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A review of things you need to know before you go home on Tuesday; some more retail rate changes, truckometer at trend, inflation expectations rise, swaps up, NZD rises, bitcoin jumps to new record, & more

A review of things you need to know before you go home on Tuesday; some more retail rate changes, truckometer at trend, inflation expectations rise, swaps up, NZD rises, bitcoin jumps to new record, & more
ID 22702269 © Daniaphoto | Dreamstime.com

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

MORTGAGE RATE CHANGES
Bank of China reduced its 12 month fixed rate to 2.35%. It's 18 month rate is now 2.45% and its 24 month fixed rate is now 2.55%.

TERM DEPOSIT RATE CHANGES
Kiwibank cut some key TD rates today, but they also raised their one year rate to 1.00% (+5 bps).

MORTGAGE STRESS STILL VERY LOW
Equifax is reporting that 9% of accounts previously in mortgage deferral now have some form of arrears, up from 5% in November, indicating an emerging segment of accounts that may be experiencing repayment stress. A year ago, ongoing mortgage deferrals were at 1.07% of total book. This was at 1.46% in December.

"BACK TO TREND"
People and trucks are back moving around "at trend" according to ANZ's monthly truckometer survey. The Heavy Traffic Index (trucks and busses) was still +1.5% higher than a year earlier in December, but the overshoot is fading as catch-up dynamics wane. Similarly, the Light Traffic Index (cars) was still +5.3% higher than a year ago in the final three months of the year, but the overshoot was as large as +8.8% back in November.

"YOU NEVER BUY BETTER"
Rod Duke's Briscoes Group (BGP) has a cracking Q4-20 with same-store sales up +12%, powered by their online sales up +58%. Their now expect their full year sales to exceed $700 mln and their after-tax profit to be in excess of $70 mln (compared with $63 mln in the previous year, and that included a $9.5 mln return on its Katmandu investment (KMD) which won't be in this year's result). It will make its full year financial statement on March 16, 2020. Briscoes has a capitalisation of $1.268 bln. Rod Duke owns 75% and because of that low market liquidity it is not in the NZX50.

LOCKDOWNS NO BARRIER FOR HIGHER INSURANCE PROFITS
Suncorp NZ, a major insurer here, reported a +19% rise in profits for the six months to December. Their direct general insurance brand AA Insurance achieved strong growth in personal insurance, and their broker-based channel Vero "experienced unit growth". Asteron Life doubled its profit based on "improved claims experience and favourable investment returns".

LOADING UP
Retirement village operator Arvida (ARV) is to issue up to $125 mln in new 7 year secured fixed rate bonds. They also announced an indicative issue margin range for the Bonds of between 1.80% to 2.00% per annum over the underlying swap rate, subject to a minimum interest rate of 2.80% per annum. With this additional borrowing, the sum of existing debt plus "residents' loans", will equal 63% of the group's total assets.

BUDGET POLICY STATEMENT
The Governments latest Budget Policy Statement is very focused on housing affordability as a key well-being standard, and signals it will be taking action to restrain excessive exuberance. Investors ("speculators") look in their sights. First home buyers are said to be those to be favoured.

HIGHER LVRs
RBNZ is to require most property investors to have at least a 40% deposit when buying a new property. Most owner-occupiers will require 20% deposits. These new regulator standards come after the banking industry has already adopted such levels.

"SOLID PROGRESS"
The RBNZ continues to scramble over its massive data breach via the Accellion transfer system. It apparently used that system to store client firm's data, rather than just using it as a file transfer system. That would have been an unusual use. You do have to wonder how it would have responded as a regulator if one of their banks had breached sensitive data. (CEO forced to resign?) KPMG is doing the review, but it is not clear who will decide the consequences for RBNZ top management.

DEFLATION IS SO 2020
The latest RBNZ-commissioned survey of expectations of professional forecasters, economists and industry leaders operating in New Zealand by The Nielsen Company (M14) shows that the 2020 retreat is over and expectations for prices are rising again. See this.

GOLD PRICE RISES
Gold is trading in Australia, and soon in Asian markets. So far today it is at US$1836/oz and up +US$6 from its New York close.

EQUITIES UPDATES
The S&P500 ended its New York session up +0.7% with a late surge at the end of their session. The NZX50 Capital index is down -0.6% in late trade today. The ASX200 is down -0.4%. In early trade, the Tokyo market has opened up +0.4%, Shanghai has opened up +0.6% and Hong Kong has opened up +0.2%.

