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US jobs growth tepid; US mortgage rates rise, US service sector expanding; China service sector stalls; Hong Kong retail in tailspin; good air cargo recovery; UST 10yr at 1.47%; oil holds and gold down; NZ$1 = 72.6 USc; TWI-5 = 74.1

US jobs growth tepid; US mortgage rates rise, US service sector expanding; China service sector stalls; Hong Kong retail in tailspin; good air cargo recovery; UST 10yr at 1.47%; oil holds and gold down; NZ$1 = 72.6 USc; TWI-5 = 74.1

Here's our summary of key economic events overnight that affect New Zealand, with news the reflation trade regained some momentum today, and that is getting the equity market's attention.

But first, there is another non-farm payrolls report out tomorrow night (NZT) and the precursor ADP Employment Report was released today suggesting it will be a lackluster affair. The ADP report came in with a much smaller jobs gain that analysts expected, and much smaller than for January. Only +117,000 more jobs are reported in this advance report. Analysts are currently expecting US non-farm payrolls to grow by a tepid +180,000 in February after the very weak +49,000 in January. In any case, for a labour market as large as the US, these general levels are close to a stall.

At the end of February, there was a sharp and across-the-board rise in mortgage interest rates in the US and taking their benchmark 30yr fixed rate to just on 3% plus points. This rate is suddenly back to where it was six months ago. Still, mortgage applications rose last week.

There were two services PMI surveys out overnight. The internationally-benchmarked one reported a strong expansion in February, and at a slightly better level than for January. The financial and healthcare sectors are leading the way. The widely-watched local one wasn't as positive reporting a notable pullback. This one said it saw a sharp pullback in new orders in February.

The US Fed released its own set of surveys for its regions in the form of the February Beige Book.

In China, the Caixin services PMI is showing the same limp expansion that their factory sector is experiencing. The steam has gone out of the Chinese economy and it is growing at a rather modest level now, quite a come-down from the 2020 COVID bounce back. When the 2021 growth data reaches the headlines, we will all need to remember it will be off a very low base in 2020. This will be true for every economy, not just China.

China has always taken food security very seriously. And this is a challenge for Beijing to manage when tastes go up-market and more 'Western'. According to a recent report, the per capita consumption of meat has reached 55 kgs, a +10% rise in just four years. It is a colossal demand rise. That is 20 mln tonnes of extra meat required every year, and rising. And this rising demand comes just as one major red meat producer Australia is reducing its production of meat products. It seems likely New Zealand will be reducing output too if the Climate Change Commission recommendations are adopted. That will force demand to other producers like Brazil where the climate consequences could be severe.

China is having yet another of its central set piece conferences designed to reinforce the power of General Secretary Xi, this one to enact a new five year plan. It is a chance to show off. But hot topics are the quick demographic changes, and their fast rising debt levels.

In Hong Kong retail sales remain in a severe tailspin, down -13.6% in January compared to the same month in 2020, and you may recall there were down more than -21% back then too as the Wuhan virus crisis and protests bit together. So from January 2019, their retail sales have shrunk by almost one third. That is truly a massive reduction. Hong Kong is shriveling, and that is probably an outcome Beijing isn't unhappy about as it brings its population to heal.

In the international airline industry 2021 is starting off worse than 2020 ended and that is saying a lot. Even as vaccination programs gather pace, new COVID variants are leading governments to increase travel restrictions. And that means international passenger air travel is still running almost -85% lower in January than the previous 'normal' (January 2019). It is very grim indeed in the airline industry.

But global international air cargo traffic is actually back to 'normal' (on the same 2019 basis) with January up +1.2%. This market features more demand than capacity, so prices are high. Capacity being removed for the once-lucrative and now-dead passenger market is causing a reduction in available freight capacity, and in fact the Asia-Pacific region is being hit harder than other regions over this impact.

In the UK, the collapse of the investment house Greensill Capital is having broad implications for many companies and many jobs. And that includes an Australian steel mill. Greensill's woes became especially serious when it couldn't get any insurer to cover it.

