What happened Tuesday

A review of things you need to know before you go home on Tuesday; no retail rate changes, Auckland auction success rises, Briscoes stars, credit card balances droop again, swaps and NZD on hold, & more

16th Mar 21, 3:59pm by David Chaston

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

MORTGAGE RATE CHANGES
No changes to report today.

TERM DEPOSIT RATE CHANGES
None here today either.

SALES RATE RISES
Auckland realtor Barfoot & Thompson's auction sales rates range from 67% for North Shore properties to 79% in Rodney, as they report fewer auction sales but a better sales rate.

KING DUKE
Briscoes (BGP) announced a $73.2 mln full year profit, up +17%, on sales that exceeded $700 mln. And that was despite their investment in Kathmandu not returning anything this year. (Briscoes is not in the NZX50 because it is controlled essentially by Rod Duke and liquidity is too low to be included in the index. If it was included, it would rank as #25.) Its shares rose +5.5% today.

FAST ATROPHY
January credit card transaction levels came in -5.2% lower than for the same month in 2020, so that confirms the retail slowdown, principally due to hospitality. Credit card balances however have fallen -$1.0 bln in a year, and -$244 in a month, the most since the March and April 2020 lockdown collapse. Now only 55% of credit card balances incur interest, a record low. Buy-Now-Pay-Later activity is eating away at the credit card business. But we know very little about BNPL, an opaque corner of the debt business that is avoiding any regulator scrutiny.

GOLD HOLDS
Gold is trading in Australia, and soon in Asian markets. So far today it is at US$1733 and up +US$1 from where it closed yesterday.

EQUITIES GENERALLY HIGHER
The S&P500 traded almost all its session flat, then had a very late burst higher to end up +0.7%. It was a tech thing. The NZX50 Capital Index is up +0.5% in late trade today and building on yesterday's good gain. The ASX200 is up +0.9% reversing yesterday's fall. In Tokyo, they have opened up +0.7%. That is matched by the Hong Kong open. Shanghai has opened up +0.5% reversing half of yesterday's fall. In a month, Shanghai has lost -6.5% despite their "home team" interventions.

SWAP & BONDS RATES MIXED
We don't have today's closing swap rates yet. If there are movements today, we will note them here later when we get the data. The 90 day bank bill rate is up +1 bp at 0.33%. The Australian Govt ten year benchmark rate is soft at 1.72% and a one-day fall of -5 bps. The China Govt ten year bond is holding higher at 3.29%. The New Zealand Govt ten year is down -7 bps at 1.79% and now slightly below the level of the earlier RBNZ fixing at 1.80% (+1 bp). The US Govt ten year is -2 bps softer from this time yesterday at 1.59%.

NZD HOLDS
The Kiwi dollar is now at 72 USc and basically on hold. On the cross rates we are up marginally to 93 AUc. Against the euro we still at 60.4 euro cents. That all means our TWI-5 is still just under 74.1.

BITCOIN DROPS SHARPLY
Bitcoin has fallen to US$53,926 which is a drop of more than -US$5,800 in one day or -9.7%. That is the second largest daily drop ever and as today isn't finished yet, it may still take the record. The decline seems to be building late in the day. Volatility over the past 24 hours has still been a sky-high +/- 6.8%.

This soil moisture chart is animated here.

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

Daily exchange rates

Select chart tabs

Source: RBNZ

Source: CoinDesk

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42 Comments

by taimaiakka0 | 16th Mar 21, 4:19pm 1615864797

Credit goes to Jacinda Arden to create a new breed of beggars - FHB with million dollar

https://www.newshub.co.nz/home/money/2021/03/first-home-buyers-resort-t…

Kudos to Jacinda and Robertson for jointly achieving a feat of creating new breed of beggars - FHB who with money are going begging for a house.

David chaston your response, is it a truth or myth or can even deny or avoid just like Jacinda

by dago | 16th Mar 21, 4:22pm 1615864951

Meanwhile, Grant Robertson questions govt investment vehicles ethics https://i.stuff.co.nz/national/politics/300253911/grant-robertson-wants…

by J.C. | 16th Mar 21, 5:43pm 1615869782

He said he's 'looking for more information'.

by richard1965 | 16th Mar 21, 5:47pm 1615870040

Standard reply frim both robertson and jacinda :, Waiting for more information or Waiting for advise.

