants both arriving with (ref my 6 year old son) or having children soon after arrival (ref my eldest daughter's baby)?
If super is a problem (and I agree it is) then solve it but don't use it as an excuse for excessive low paid immigrants.

Are you an economist by any chance?

You'd think being a few years behind would give us an advantage of problems to come so we can steer away. Anyway, it'll be full steam ahead.

12
up

"New Zealanders are among the most accepting of migrants, but Europeans the least. (Perhaps it is recent European migrants here who drive the enmity to other arrivals here?)"

Europeans not fond of migrant camps on Europeans city fringes being hotbeds of crime = Europeans coming to NZ hating on other arrivals. Big leap of logic. But it's your website - so carry on!

"(Perhaps it is recent European migrants here who drive the enmity to other arrivals here?)"
Yes I thought that this was an extraordinary, personal view.

Sadly, witnessed it in our local supermarket the other day. First generation pom telling people of Asian extraction to "go back to where they came from". Followed by me (5th generation NZ'er) and wife (105th generation ) telling them where to stick it. God I hate racism and imported white privilege!

Brits are the worst imports

Rubbish, white privilage my arse. I live in SE asia. Come and live here buddy. People have no rights who are a different race or religion. Chinese who are born here and are citizens are told to go back to China. Indians are on the bottom of the heap. People are locked up, tortured, not given jobs, the list goes on and on.

Just yesterday I was told to leave a goverment services for transport as I was a foreigner. I've lived here for 11 years but we were told it was procedure because of covid, foreigners to be removed. One guard who came had a shotgun. The racism is extreme here. Come on I challenge you come and live in any south east asian country without the company or organisation to support you.

My go to indicator of the health of the real economy, the Port of Tauranga share price is at 7.58. The chart of the share price shows a bump downwards at the end of November followed by a slow rise through January. The real economy seems to be slowly clawing it's way back.

I think the wins for the Democrats in Georgia are game-changers. Biden will now be able to fight the pandemic, supply funds to individual states and to needy individuals to mitigate economic damage for lower income people. Money will start to flow into the real economy in greater amounts and money will go into the speculative economy in lesser amounts.

Up until now Trump has given tax cuts to wealthy people, given the bulk of Covid loans to large businesses rather than small business, given cheques in equal amounts to those who need them and those that don't, then deprived individual states of the funds needed to fight the pandemic. The Federal Reserve has had to counter the lack of adequate fiscal stimulus with a greater and less effective amount of monetary stimulus which has had the effect of generating increasing wealth for high wealth individuals and companies. The net effect of this is to increase the amount of money flowing into the speculative economy.

Lots of young professionals sitting at home in lockdown gambling on the the sharemarket and in cryptocurrencies trying to get rich quick and get an elevator into the property market.

I think that Biden will reverse this pattern. More money will go to entities and individuals putting money into the real economy and more activity will be generated in the real economy rather than primarily in the speculative economy. This is one of the reasons for the recent drop in Bitcoin, shares and other short term speculative trading assets I believe.

When the Federal Reserve sees real action on US govt fiscal stimulus it will be able to pause it's efforts with monetary stimulus. The same principle is equally applicable to New Zealand.

It is pure Keynes. The govt is the one with the funds to spend when the private sector is stretched by debt. When the govt spends on needed items in the real economy and takes measures to release elements of the private sector from the lack of credit then the real economy starts to move.

The best thing Biden could do is spend on run down infrastructure that would create jobs and velocity through the wider economy. But no, instead he’ll give out free money to create dependency on the state = control = socialism.

No he will give it to the banks and wealthy - nothing changes...

Lets hope that some change will come, not earth-shatteringly turning the US on its ear, but some for the better eh?

The US Govt ten year is down -4 bps at 1.11% but it did reach almost 1.19% earlier in the day.
Stellar Demand For 10Y Auction As Shorts Squeezed

10
up

(It will also mean our population will age quickly as a result, putting very sharp pressure on Government finances; less workers, more retirees on benefits - and much more pressure on those working to pay these benefits.)

Well, David, at some point we had to reduce population. It depends on what your desired per-head consumption-rate is, but the reduction globally probably requires 6 out of 7, or even 7 out of 8, to leave. In NZ, sans fossil energy and sans resource draw-down, we're 2-3X overpopulated.

Why decry the point? The sooner we traverse it, the better.

Resources are global aren't they? I doubt NZ population is going to make much difference...