On Wall Street, they are still marking time today with the S&P500 down another minor -0.3% in mid-day trade. That follows European markets which gained +0.5% overnight. Yesterday the very large Tokyo market also rose +0.5%, while Hong Kong jumped an impressive +2.7% and Shanghai jumped +2.0%. The ASX200 rose 0.8% yesterday while the NZX50 Capital Index was up a mere +0.1%.

The latest global compilation of COVID-19 data is here. The global tally is still rising and at a faster pace, now at 114,912,000 and up +293,000 in one day, so no letup globally. Global deaths reported now exceed 2,553,000 and +10,000 since yesterday.

More countries (128) are into their vaccination programs. About 268.6 mln doses have been given so far (+24.3 mln). New Zealand is very much a laggard. China, for example, expects to have 40% of their citizens vaccinated by June.

The largest number of reported cases globally are still in the US, which rose +57,000 over the past day for their tally to reach 29,378,000. The number of active cases fell overnight and is now just on 8,943,000 and -32,000 fewer in a day, so many more recoveries that new infections again. Their death total is rising slower, now at 529,000 (+1000).

The UST 10yr yield is back up +5 bps at 1.47% and extending the yo-yoing pattern of the past few days. The US 2-10 rate curve is steeper at 133 bps. Their 1-5 curve is steeper still at +65 bps, while their 3m-10 year curve is also steeper at +144 bps. The Australian Govt 10 year yield is up +5 bps at 1.75% following the RBA statement. The China Govt 10 year yield is up +1 bp at 3.28% and an island of stability. The New Zealand Govt 10 year yield is also pretty stable, down just -1 bp at 1.75%.

The price of gold starts today lower by -US$17 from yesterday at US$1718/oz, still languishing at a nine month low.

Oil prices are marginally firmer at US$61.50/bbl in the US, while the international price is just over US$64/bbl.

And the Kiwi dollar opens at 72.6 USc and slightly lower this time yesterday. Against the Australian dollar we are lower at 93 AUc. Against the euro we are little-changed at 60.2 euro cents. That means our TWI-5 is back at 74.1.

The bitcoin price is now up at US$51,185 and a gain of +6.9% since this time yesterday. Volatility in the past 24 hours is very high again at +/- 5.9%. The bitcoin rate is charted in the exchange rate set below.

The easiest place to stay up with event risk today is by following our Economic Calendar here ».

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"....That will force demand to other producers like Brazil where the climate consequences could be severe."
What? Smells like Rotorua?

Brazil or a lab somewhere fabricating it from cells.

Maybe Oz is heeding Gates demand Western countries eat plant based meat.

We've just out sourced our methanol - why not out beef too? Good one greens, really thought that one through.

'Chinese operator starts up world’s largest single-train methanol plant
Ningxia Baofeng Energy Group Co. Ltd. has commissioned the world’s largest single-train methanol plant as part of its new 600,000-tonnes/year coal-to-olefins complex at Ningdong Energy Chemical Base in Yinchuan City, Ningxia Province, China."

Mortgage rate at 3% fixed for 30 years would be nice.

Nzdan...most mortgages in America are fixed for the term of the loan. Makes long term planning and being financially responsible much easier.

Interested to hear if anyone has a strong bull case for gold

Google Peter Schiff or Robert Kiyosaki, any time in the last 25 years

Eventually. Using the dip to buy aus miners. The madness of money printing will come at a price

aus miners is good

No, its an outdated store of value that is going to get eaten by Bitcoin in the next few years. Too manipulated, cumbersome, slow and high maintenance (you have to store it securely somewhere, this is a problem esp once you get a decent amount of it).
In todays digital world, why would you go backwards and purchase an outdated product?

Peter Schiff is an old boomer who just wont learn and who tweets more about Bitcoin than gold (theres actually a bot that buys bitcoin every time he tweets about it and sells 72 hours later. Up 1000% since Oct with a 65% win rate and average 3% profit lol), and Robert K is buying more and more Bitcoin these days.