If at Midday, you ask him is it noon, his first reaction will be Waiting for more information and if yoh ask with Jacinda will reply Waifing for advise

Both stand exposed Now.

by EdwardD | 16th Mar 21, 7:39pm 1615876782

Appears that he has been looking for more info for quite awhile.

by Audaxes | 16th Mar 21, 4:37pm 1615865870

First-home buyers are resorting to extreme measures to buy homes, using targeted letterbox drops, door-knocking with cash offers and trying to view properties before they're listed..

What defines a bubble is that investors drive valuations higher without simultaneously adjusting expectations for returns lower. That is, investors extrapolate past returns based on price behavior, even though those expectations are inconsistent with the returns that would equate price with discounted cash flows. The defining feature of a bubble is inconsistency between expected returns based on price behavior and expected returns based on valuations.

“As long as investors focus on year-to-year returns and not discounted cash flow calculations, the bubble can continue to grow in self-reinforcing fashion. Investors anticipate a high return, and the price behavior reinforces the expectation. The true long-term return becomes increasingly detached from the long-term return imagined by investors, and the bubble component accounts for an increasingly large proportion of the total price.” Link

by Yvil | 16th Mar 21, 4:39pm 1615865977

I don't think it's extreme at all to drop pamphlets in letterboxes, it's smart, I've been doing this for many, many years

by bw | 16th Mar 21, 4:58pm 1615867127

A good read. Thx.

This is how very bad things have repeatedly happened in the financial markets across history, enabled by what Galbraith called “the extreme brevity of the financial memory.” The trap door quietly swings open when valuations are extreme and market internals begin to deteriorate. That’s the situation we’ve observed in our measures in recent weeks, with the initial deterioration largely driven by debt securities, but with increasing divergences in equities as well....By our most reliable measures, run-of-the-mill historical valuation norms are roughly 70% below current levels. We’re currently farther away from “typical” expected returns than at any moment in history, including the 1929 and 2000 market peaks.
I suspect that a near-vertical market plunge on the order of 25-35% is coming, probably quite shortly, most likely out of the blue... driven by nothing more than the sudden concerted effort of overextended investors to sell.
The truth is simple but uncomfortable.

by richard1965 | 16th Mar 21, 6:05pm 1615871105

#jacindacreatesnewmillion$FHB

by theglc | 16th Mar 21, 10:35pm 1615887350

#jacindaslaves

by Zack Brando | 16th Mar 21, 7:23pm 1615875789

Well, I'm in Christchurch and definitely get a few in my letterbox every year - often hand-written, photocopied pleas from FHB. Lots of companies wanting to buy as-is-where-is properties here too. I rent so just chuck them in the recycling to be turned into egg-cartons?? .. I guess lol

There's nothing wrong with it. Real Estate Agents/Salespeople do flyer drops all the time. It's an opportunity for property owners to avoid sales fees. Granted it speaks to demand and if you never take your property to market, you'll never know what the market would have paid. I imagine getting a good valuation in these situations is key.

by Pusheen | 16th Mar 21, 5:40pm 1615869619

More money to be made when property climbing price, at least until 2025.
NZ has not yet catching up to be no.1 - so more room to go by govt & RBNZ to ensure this. Tweaks:
Demand: No OB, No LVR (back again just for PR), FLP for housing, ensure no CG, lower OCR, Stimulus
Supply: Tweak the RMA(pretend), more KB;-), no cheap foreign labour and other legislation to slow it down.
The major points is: if clearly the NZ is heavily rely on F.I.RE economy? means any tweak is a 'must' to maintain the self fulfilling price trajectory - any tweak to tone it down? will be responded by market in brutal way.
Hence, the slogan team of 3.5m 'to be kind each others' - lucky those 1.5m that already displaced abroad.

by Zack Brando | 16th Mar 21, 7:41pm 1615876880

Don't voters have to take some responsibility? We live in a democracy [supposedly], these problems aren't new. In many ways Kiwis are suffering under a yoke of their own making.

It's a hard truth, but to quote Michael Jackson, "I'm talking about the man in the mirror". I take my civil responsibilities seriously, perhaps you do too - but in a democracy it's the majority that counts.. under MMP, even a high-single-digit percentage of responsible citizens would have counted!

