Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
None to report today.
TERM DEPOSIT RATE CHANGES
Kiwibank ended their 1.10% 100 day special, reverting back to 0.40%. BNZ increased their 12 and 18 month TD offers to 1.10%. Nelson Building Society raised their 6 and 9 month rates.
HOT FARM MARKET
Sales of farms are running well ahead of last year with prices also on the rise. Last year may have been pandemic-affected but the comparisons with April 2019 also show April 2021 is running hot. Sales of dairy units has been especially strong. There were 58 dairy farm sales in April 2021, following 32 in March and 26 in February, taking the quarterly total to 116 sold in the past three months. April is the highest in any month since December 2013. This is happening at the same time far fewer dairy properties are being offered for sale. In April 2019 the listing portals were offering 366 properties for sale; in April 2020 there were 317, but in April 2021 this was down to 207. The median price for a dairy unit has jumped +7.6% in a year, and +22% in two years. More data here.
EVEN HOTTER
Lifestyle block sales also had a boom month in April 2021, rising to an all-time high volume for any month, ever. 1207 transactions were recorded, only the second time even that more than 1000 lifestyle block sales have been recorded in any month.
COLD
Synlait Milk (SML) is in trouble, and probably about to fall out of the NZX50. Their share price has fallen today, taking the decline from the start of May to -8.2%. They have been hurt by their relationship with A2 Milk (ATM). And they say it has been given a waiver on its banking covenants for the current financial year as it continues to be hit by ongoing shipping delays. It expects to post a loss of -$30 mln.
SOME BIG MOVERS
The NZX50's capitalisation has now reached $126 bln which was up +0.7% in a week. But for the past month it has slipped by -1.6%. Since the end of September 2020 when we started detailed tracking this market's capitalisation in detail, it is up +4.9% or +$5.9 bln. There have been some big shifts during this time, the highest profile being A2 Milk (ATM) who have slipped from #2, down to #10, and -$2.4 bln in value has been shed by them alone. Other big fallers have been Synlait (SML), Sanford (SAN), and Scales (SCL).
RISING TIDE
ANZ revised up their farm gate milk price forecast for the 2020-21 season by +5c to $7.75/kg MS. Their forecast for the 2021-22 season has been lifted by +40c to $7.70/kg MS. You can compare these new ANZ forecasts with those of other analysts here (at the bottom of that page).
SUMMER FUN FOR RETAILERS
Higher retail spending on electronic items and outdoor recreational goods this summer helped boost overall spending in the March 2021 quarter, Stats NZ said today. After adjusting for price and seasonal affects, the total retail sales volume rose +2.5% in the March 2021 quarter following a -2.6% fall in the December 2020 quarter. Year-on-year they are up +6.8% on the same basis. In value terms they are up +6.5% year-on-year. Electrical and electronic goods had the largest increase, making up for big falls in the December quarter. Some analysts were surprised by this result because the expected 'supply disruptions' area no-show in this data.
CARBON PRICE HESITATION
The carbon price seems to be languishing, handing buyers who jumped in just prior to the March 14, Government auction a loss. That auction sold 4.75 mln NZUs at $36 each, with too many units offered to support the prior bidding. They had risen to $39.50, but have since fallen to trade at just $36.55 and about where they were in December 2020. You can track the carbon price in the RH sidebar of our Rural section (desktop only) with data from Jardens Commtrade.
RE-ENERGISED HOUSE-BUILDING SECTOR
Following on from high building consent activity reported by Stats NZ for March, independent analysis from Blackburn Management for Canterbury shows that the trend is continuing into April where the three councils in the Christchurch region topped 500+ for the second month in a row. The four months in 2021 are up by a massive +24% on the number of dwellings consented compared to the same period last year. More than 60% of all new dwellings in Christchurch are part of multi-unit developments. National data from Stats NZ for April won't be available until June 1 but are likely to mirror this Christchurch data.
CALLS FOR AN RBNZ TIGHTENING
The RBNZ will release its May MPS on Wednesday. In advance the NZIER Shadow Board has released its opinion about what they should do. Some members of that Shadow Board have strong opinions and that colours the overall view that the RBNZ should be actively considering a tightening. (The comments by Professor Arthur Grimes are particularly interesting.)
'CHALLENGING & EXCITING'
MTF Finance has reported a half year profit of $4.4 mln, a recovery partly on the back of writing back some earlier bad debt provisions. The say "The next six months will be both challenging and exciting...".
GOLD FIRM
The gold price is now at US$1884 in early Asian trading and up +US$3 from the final trading in New York last week.
EQUITIES SHARPLY LOWER
The NZX50 Capital Index has started this week down -0.4% in late trade today. Meanwhile the ASX200 is limping along unchanged in a hesitant fog of uncertainty. The very large Tokyo market has opened the week up +0.2%, but Hong Kong is down -0.7% in early trade, and Shanghai is down -0.2%. The S&P500 futures trading is suggesting Wall Street will open up +0.2%.