But it's real, tangible, non-degrading, and doesn't require someone to keep a server somewhere, going.

I don't have any, nor do I intend to, but I intend to stay away from crypto-anything even more....

And so easy to dig up and store.

You are so old PDK. The obvious way we will beat this climate change is to with stuff like Bitcoin. Living virtual, housing, food, clothing. Nothing needs to be real and tangible anymore. ;)

Too true, I was watching a documentary the other night called the Matrix. Seemed to work well.

Why expand outwards in reality when you can expand inwards to exist in an infinite simulated universe the size of a quark.

That's all good, it is still early days and its not for people that dont want to do the research.
Bitcoin doesn't require someone to keep a server going, it is decentralised. You can transact and download the entire blockchain straight from satellites if you like.

So do none of your digital items have any value to you? your photos, contacts, email records, bank account balance...All of these are not "real" as you put it, so why do you care what your bank account balance is?

Can you pack your gold up with you in a hurry and leave the country if it is turning to shit? Without it being confiscated at the border...

Bitcoin is many things, depending on what the individual wants to use it for :)

So tiresome the btc argument. It’s grossly inefficient re power use and is no more than software gobbling up massive energy resources for no purpose (largely coal fired which the young btc freaks should find abhorrent).
Invest if you will, as I will in gold. But give us a break from the god like worshipping guys have.

BTC is not the only crypto - $Nano runs on a fraction of the cost of BTC when it comes to energy and is feeless/instant to boot. BTC was a pioneer but is not the only crypto there was or ever will be.

Sentimental value to me != economic value to anyone else. Pretty sure the local dairy wont let me pay for a loaf of bread and a bottle of milk with my 2019 holiday pics.

" Too manipulated, cumbersome, slow and high maintenance (you have to store it securely somewhere, " sounds like the perfect description for bitcoin if you ask me.

I really feel sorry for gold bugs. They have been (rightly) preparing for this moment for decades and then suddenly along comes Bitcoin and it destroys gold's value prop. No wonder Peter Schiff is so grumpy all the time.



Always amused me that food isn't exempt from climate taxes but airlines are. Just shows how the jet set drive the direction of policy.

On that note interesting to see the UK budget overnight, I'm glad I'm paying income tax in New Zealand and not the UK! That 40% income tax rate is eye watering. We're a comparative tax haven.

We've got our priorities right in the UK though ;)
"£150m to help communities take over pubs in danger of closing"


Yes but they don't pay tax on the first $25k which is what NZ should implement along with taxing capital gains to broaden the tax base

True, and this makes a huge difference for the poor:
'At present, people start paying 20% income tax when they earn £12,500 a year, known as the personal allowance. The starting point for paying the higher 40% rate is £50,001. These thresholds will go up to £12,570 and £50,270 in April, but will then be frozen until April 2026.' (BBC)

Makes a total mockery of those that claim low income earners pay no tax.

And don't forget there's also National Insurance at 12% on earnings over about 8000gbp too!

It is called a welfare state
Meaning ambulance service not a charity, firemen get paid, school kids don’t need crap breakfast food from teachers and schools don’t have to raise money from parents each year that poor can’t afford. Not to mention that disabled pensioners get a lot more benefit

There'd be a thread from someone crying their eyes out if the same tax measures were announced for NZ. "You're just jealous of meeeee".

A bold Labour government indeed...

That's why I enjoy New Zealand, the kindest little country that would impoverish children to marginally reduce taxation. In most countries it would be unacceptable but here it's normal.