SWAP & BOND LONG RATES STILL RISING
Long rates are still moving up. We don't have today's swap rate movements yet. If there are material changes when the end-of-day swap rates are available, we will update them here. We expect them to reflect a rising long-end market. The 90 day bank bill rate is up +1 bp at 0.29%. The Australian Govt ten year benchmark rate is up +5 bps to 1.25%. The China Govt ten year bond is unchanged at 3.26%. And the New Zealand Govt ten year is up a strong +5 bps to 1.43% and well above where the earlier RBNZ fix was, at 1.40% (up another +3 bps). The US Govt ten year is up +3 bps from this time Friday to 1.16%.

NZD RISES
The Kiwi dollar is now at 72.5 USc and in a new appreciation following the RBNZ expectations survey results. On the cross rates we are a tad lower against the Aussie at 93.8 AUc. Against the euro we are little-changed at 60 euro cents. That all means our TWI-5 is up to just over 74.

BITCOIN LEAPS
The bitcoin price hit new record highs today, reaching US$47,514 at one point. It is now at US$46,565 and a +7.7% gain from just this morning. Volatility is a very high +/- 12.5% in the past 24 hours. (Recall, we left this price at US$36,812 on Friday which seemed high at the time. It is now +26.5% above that level.

This soil moisture chart is animated here.

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End of day UTC
Source: CoinDesk

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60 Comments

One Bitcoin is just a few k short of being enough for a model 3.

Im pretty tempted tbh, now that Tesla will accept the trade shortly.

There's so much money rolling around chasing crypto atm, it's nuts.

Finding something that isn't just alt-coin hype is borderline impossible.

Finding something that isn't just alt-coin hype is borderline impossible.

I'm wary of some of the the crypto fan boys and cheerleaders. Some of the attitudes seen make me feel that many feel that they're knowledge leaders on the cusp of great transformational change. The atmosphere sometimes feels like being in a room of people playing pokies for the first time.

15
up

I'd rather chat about crypto than house prices any day of the week

Well when you have been studying Bitcoin for the last 3+ years, you tend to pick up just a bit of knowledge here and there. Just speaking for myself.
And you are correct, we are on the cusp of a great transformational change, think on the scale of the internet.....

Oh good grief.

Cheer up Rastus...

For some - the extent of transformational change means 3000 new bureaucratic jobs in Wellington.

Well when you have been studying Bitcoin for the last 3+ years, you tend to pick up just a bit of knowledge here and there

Well good for you. But my point is somewhat different. You have to wade through a lot of hype and hooplah in the crypto world. Much of the dialogue is repetitive and hyper enthusiastic. My experience with the space goes back to the days of Mt Gox when the space was more circumspect and populated by tech people. I notice the difference between then and now. And I feel people were far more humble, more critical, and less emotive back in those times.

They were humble because it was only the first halving, and the majority were devs sharing technology more interested in the possibilities than the money. The cultural transition is identical to what happened to the internet back in the late 90's. That's where we are on the crypto timeline right now, and the adoption pattern and community growth is likely to be very similar.

So now you think 'the crowd' owns the narrative. That's the point I'm actually making.

The majority (crowd) always own the narrative - that's how democracy works, and blockchain is the most democratic tool ever invented. It's why we don't do tweet-ups anymore, because the crowd came in and changed the narrative. Who should own the crypto narrative IYO?

OK. I get your point. Imagine if Mike Hosking was big on crypto.

I quite like Mike Hosking. But as the poster boy of the boomers reckons, I can't see that happening anytime soon. As champion of the establishment he's got too much to lose.

So you like a narcissist, guess that says a lot about your judgement. Not just any narcissist, but the one I use as my poster boy for the condition.

Sigh. Sometimes I think this site should redirect from logicalfallacy.co.nz

I liken Bitcoin to a pyramid scheme. If it ever does become some kind of world currency it would require a lot of people to become incredibly rich due to the fixed supply. I really can’t see that happening but I guess it makes sense to have a little just in case. I do however like your comments J.C as you seem to have been able to make some money while understanding that there is a lot of hype and just because someone has made a lot of money and written a blog that does not necessarily make them an expert.

With TDs not worth thinking about, bitcoin might be worth a serios look.

Everything aside from BTC is a punt to be sure. But there's fortunes to be made on alts in the medium term for people who are technology savvy and understand what drives adoption. In this regard the fundamentals for alt investing are the same as traditional tech stock investing IMO. Look at the team, and product value proposition. Understand the core problem they are solving and chart the variables for success. Understand the products in the space both traditional and new. And then like Jason Fried says - "you could have a dozen Italian restaurants in the city and they can all be successful" - with 4.13 billion internet users and 1.7 billion un-banked people dozens of alts will likely succeed with similar offerings. The early movers have a network effect advantage. As long as you don't put in more than you can afford and lose the shirt off your back, the downside risks vs the potential upside look pretty minimal RN.

