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A review of things you need to know before you go home on Friday: Fitch likes NZ prospects, Auckland housing completion slow, carbon price up, ATM turns corner? gold drops, swaps firm, NZD weak, & more

A review of things you need to know before you go home on Friday: Fitch likes NZ prospects, Auckland housing completion slow, carbon price up, ATM turns corner? gold drops, swaps firm, NZD weak, & more

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

MORTGAGE RATE CHANGES
No changes so far today.

TERM DEPOSIT RATE CHANGES
None here either.

SEEING BRIGHT SUNSHINE
Fitch Solutions says the New Zealand economy is on the path of a strong recovery and the 2021 expansion could be as strong as +5.5%. (In 2020 the economy contracted by -2.9%. In 2019 it expanded by +2.4%.)

SLOWING PACE
Residential construction in Auckland may have peaked late last year. Fewer new homes are now being completed in Auckland compared to the second half of last year, according to updated construction completion certificates issued by Auckland Council.

CARBON PRICE RISES
The carbon price has ended the week with a good gain, now at $41.30/NZU and up about +2.5% for the week. That caps the year-on-year rise as +78%.

DAM EMPTY
Readers in Auckland will know that it has rained for some of this week. Water reservoir dams are filling, but it is still relatively minor with them now up to 51.6% full. Usually at this time of year they are 78.3% full. The fundamental shortage remains.

A REBOUND
The share price of A2 Milk (ATM #10) rose by +6.3% today (updated) in a continuing rally that has seen it rise by +9.4% this week (corrected). This was a stock that not long ago had a capitalisation at $10 bln but even after this week's gain is barely at $5 bln now.

GUILT ADMITTED
The SFO is reporting that Kelly Simon Tonkin (52) appeared in the Christchurch District Court today and pleaded guilty to charges of ‘False accounting’, ‘False statement by promoter’ and ‘Forgery’. He was remanded on bail until 16 September for sentencing. The charges related to his management of the Penrich Global Macro Fund which was a Cayman Islands registered company set up in September 2004. The Fund invested in a range of financial instruments including fixed income securities and currency instruments. Significant losses were concealed by Tonkin who continued to solicit investment in the Fund. It was placed into voluntary liquidation by its shareholders in April 2020. Penrich Global Macro Fund was part of the Penrich Group, which Tonkin controlled.

SUPER SENSITIVE
In China, reports are filtering out that Beijing is detaining and arresting analysts who report on crop yields. This sort of work is very hard to do unless you tour and observe crop regions first hand (which is how it is done is most countries). But independent reports have been snuffed out in China over the past few weeks. It does raise the question about why Beijing needs to be so heavy handed on this arcane, technical corner of market assessments.

GOLD DROPS FURTHER
Compared to this time yesterday, the gold price is down another -US$40 and now at US$1781/oz in early Asian trading. It closed in New York earlier today at US$1774/oz and in London at US$1779/oz.

EQUITY MARKETS DOWN IN UNISON
The S&P500 closed flat today on Wall Street. Tokyo has opened up +0.2% in early trade, and Hong Kong has opened up a minor +0.1%. Shanghai is also up +0.2% in very early trade. The ASX200 is down -0.5% and off its record high. The NZX50 Capital Index is down -0.4% in late trade.

SWAP & BONDS YIELDS HOLD MOST OF THEIR RECENT GAINS
Update: Swap rates for one year were up sharply again today, now at 0.44% and +7 bps in a week to its highest level since April 2020. Similarly, two year swap rates are up +16 bps in a week, also now their highest since March 2020. We don't have today's closing swap rates yet. If there are significant changes again today, we will update this item. They probably held, little-changed. The 90 day bank bill rate is unchanged at 0.33%. The Australian Govt ten year benchmark rate is down -3 bps at 1.56%. The China Govt ten year bond is unchanged at 3.15%. The New Zealand Govt ten year is down -1 bp at 1.79% and still well above the earlier RBNZ fix of 1.75% (-3bps). The US Govt ten year is down -5 bps to 1.52%.