Mike you might need to read some of the uk papers if you can stomach them..NHS in dire straits (even before covid), food bank use soaring, working people in poverty, schools now mostly academies run for profit (and my rellies there certainly do have to raise money for schools which are cash strapped).
Makes you wonder where all the money goes...they can't blame Brussels anymore

Having been in uk for 48 years before 2011 and with v informed people as family there, and having studied and worked in welfare rights for 20 years I know uk is lot more provided for than nz esp in respect to housing benefit for instance as well as dentistry etc

Fair enough. Although apparently the new Universal credit system is a bit of a shambles.
I can never understand why dentistry is treated differemtly to other medical disciplines. Especially when apparently lots of conditions start through bad oral hygiene

In the UK the first 10000 was Zero tax rate not sure if this is still the situation.

It's 12,500 now

They are also reintroducing 5% deposits for mortgages....what could possibly go wrong?!

All very well for ordinary people but not so great of you are a high income earner.

This year a scheme called CORSIA started for international air travel which requires the purchase of carbon credits for carbon emissions above 2019 levels. See for more information.

Interesting counterpoint to a one-way adjectival flow.

Was 'heal' intentional? Subliminally correct, but perhaps further down the track?

'heal' - hmm, perhaps should have been 'hell'

Unintentional, should have been "heel"

I think you mean to bring the HK people to "heel"


I wonder how easy it will be for the people of Hong Kong to emigrate in future. I know there is that British passport thing, but to other countries?
Lots of mainland Chinese have been allowed to emigrate to places like NZ possibly in an attempt to swamp small countries like ours. Swamp it with Pro CCP ideologies. But if lots of anti CCP Chinese from Hong Kong were to flood to places like NZ, I am 100% sure that China would not be happy. One little bit. It would water down its influence here.

"Lots of mainland Chinese [Xingmowangs] have been allowed to emigrate to places like NZ possibly in an attempt to swamp small countries like ours."

The Chinese I know in NZ are not pro CCP ideologies

Most Chinese I know aren't, but around 20% of those I know are quite staunchly pro-CCP

Australia introduced last year a visa that allows hong kong citizens in Australia to stay for five years and then transition to permanent residency - they called it the Safe Haven program. I believe Hong Kong citizens also are getting preference if they decide to emigrate to Australia. At the moment NZ is the only one of the 5 eyes not to put a formal program in place for Hong Kong citrizens.

NZ is probably still "reflecting" on that one...


Uninterested....if a migrant from Hong Kong wants to move here and is genuinely well-qualified and/or financially secure and prepared to invest in our economy (not in housing only), often creating jobs for NZers, then we need to welcome these type of people here with open arms. They are "net positive migrants". However, if a different type of migrant wants to move here with only the shirt on their back, often as a beach head for a steady flow of similar "net negative migrants" in the form of family and cheap migrant labour for completely unskilled work then........ .
We have the right, and owe it to our citizens, to pick and choose on the basis of of who is likely to benefit our society and who is not.


And then there is the question of population size....? So while your sentiment is easily agreeable, in the end I'd have to no thanks. I suggest that NZ has already stepped over a sustainable population, so there should be NO immigration at all. We need to find new ways to do things, and take our economy back to supporting people, not the banks and the wealthy.

NZ should drastically cut immigration, agreed. No immigration is impossible - Kiwis travel and meet people overseas and fall in love and bring their partners back to NZ - that happens. On the other hand INZ approving of arranged marriages bugs me: see
And there really are a small number jobs that only foreigners can do (I once met someone with specialist air traffic control experience who had worked in North Korea and had two official passports one for travelling to Israel and another for Arab countries.

NZ can sustain (feed) a much larger population. But the world's population is unsustainable, NZ should set an example in planning for a declining population for much the same reason we are talking about setting an example with climate change policies.
The more personal argument is I love NZ's low population density - when I return to the UK and France I'm appalled by the sheer mass of humanity. Some commentators (usually native Kiwis) would love our population to grow. I belong to the other group (usually immigrants) who want the population to stabilise or shrink.

I'm with David Attenborough who holds that overpopulation is the largest factor in climate change.

Isn't he one of those guys who travels the world with a crew of many and lives as one of the top few percent. Probably has the carbon footprint of twenty sub-saharan families of six.
But yeah it's population.