We don't live in America or Europe where you can just drive to a different state/country! The NZ citizenry has failed on housing. As housing is a necessity, NZ, for SOME, could be considered a failed state. What can I say, there is plenty of blame to go around, but MANY should start by looking in the mirror.

by youngdumbandbroke | 16th Mar 21, 7:55pm 1615877709

Ironic you picked MJ as an example of morality. Pretty bold to blame the population for the governments they’ve been voting in when these governments have repeatedly failed and/or refused to fulfill the policies and promises they were elected for. As Abe Lincoln so famously expressed - democracy is a government of the people, by the people and for the people. How many of NZs recent governments have done anything other than deliver lip service while our once egalitarian society falls apart?

by Zack Brando | 16th Mar 21, 8:07pm 1615878471

Woman: The serpent tricked me and I ate
Man: The woman YOU gave me offered it to me

Nobody wants to take responsivity. If you repeatedly vote back in visionless, inept political parties.. aren't you asking for trouble?

by youngdumbandbroke | 16th Mar 21, 8:19pm 1615879146

Society votes for a government in confidence they will deliver their promised outcomes for the greater good. If they fail to do so or deliberately not do so, then the responsibility sits squarely with the elected officials. That’s the piece of democracy that’s missing - the accountability part

by redcows1 | 16th Mar 21, 8:12pm 1615878765

But isn't that the point of the comment that collectively this what/who we voted for.

by youngdumbandbroke | 16th Mar 21, 8:15pm 1615878959

If we voted in Labour in good faith that they will follow through with their election policies and promises, then they either failed to deliver or deliberately chose not to deliver, is it really the voters fault?

by MLSmith1 | 16th Mar 21, 8:26pm 1615879560

Yes... if you had half a brain you would recognise the spin and shallowness of it all.

by Zack Brando | 16th Mar 21, 8:40pm 1615880447

@MLSmith, it's ok to vent buddy :)

by Zack Brando | 16th Mar 21, 8:42pm 1615880554

Jacinda said BEFORE the election:

- She wanted house prices to increase
- Capital Gains Tax [if ur a believer] would not happen
- She would respect the majority vote on proposed cannabis legislation
- She believed poverty/child-poverty was getting better

Voters aren't necessarily AT FAULT, but surely they need to accept blame.. otherwise won't they just continue voting against their interests?

The housing situation in NZ has been created through inaction and bad decisions over decades. It stands to reason the opposite would be true. That is; fixing the housing crisis by taking action and making good decisions moving forward. "Good" doesn't mean the pixies coming down from the sky.. there will be winners and losers - it would/will be tough at first, but results would fast follow.

by youngdumbandbroke | 16th Mar 21, 9:06pm 1615881997

She said kiwis “expect” house price increases, very important difference. Believing and achieving my rhyme but that’s where the similarities stop. Politicians are immune from true accountability that voters encounter in their workplaces, so I find that blaming the public for elected officials’ incompetence unsavoury. Is it too much to ask governments to just do their job, given the fat pay checks and kickbacks they receive from the taxpayer?

by Zack Brando | 16th Mar 21, 9:11pm 1615882268

It would behoove the public to ask politicians what they believe their job to be.. before forming expectations.

by youngdumbandbroke | 16th Mar 21, 10:10pm 1615885841

The politicians should already know their job. They campaigned for control of parliament by promising deliverables to the electorates and the public voted for the party with the plan that they believe will serve NZ best. Voters have the expectation that elected officials will deliver the plan because that’s how it’s supposed to work. Until it doesn’t

by Zack Brando | 16th Mar 21, 10:51pm 1615888275

You're right of course.

They are there to represent their various constituencies, aka their electorates. Many people on interest.co.nz complain about housing, HOWEVER, when was the last time they took it up with their local MP?

Political parties more represent a vision for the nation. Most/ALL are currently visionless IMO. Parties able to form a government get ministerial reigns - a steering wheel. There will be legal definitions and handbooks relating to member's job descriptions.