Should I remind you of what you said about gold?

Yes, although I think you completely missed my point there. But enlighten me oh great J.C. of crypto, first New Zealander to be interested in Bitcoin, King of the alts, Protector of staking, Father of sharding, the Khal of great interoperability, the unrekt, Breaker of blockchains.

Yes. I am Satoshi Nakamoto. Do you think the crypto space should be dominated by social media reactions or by critical thought and use cases?

All media is social by it's very nature from twitter to academic papers. When it comes to drinking from the fire hydrant, I only imbibe the finest critical thinking. ;)

For the record, I'm quite open to being wrong about any position, and the beauty of this forum is that these posts are preserved for posterity. So far I haven't been wrong.

by Ezy | 6th Nov 20, 7:28am

BTC well on track for 20k before Christmas

by Ezy | 12th Jan 21, 9:29am

Old school economists: Bitcoin has crashed 20%! Doom! Catastrophe! It's going to zero! THE CRYPTO SKY IS FALLING! [relevant, as only 50+ use caps in posts]

Also old school economists: Be fearful when others are greedy, and greedy when others are fearful.

See you all at 50k on the rebound folks.

OK. I believe you. You're the Ashley Church of crypto.

I'll be wrong at some stage, and have no ego attached to it. But I'm not afraid of putting my predictions out there, because I've long been a student of markets, technology and history all of which are vital to understand this space.

I suspect the government policy side once it gets hostile toward crypto is going to be very unpredictable. But much like the war on drugs, stopping torrents, turning off the dark web, mitigating TOR, and understanding 4chan, government will be unsuccessful stopping blockchain.

Ezy, how can you search for or find your old comments like that?

Use Google and append site:interest.co.nz to your keywords in the search bar

Why don’t you just bail out and buy dogecoin. It’s only 8 cents and does everything btc con can do after all does it not?

Eh, in the end I went with Nano (instant, no fees) and VET (supply chain focus) as cornerstones. DOGE was fun but massively inflationary by design and the developers want to stay true to that vision, which I respect.

I thought DOGE was supposed to be a joke.

DOGE is definitely still a joke, and the same guy who thought it would be funny to produce a limited production flamethrower and call one of his companies "the boring company" is right on board with that joke. You'll also notice Tesla didn't put 1.5B into DOGE.

If you're looking at alts, there's a number that are trying to solve sharding (distributed data storage fragment consensus) in different ways right now that are really compelling. Throughput and TPS are one of the big problems to successfully solve for mainstream adoption and sharding is the way to do this.

Ezy,

Following this thread make me feel really old-76 shortly. You are talking a language I simply don't understand. I wish you well, but I will stick with the stockmarket and companies with high quality balance sheets.

Don't feel too out of touch oldbloke - you're in the majority right now regardless of age. And it sounds like you've done well enough to have these first world problems, so you must have been where I was at some stage feeling perfectly poised with the knowledge and tools to take advantage. In time, I will be old and out of touch also, but like you say solid fundamentals are a universal truth and if you can afford to live in comfort, and ride out the next 10 years of carnage that will come from this MMT circus well done. If you're a regular investor though, it's well worth looking at a few companies with BTC on their balance sheets and allocating 5% in my opinion. Especially while the tax laws play out around the crypto space. All the best.

DP

Oh hell yea, I threw $117 or so in a few months ago because it pumps every cycle. Turned it into a tidy couple of k. No complaints form me :P
But to answer your question, because 10,000 doge are created every few min...for prosperity.

Would love to know what deal Nielsen has with RBNZ for data collection. As an aside, Nielsen Holdings has split up and its 'consumer research' function has been spun off to sink or swim. The company seems woefully behind in terms of tech-driven research and innovation. Surprised the RBNZ is not with Ipsos who have a global track record in public research.

Only 29 responses from industry and banking leaders and professional forecasters to the influential survey. Not all could be bothered to respond to all questions. Numbers continue terminal decline

It'll be an interesting year for export education with foreign student enrolment expected at 25-30k at the start of semester-1 next month, from 100k+ in 2019. The bulk of these are international students already in
NZ renewing their visas to continue studies.