That's the same mistake Jim Mora used to make about Al Gore.

Shooting the message to denigrate the message?

Common but flawed approach

murray.. IMO if a foreigner brings millions into NZ they are an overall positive on our society and should be allowed in. My personal preference for guideline settings (that are constantly monitored and reviewed) would be as follows:- (max PA figures)
temporary work visas 4 000
spousal visas 3 000 (flexible)
student visas 2 000
dependent children of spouses 3 000 (flexible, but MUST be under 18)
parental visa 50 (very exceptional situations only)
arranged marriage visas 0
refugee visas 1500
HNWI visas 2 000

There should also be a strict limit of 30 000 temporary work, student and family visa holders in NZ at any one time. While zero (or near zero) would likely be best for NZ as a whole I think we need to be compassionate and allow a small very tightly controlled number to be here. But things like Cook Islanders having automatic NZ citizenship, Pacifica coming here year after year to pick fruit (and many even choosing to overstay here without any fear whatsoever of deportation if caught) and economic migrants fleeing their own hellholes to drive a taxi, deliver pizza or sell you alcohol should be things we can look back on and say' "how on earth did we ever allow that to go on for so long?".

So millions would Trump character with regards positive/negative impact on society here?

You can measure money but not character. Note the failures/successes when the minister has overruled his INZ bureaucracy to grant exemptions.

Karl, you need to ask yourself how they made their millions, and what their expectations are when they move here. The view of capitalists is generally just to make more money and bugger the consequences. This is no longer sustainable. Our finite world is showing us what happens when we go past natural limits, so we need to find new ways to do things, new ways to support our population, and all this without destroying our environment and leaving our children and grandchildren with just a toxic pond to live in. I do accept that to set an immigration limit of 0 will be difficult if not impossible, but we'll never get there if we don't try. Population size, and density, are every increasingly present issues that need to be addressed, but which are strongly avoided by all governments.

Your point about the 'hell holes' is well taken, but that is an international Government issue where Government standards should be set as a target for all Governments. Something the world has never achieved despite the rhetoric in some areas.

Millionaire bottle shop owners who made their millions from their sweat factories out the back of the schools.

Karl, Your figures are worth discussing. And that is precisely what is not happening among our politicians. For what it is worth in my view:
Almost unlimited parental visas - but with the govt paid up front (could even be in escrow) for pension and health costs. Especially valuable when the parent is going to live with the family (no need for more housing).
Unlimited student visas but no permission to work or bring family.
Refugee Visas - reduce drastically. The money spent on bringing refugees here is far more effectively spent back in the refugee camps [on UK study claimed the cost of one refugee would support over 30 in the camps]. There are many success stories often repeated about refugees who are now doing important work in NZ; even refugees who are now patriotic MPs however they are balanced by our failures. Not the NZ ISIS woman in the news recently - her parents arrived as refugees; they were unemployed, had poor english and eventually moved to Australia. Not every refugee absorbs the values of their new country - some strongly rebel against it.
I would argue for Cook Islanders and Nuieans to be excluded from immigration data - they are really part of NZ but with more powerful local governments than the Chathams and Stewart Island.

"Refugee Visas - reduce drastically." - and we get to pick them on the basis of 'net positive' too please, or we quit the UNHCR programme entirely.

Fully agree Karl. But before we get specific about immigration numbers we need to be specific about our desired population. And set the immigration figure after that.
My preferred population for New Zealand is two million. I would accept five million as a political settlement. Probably we should just let it drift down.
There is good reason for cross border flow sometimes. New Zealanders training overseas etc. And interchange of skillsets (say in health). But frankly we should expect agencies who need specialist staff to train New Zealanders on a long term plan.

Hong Kong would love to ‘heal’, but Xi is bringing them to heel?

He'll let you know....

Oz has the blue heeler. China the red heeler. There it is.

and Economists could be called Faith-heelers?