I'm simply suggesting we ask them what THEY believe their job to be - the answers, I'm sure will be quite telling.

by alittle | 16th Mar 21, 6:37pm 1615873051

Partial solution is better than No solution

https://www.newshub.co.nz/home/money/2021/03/housing-crisis-economist-s…

Add DTI and may add to that partial solution

by JimboJones | 16th Mar 21, 7:04pm 1615874643

Do all the people who go on and on about Jacinda and Grant actually know of a good solution to house prices themselves? I’m not sure there is any short term fix other than somehow forcing the RBNZ to raise rates.

by frazz | 16th Mar 21, 7:18pm 1615875512

Totally agree- how about tomorrow every comment should be offering only a solution. I think we are done with over a 1110 comments on how did we get here?

by custard | 16th Mar 21, 10:12pm 1615885943

Define solution – what exactly is the problem we are trying to solve.

Once defined – you have a chance at a plan enabling a solution.

However, the solution may be very uncomfortable for some – and politically unpalatable.

So, now what are you going to do.

To my mind this is a complete shambles and the government of the day has simply no idea of what to do to fix it, and after having complete culpability of creating it – now will simply have to go back to their old game of lies, spin and mis-truths – because they don’t even understand what they’re trying to fix.

by Nzdan | 16th Mar 21, 7:21pm 1615875696

Well I'm sure if the RBNZ was forced to raise rates and we had carnage, those same 'heroes in hindsight' will have a lot to say.

I doubt it's got anything to do with action or inaction, but just a whole lot of partisan barking.

by youngdumbandbroke | 16th Mar 21, 7:58pm 1615877899

I’ll go first. End interest only loans tomorrow and introduce an empty home tax

by redcows1 | 16th Mar 21, 8:17pm 1615879040

Limit the total volume of bank residential lending.
If the banks weren't able to lend in this volume the price couldn't go up. Simple.

by MLSmith1 | 16th Mar 21, 8:31pm 1615879912

The solutions are manifold but those in power wouldn’t act on them as it would (1) required them to have long term vision (2) bring the people along with them and sell the vision (3) have courage (4) sell and tell all, there will be pain and sacrifice but the end justifies the means

by Zack Brando | 16th Mar 21, 8:51pm 1615881082

Money has corrupted the American political system. However, wise rich people in politics can be beneficial - they don't care if they're voted out AFTER doing the right, often painful thing.

by the Joneses | 16th Mar 21, 10:02pm 1615885335

Really? I would be interested in hearing an example or two where that has actually happened. Usually rich people simply get into politics to make themselves richer, or get their kicks out of the power and status of the position.

by Zack Brando | 16th Mar 21, 10:30pm 1615887010

Knowledge is knowing the right thing, wisdom is doing the right thing. Many great American statesmen have been independently wealthy. In recent times here in NZ, we had Gareth Morgan trying to make a difference. Not to say he was perfect by any means.

My point is; it's not always the rich that are/get corrupted by money. In a real sense having politicians whom are both rich AND wise is advantageous. Perhaps I'm wrong. Perhaps I'm not expressing my stream of thought well.. I'm happy to let this one float out to sea. lol :)

by custard | 16th Mar 21, 10:38pm 1615887507

It's quite fascinating - I haven't really seen this in a very long time.

They have smiled, lied and spun while all along painting themselves into a politically impossible position.

I'm actually intrigued to see how, and if they really ever, get themselves out of this housing shambles mess of their own creation - in terms of self inflicted wounds, it's quite extraordinary.

by Fritz | 16th Mar 21, 10:47pm 1615888043

Yeah.
Btw what's happened to that Unitec housing development?
That moron Twyford announced a major development early in his government's first term for the land, it was going to comprise thousands of apartments. A few years later, what's happened?
I might do an OIA.

by custard | 16th Mar 21, 11:27pm 1615890469

With you Fritz - never let up, keep pushing.

by Theoracle | 16th Mar 21, 9:52pm 1615884776

3D printed govt funded social housing. That's my suggestion.

by bw | 16th Mar 21, 7:36pm 1615876586

The Washington Post has published an astonishing retraction two months after a bombshell story about a phone call between then-US President Donald Trump and an election's investigator in Georgia....the quotes attributed to Trump, and relayed to the media by an anonymous source, were false.
CNN also issued a correction today.
The false quotes were included in House Democrats' impeachment brief.

by stuart786786 | 16th Mar 21, 8:49pm 1615880967

Now this government too believes in lying and manipulation in EVERTTHING they do.

https://www.newshub.co.nz/home/politics/2021/03/government-accused-of-t…

Last term as had other partners kept them little bit checked. Absolute majority is bad in NZ democracy specially when headed by ...........