Hopefully, all those low-quality education providers around the country perish and TEC ensures new ones don't take their place in the future.
Also, the impact on CBD rental markets is already evident with plenty of crappy homes finally going under the hammer or renovation.

Emergence of the central city ghetto

They are replacing 4 foreign 'students' with parent and child sent by Winz.

This market will never give up: Already NZQA & TEC are giving permission for these providers to keep selling, and delivering their product online/offshore.
Then they may more easily transition to onshore once borders open.
The contentious issue is how the govt is going to grant the incentivised post-study work visa which is customarily granted as a reward to the students under such a work-around system.

Coming as to NZ as "Student" is another avenue to bring the whole family in if they cant get in other ways.
Check mbienz for the data. Many senior students arrive into NZ and they are allow to bring in dependents.

12
up

If they have great degrees with PhD's in Engineering, pure maths, medicine then I don't mind. However importing 3rd world labour pay rates and conditions is where the exploitation starts and where the NZ employer stops training Kiwis.

Agree. The offshore students being accepted at the moment will be high quality students which is good for NZ and hopefully stay on.

PhD's in engineering, pure maths, medicine pushing supermarket trolleys. NZ doesn't need these people. They're better off in countries where their skills and knowledge can be applied.

Certainly don't want the trolley pushers.
Best would be to tighten the criteria for what they can do if they apply for a work while they are here.

and paying customers claiming to be dependents.

Yeah I'd say that it is an impossible task to verify if people are actually a couple or if its a scam...

Fake documents that would pass any INZ test are (very) cheaply available in numerous Asian countries. Need I say more?

DEFLATION IS SO 2020

Even the feds haven’t been able to keep up. Without the government having taken over student loans in the wake of 2008-09’s Great “Recession”, there’d have been almost no additional consumer credit extended during the decade since. It’s one more facet to the recovery-less recovery; like Japan, a dominant even overbearing government influence that doesn’t stimulate anything but its own proportionally larger footprint.

Given all that, the “need” for maintaining its footprint during the current recession is that much more paramount. With an employment crisis far worse than twelve years ago, any channel for raw aid, even student loans and stipends for those unfortunate college graduates staring into this even deeper labor market abyss, is an absolute necessity.

Reflation(ish) has made its way into many markets, but maybe the reason it hasn’t gone so much further is that it hasn’t yet found itself in widespread fashion in the real economy. Maybe this won’t matter; many are betting it won’t. Perhaps the future won’t be tripped up by today’s woes, including the lack of rebound. Link

Is NZ really different?

At least theyre not playing with some small countries currency , NZD for e.g.

Tds back to 1% at Kiwibank. Looks like the curve has turned. R.I.P 0.8% TDs

This outrage about Air NZ selling their services to the Saudi navy seems a bit hypocritical. Surely we sell food to the Saudis, and we probably buy their oil? What about other countries where we disapprove of how they conduct their military. China, USA, Aussie?
The result of this virtue signaling will be the inability for our struggling Air NZ to collect the full $3m for the work. Marvelous.

A better decision would have been for AirNZ to have honoured their contract commitment and say that they would not undertake any more work for the Saudi Navy.
But I agree the Government’s actions seem to be governed more by dollars than principle.

Slack, most New Zealand businesses providing services to military customers arrange to operate through an offshore intermediary to provide plausible deniability.

Better to keep the Saudi Arabians sweet though because they carry a lot of weight with OPEC. They may not be ethical but they do have oil and now we've stopped drilling we're rather at OPECs mercy.

Hasn't Israel operated an almost identical and complete blockade on the Palestinian Territories for years? Regardless of how Ashley Church and his gang at the Israel Institute of NZ frame it NZ needs to take state action. Rather than be in fear of being (falsely) accused of being anti-semitic should we not be equally worried that refusing to cut ties with such a systemically racist regime would be regarded as aniti-muslim?

The US, EU, UK, Canada, Australia etc. appear only too happy to take Saudi money. We're happy to give them that money to buy their exports so I don't see how we're any less culpable.

I'm also particularly keen why it's come out now after Luxon was elected but before he could become leader when in that work has been done for some years. Potentially heading off Judith's successor before he could get a foot in the door? The PM has shown more umbrage about this and 'sniff tests' than she did about Mallard's 'rape' accusation, which barely registered as a shrug of the shoulders. How interesting.

I don't think Orr should resign. If senior people start resigning over every security breaches and data theft event we soon won't have any senior people left. It's fairly widely acknowledged across businesses and government that security hasn't been a foremost priority and suffered from underinvestment.

Now if there where steep punitive damages stipulated for such events then things would change rapidly.