Still too many new virus cases in USA.... but as Trump said last year "it will be gone by April". There is now a good chance of that actually happening

"New Zealand’s $33 billion national pension fund has excluded five Israeli banks from its portfolio because of their role in financing Israeli settlements in the occupied West Bank."

And about bloody time. Take note NZ Govt. Contrary to what Ashely Church says we do understand and regardless of how he tries to spin it we should not have anything to do with people who imprison children without trial and ban people from (some ) Govt positions based solely on ethnicity.

I remember being rejected for a job in the NZ Navy because I was a recent immigrant. The USA reputedly imprison illegal migrant children without trial and Australia seems to have abolished the right to a trial if you are suspicious (have a gang patch) and were born and lived in NZ decades earlier. That's the trouble with morality and a capitalist system - do you leave it to the consumer or does the govt decide who we shouldn't trade with? he who is without fault should throw the first stone.

Woe betide Grant Robertson if he even thinks about again delaying the housing announcement, or does a non-announcement or somehow slithers out of his obligation and his own profuse promises of a fairer NZ

Oh just keep CV19 death threats bubbling away on top of the headlines. Anything else to stay under the dust clouds of that.

Covid is so handy like that

Almost certain that announcement will be delayed, or if there is action, the "first part" will be for the budget this year (which will be playing around the edges and probably making the problem worse, like increasing FHB grants or setting the limits higher on property prices they can be used for), while the next part (which will be more fiddling with some tax rates for investors) will come in next year or the year after.

If you are looking for something transformational (like ordering the RBNZ to change the risk weightings for banks regarding types of lending, or a massive build program partnering with Panasonic or another group) you are barking up the wrong tree. This government is not transformational, it is pitifully inept, filled with either populists who know how to appease, or managers that do nothing but become another impediment to progress (see Twyford). Even the new crop of MPs appear to be surprised and happy that they have "good jobs", but likely can't organise their way out of a carpark building. Underlying it all is a general blindness to reality, of the housing, climate and drawdown crises.

Thanks NZ for voting for it.

We get what we deserve.

Well Well Well US Mortgage rates have risen.

Yesterday Australia stated Mortgage rates will rise if the housing market starts to over heat (this was after 1 Month of house growth >2%)

Tony Alexander came out overnight and said NZ rates will rise this year and banks will start passing through increases (external to the RBNZ's direction) by April - I can only imagine this is because global funding costs are on the rise.

Looks like the boom time is over and Jacinda, Adrian and Grant need to get on board - no excuses left- if the rest of the world can increase interest rates on mortgages to stop an asset bubble.......

In theory, but in practice very little funding for lending has yet to be taken up....

The banks don't seem to be too worried about it -- or they'd be taking up the FLP, wouldn't they?

If I offered you $1,000,000 for 3 years at 0% to lend out at 5% p.a., to borrowers who you previously wouldn't lend to at that rate, would you take the cheap funds and lend them out?
Getting that 5% spread is great - IF the borrowers repays you the $1,000,000.

Liquidity can't transform the credit standing of borrowers. In fact, it can only make it worse. A good example? Mortgage Lending.....(Haven't we seen all this before, and not that long ago?!)

Once an economic system has priced risk out of the cost of funds, it's headed for trouble.

Memories seem selectively short

But the banks here have been acting thus far as if property is and always will be a zero-risk investment. I'm not saying they're right, just asking: has something actually changed? If they saw some risk in pouring money into mortgages, why would it manifest as reluctance to take up zero-interest funds when they show no other inclination towards caution?

"Once an economic system has priced risk out of the cost of funds, it's headed for trouble" - perfectly said, and Reserve Bank tricksters like Orr are experiencing increasing trouble in deceiving the markets.

Smart money will be jumping ship already in anticipation. The rest will go

Reality is the OCR is only very loosely connected to the actual interest rates available. If the OCR doesn't rise and the cost of the bank borrowing rises then that's going to get passed on regardless of where Orr thinks the interest rates should be. Banks have been loosing term deposits hand over first is you believe what's written on so the lending has to be backed from somewhere. The next few months could be interesting, but then they always are.