..not make much difference. That is the argument used against any climate change policies. Same argument can be used for dropping litter.

But aren’t we talking about immigration? Not sure how it matters whether a person uses a resource in their current country or in NZ?

My fault , I think I see your point now. Much the same issue as charging carbon credits on production (eg our dairy exports) or on our consumption with exported dairy having its carbon credits paid by importing country. Haven't similar point been made on this website about stopping NZ producing natural gas to signal our climate change virtue and then importing fossil fuels to meet our demand.
Back to immigration - an immigrant from a 3rd world country (eg most of my family) uses far more resources while living in a developed country such as NZ. But the logic of that would be all countries reversing development - closing fast food outlets such as KFC etc.

I think the point is that when the fight for resources really kicks off, NZ (and all countries) will either need to sustain our population out of our own resources as few countries will have surpluses or they will be sold to the highest bidding country or taken by force.

A little addition to the BTC price action. Strong head and shoulders pattern suggests that the price could continue to go down, but it's unclear at this point. If you cannot stomach or psychologically deal with price falls of up to 80%, stay away.

About the FMA 'warning', it's full of alarmist language. It's important to remember that the management team at the FMA come from careers at Bank of America, Merrill Lynch, ANZ, Barclays Bank, BNZ, etc. These institutions are at threat from the decentralization of finance and money. It's only natural that they protect their own interests and peers.

I view it very favourably they thought it necessary to issue a statement. They didn't do that when BTC was worth $8.

As they say, would you ask a taxi driver about Uber? Well obviously not, so why would you ask a banker about Bitcoin...

11
up

I have the opposite view to DC on the benefit on increasing population.

You think a relatively small number of young people paying crap loads of tax for boomers superannuation is a good idea? The boomer population bulge retirement problem should have been sorted decades ago, but it wasn’t so immigration is our last resort. I remember being taught about this issue in 3rd form economics 30 years ago but Cullen was the only one that did anything and then National suspended it for 9 years.

Thanks for pointing that out. I've voted National and Labour in equal measure over my lifetime but the last lot left a lot to be desired when it came to equity and stewardship. Given his quiet achievements, the toxicity of some in this forum towards Cullen astounds me .

Superannuation shouldn't exist. It's merely stealing from future generations. Immigration doesn't solve it rather it just makes the problem that much bigger

Isn't superannuation funded in New Zealand (unlike most other countries)? Either way just tax the old instead of the young.

Boomer bashing very narrow minded attitude. What about the positives that Boomers have provided this Country and its development. Yea Cullen tried to implement Kiwi Saver Superannuation but that was after a previous Labour Govt destroyed Private Super Scheme by Taxing annual income of the funds.

https://www.youtube.com/watch?v=J_eecYMLL34&feature=youtu.be&fbclid=IwAR...
Bloody fantastic break down of future demographics for NZ. Highly worth the watch and some mind blowing info!

Only a matter of time before NZ goes onto another lockdown. Too much pressure on the quarantining system especially with the new more infectious variants. No border control can be perfect and the daily arrivals are relentless.
How will small businesses cope again? Would the Govt start another new wage subsidy project?

Printers will go brr

Property market is still pumping. 3/93 St Heliers Bay Rd sold in November 2017 for $925,000. Tonight it sold for $1,464,000. No obvious capital improvements made in the last three years.

2-bedroom apartment?

Strange property. Like a sausage flat but with weatherboard, not brick. The property that sold was on the end with good outdoor area. I went to the open home and the others were mostly youngish families. The property is appealing but needs work e.g. a 1950 style laundry under the unit and the double garage that most people couldn’t walk into without hitting their heads. Yes, 2 bedrooms. Fine for a couple with one child.

Lets not panic
The working age population has increased.
The percentage aged 64+ is almost constant at about 18.7%
There are too many humans per hectare but not in New Zealand.

"Travelers arriving from the UK are putting all of us at risk."

When I looked into this it's far from clear to me this variant originates in the UK. The UK is doing more sequencing than any other country in the world (see link below) so the fact they picked this up first may well be just that they have better surveillance. For example one story I read indicated that the UK does more sequencing work in a week than france has done over the entire course of the pandemic. Now it's easy not to find something when you're stumbling around in the dark with a blindfold on so I'd say be very careful in ascribing this mutation to have originated in the UK.

https://www.sciencedirect.com/science/article/pii/S1201971220325571