SWAP & BONDS YIELDS SINK
We don't have today's closing swap rates yet. If there are significant movements today, we will note them here later when we get the data. The 90 day bank bill rate is down another -1 bp at 0.32% and its lowest in six weeks. That is a -5 bps fall in a week. The Australian Govt ten year benchmark rate is down -2 bps since this time yesterday at 1.66%. The China Govt ten year bond is down another -3 bps at 3.09%. And the New Zealand Govt ten year is down -1 bp at 1.83% and still below the 1.82% in the earlier RBNZ fix (-5 bps). The US Govt ten year is down -1 bp at 1.62% as markets stay in a risk-off tone.
NZ DOLLAR HOLDS
The Kiwi dollar is slightly softer at 71.7 USc. Against the Aussie we have firmed marginally to 92.8 AUc. Against the euro we are little-changed at 58.9 euro cents. That means the TWI-5 is still at 73.2.
BITCOIN RISES IN HIGH VOLATILITY
The bitcoin price is now at US$35,164 and up +9.2% from where we opened this morning. Volatility in the past 24 hours is still extreme at +/- 10.5%.
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26 Comments
“Asset price inflation (particularly of houses) that is driven almost solely by monetary policy, is causing massive social dislocation. In addition, goods price inflation looks to be on the rise. The degree of monetary easing needs to be lessened, initially through stopping bond purchases. Unless an unexpected downward shock were to occur, monetary policy needs to be tightened. It is already well behind the curve and will become more so the longer a tightening is delayed.”
Disagree
Asset Price Inflation as we have it now is the product of 20 years prior, pouring 1,000,000 newcomers into the country without planning the infrastructure and housing to accommodate them did it. Exactly the same as bitcoin. If you purchased a few tokens last month at USD $60,000 you can't possibly blame the latest price on current monetary policy for the rise from $1. The current price has evolved over 12 years. The early movers pushed it up, followed by the next echelon, followed by the next echelon
Sam Stubbs dips his toes into crypto as a 'non-investment'. To be honest, this is a pretty weak analysis from the leader of the Kiwisaver industry. Unfortunately, this gives some insight into how backwards the understanding is among media / industry celebrities.
https://www.stuff.co.nz/business/opinion-analysis/300313750/cryptocurre…
Looks like a very reasonable article to me.
Disagree. It's light, lacks rigor, and is full of urban myths. For example, Sam says 'cryptocurrencies are seen as the digital equivalent of gold.' Wrong. Bitcoin is looked at as sharing some of the properties of gold. Furthermore, if he'd done his homework, he would understand that gold digital tokens are arguably 'cryptocurrency'. They are fully backed by gold under custody by institutions such as Perth Mint.
Saying it shares 'some' properties of gold does little to rebut the point. Then talking about gold digital tokens does also not help your point as one of the authors main points was that crypto is not backed by anything real, unlike gold tokens, meaning when Elon Musk tweets, the value can easily plummet.
What about the 15,000 to 20,000 El Salvadorans who are signing up to the Strike app every day, using the Bitcoin layer 2 Lightning network to receive remittances from the US. 24% of El Salvador’s GDP comes from remittances. This means they don’t have to travel weekly to the local Western Union to collect payment, they avoid the risk of gang muggings once they’ve collected the money, don’t lose 30-40% as a fee, and it’s almost instantaneous. That sounds like a pretty solid use-case to me. Many confuse Bitcoin the asset and Bitcoin the network, with all the thousands of cryptocurrency s**tcoins. (Source: Ross Stevens @NYDIG). https://twitter.com/bitcoin/status/1396693322664595460?s=21
Hypothetically, two phone calls from the Fed; one to Infura, and the other to Amazon web services could turn off Etherium, and every altcoin/crypto/defi project that runs on top of its rails. Or alternatively, political (or criminal for that matter) pressure applied to Vitalik Buterin and his inner circle, could also end the whole party. This is the problem with anything that is too centralised. Maybe I’m completely wrong, but this is a major weakness from my point of view.
Sam Stubbs Investment advice -
What are two money tips you'd give to a 20-year-old who wants to become a millionaire?
The first would be to buy the most expensive house you can possibly afford, and as soon as possible. It'll give you tax-free capital gains, is the cheapest borrowing there is, and you get to enjoy it every day.
(Start a productive business, employ people, R&D..nah just buy a house)
"he first would be to buy the most expensive house you can possibly afford, and as soon as possible."
So instead of buying an actual asset, wait ten years saving up your 20% deposit as your cash value depletes every year, then go all-in into a single asset with x5 leverage
For the technical fanboys, let's see if there will be a housing price change in May.
Montagu Norman, Governor of The Bank of England prior to the crash of 1929, addressing the United States Bankers’ Association, New York, Idaho Leader, 26 August 1924.
“When, through process of law, the common people lose their homes, they will become more docile and more easily governed through the strong arm of the government applied by a central power of wealth under leading financiers...."
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