Banks have been loosing term deposits hand over first is you believe what's written on

But not deposits - evidence

Grant Robinson and Mr Orr when it comes to taking action to promote and support rising house price took over night action ( Just the thought that house price growth will stall made them to take overnight action in April/May last year - and this was not that market had fallen but was just the fear that it might fall or stop rising) AND now when it is not a thought but reality that house prices are rising in multiple every month, if not every week and is so obvious that no one can deny or avoid both Mr Robertson and Mr Orr are playing with time under the farce of setting up a committee (everyone know that committes are set many time to avoid taking action and buying time) or asking advice from each other :

If Mr Robertson knows and wants to control speculative demand than just like LVR, can go for DTI for speculators and by taking action on Interest Only loan. As he himself said that their is no silver bullet but just like trying LVR can try DTI and removing interest only loan which is used by most speculators - Why play with time specially when is obvious that ponzi is touching new heights.

Have few meetings between both ( Mr Robertson and Mr Orr) the supporters and promoters of current housing ponzi and should come to term that now as has gone in extreme and under pressure will have to act and discuss the options of DTI and Interest Only loan and this discussion should not be IF but HOW to impliment INSTEAD playing with time. This consultation could be done in days or a week but why are we hearing it from Mr Robertson since last few months.

Today also just like last few months Mr Robertson will just throw an idea, asking for advice with no intent. On the part of Mr Orr when it comes to rubbishing the idea propsed, does it the very next day on public platform otherwise keeps mum giving opportunity to Mr Robertson to show that is concerned but in reality both playing the game of screwing average Kiwi.

The fastest I've ever seen politicians move and they were all positively radiant after announcing emergency OCR cut, wage subs (we know where alot of that went) , lowered LVR


Yip house prices falling 5% was a state of emergency. House prices rising 20%....oh look, somebody has lost their toy bunny.

It really was a state of emergency - like in all Ponzi schemes, you can't afford even the least wobble or sign of weakness, lest too many speculators run for the exit at the same time. And like in all Ponzi's schemes, you actually can't even stay stationary, as you actually new need suckers all the time, to keep the deception alive.
NZ housing's house of card is more fragile than many specuvestors care to think. This is why the RBNZ was hysterically urgent in ignoring its own financial stability remit when it started its reckless ultra-loose monetary policy, and also stupidly removed the LVR restrictions.
Many ignore that this is a sign of profound weakness, not of strength, of the housing market.


Jacinda Ardern, by promising in 2019 that there would be no capital gains tax while she is prime minister, then just before the 2020 election that there would also be no wealth tax nor any other new tax imposed by her government, has effectively assured house-owners and house-buyers that property must always rise and never fall. An extraordinary betrayal of the poor of New Zealand.

There already is a wealth tax. Local government has has a longstanding grip on that through assessing and calculating rates pro rata on the value of your property. That is, the higher the value the greater the rate demand regardless of services that are actually supplied. And over the top of that the government collects their 15% GST.

The rising tide of property values lifts all boats, so you would only have to pay for a larger slice of the local council pie (wildly mixing metaphors), if you had somehow added value to your house above the houses of all your neighbours.
There is a strong case for central government leaving the GST with the local council to spend locally.
But apart from that, who would you ask to pay for your local infrastructure and services if it were not to be paid from local body rates, which ultimately are paid by all residents, whether property owners or renters?

Correct and that is the point. On the face of it rates are charged for services required and received by each owner. So why then for example in Christchurch, two neighbouring houses, same size section, same size structure, same street frontage, one pays annually rates $4,300 the other $8,100. The latter is a rebuild from EQs but it receives no greater service or cost of service from the council than the other. Therefore the extra rate charge is being calculated purely on value or the extra “wealth” of the property. It hides under being a service so the government can get their GST but it is more accurately in its outcome a wealth tax.

Which leaves only one truly effective action and that is to remove the tax deductibility for borrowing costs on a sliding basis over say 4 years.

Meanwhile, Orr is making a fool of himself:

"People should be very worried about soaring asset prices that have been driven by low interest rates, Reserve Bank governor Adrian Orr says.

Responding to questions at an economics forum hosted by Waikato University in Hamilton, Orr suggested people were not pricing in risks in the share market and housing market correctly."

That's LITERALLY YOUR JOB you numpty. To set the playing field so that people don't take extreme risks. It's literally your job as you have a mandate to ensure financial system stability. Blaming others for a lack of YOUR ACTION on people being able to take too much risk is blame shifting at its best. And instead of doing something intelligent, you are throwing gasoline on the fire to try and put it out (in the form of printed money).

Central bankers have severe mental health disorder/s. They're the arsonist and fireman.

Breakfast briefing: The reflation trade isn't going away

Nonetheless, on the turn - 5-Year, 5-Year Forward Inflation Expectation Rate

Same with CNY. Read host article.

I'm seeing the phrase 'short term commodity price squeeze' along with your point that the 5-year forward inflation expectation rate is for a decline in inflation after a short term bump. I think that anyone getting excited about a long term super-inflationary trend is kidding themselves.

Govts have become involuntary Keynesians. They have had to do wage subsidies and stimulus packages if they wanted people to stay at home and break the chain of Covid transmission. Those govts not putting any support measures in place and trying to keep things open have had worse results economically than countries like China, NZ and Australia that had lockdowns and adequate support measures.

However just because neoliberal govts the world over have had to take fiscal measures to support their economies it doesn't mean they like it. At the first opportunity they will go back to austerity, balanced budgets, the free flow of labour and more user pays.

A brief bump in real world inflation due to adequate govt spending will quickly be followed by a reversion to the low growth trend we have been seeing in the last decade due to the lack of spending power of 70% of the population in the Western World.

This will gradually be reversed as the lack of labour due to demographic changes in the Western world and in China start to have an effect in higher wages, but I would have thought that this would be over the next decade and be a slowly building change.

High prices in housing, bitcoins, shares etc are all due to easier finance and lower interest rates coupled with short term govt fiscal support measures. It is a speculative response by a population having to spend locally and who currently have job certainty. It only translates to long term inflation if those conditions last. Govts will want to stop spending as soon as possible, central bankers will want to raise interest rates as soon as they can. If both take action at the same time then there will be a contraction closely followed by a another loosening of the money supply as central bankers panic at the results and politicians drag their feet on re-introducing fiscal measures.

I don't see deflationary forces being overcome by inflationary forces in the near future.

Central Park New York is coming to...Wanaka area. Expect to see more celebrities in town.

No one is an expert. Even this news that housing boom has past its peak is actually to calm the nerve of the speculators as when one reads it says that even next year house price will rise by 7.5% .....and by 2023 may fall......This is another way to sound realistic and impartial but actually assuring speculators, not to worry and continue without panicking for now.

Surprising now even the patriach of RE Lobby talking about fall... May be trying to make Robertson shit in his pants before him making any announcement to combat speculative demand (may be delay, if cannot avoid or dilute it) as everyone knowd how scared Jacinda Arden and Robertson are with just the very thought that housing ponzi may stop.


I've noticed new stories of houses selling -"within hours".. Why the rush hmm

NZ at the head of the queue for vaccines?

Yep the Far Queue.

Except for every other OECD country it seems. Same problem as Germany, they did a good job at first and became complacent.

We definitely shouldn't be, it's morally destitute to promote the idea that we should be. We are part of COVAX, which is giving them out by need. Guess what, we don't need them.

Think about all the thousands dying everyday all around the world, don't you think the vaccine would be more useful there? Remember they are a scarce resource, you can't just instantly print more of them. They need to go where they are most needed to be the most effective. Yes immunise our frontline workers, but our general population doesn't need it yet.