NZ DOLLAR LOWER
The Kiwi dollar is down -90 bps from this time yesterday at 70.1 USc. Almost all of that is due to a fast-strengthening greenback. Against the Aussie we are down -30 bps to 92.7 AUc. Against the euro we are also down -30 bps at 58.8 euro cents. That means the TWI-5 is now down -70 bps from this time yesterday at 72.5 and its lowest since late March.

BITCOIN SLIPS FURTHER
The bitcoin price recent jump is fading further and it is now at US$37,743 and down -2.4% from this time yesterday. But since this time last week, it is virtually unchanged. Volatility in the past 24 hours has been moderate at +/- 2.9%.

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End of day UTC
Source: CoinDesk

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35 Comments

In Bitcoin news today Paraguay gearing up for btc standard https://cryptobriefing.com/paraguay-official-plans-to-legislate-bitcoin-...

Little by little, then all at once.

Yeah then all the third world countries and the corrupt countries all at once, then a sudden stop. Still when it gets banned in all the first world countries I guess the upside is you can move to somewhere like El Salvador and try and live like a king with your Bitcoin.

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If all the corrupt countries in the world adopted Bitcoin, that would leave only the Federal Republic of Antarctic Penguins without BTC as legal tender.

NZ likes to think it has a low level of corruption because it tops the Transparency International Index. Of course the righteous Western nations set the benchmarks for what is or what isn't corrupt.

Ironically it's because we've lost our faith IMO. Hard to find someone who thinks the ten commandments hold any sort of authority these days. But I dare you to choose a single one that you'd be happy to have someone "do unto you". Left to our own devices we all decend into our own private depravities whilst poo-pooing the poorer nations from our high moral horse.

By far, the best thing about Bitcoin is it's causing us to question much of the status quo. Maybe our own shit does stink after all?

There is corrupt and there is corrupt. Totally corrupt is when that Toyota Ute you always wanted comes rolling down the street but the only main difference to the NZ spec model is that it has a 50 Cal machine gun mounted on the back.

Corruption depends on what side of the 50 cal you are on.

Total corruption is who paid for that Ute. What illicit crop they were running out of Afghanistan to pay for it. What middlemen in Turkey they used to shuttle it to Raqqa. What Ukrainian cargo plane they used to ship in the ammunition. What military base hosting NATO troops was used as the dropoff point. What north African country was invaded through a breach of the terms of a particular UN resolution to provide small arms. What Ambassador was killed who was involved in the arms transfers. What former Secretary of State was caught using personal email and cellphone. What media sold a false narrative of events to distract a clueless and inept public. What nations lent material, financial and moral support to the Ute drivers. As I said. Only the penguins will be sh*t out of luck adopting BTC.

How melodramatic. Honestly, you could have just mentioned the IMF and summarized the whole shooting match. [sarc]

In today's anecdote is not evidence, it's ok we can look through. Speaking to an electrician and apparently electrical cabling went up 10% in May and is expected to jump again. He used a % I won't even repeat for fear of ridicule, my jaw dropped. Hope he is wrong.

I knew I should've stockpiled on Copper :(

Told you'll last year to buy copper. :)

China is releasing some base-metal-stockpiles so I wouldn't jump in right this second, unless you're dollar-cost-averaging. That's my opinion anyway.

can confirm there is a shortage of cable, as well as a copper price increase. Wholesaler is saying, there is x number of metres available, will hold it for you till the end of the week , rather than the usual 30 day quote. i expect that will change to the cables here, take it or might be gone tomorrow, unless supply improves.

I’m pretty sure my A2 milk shares aren’t up 73% this week

Maybe 7.3 percent, otherwise sometimes dreaming. Given its one of the most shorted Australasian shares maybe Mr Chaston is trying to do a Gamestop.

ATM hasnt been shorted, its been sold off for good reason, started by the directors at $20.

A mistake. Yes, it should have read 7.3%. Sorry. But I have updated it now with the end of week price, which was more.

Wish they were.

China is heavy handed on everything that does not meet the hierarchy targets. Hong Kong, Taiwan, gold kiwifruit amongst others just today.

Watch for the invasion of Taiwan to come.

Maybe, but I think Xi for internal political reasons is being pressured to cool his jets.

Look who is talking and if this gentleman is worried....it is real serious

https://www.oneroof.co.nz/news/tony-alexander-weve-been-panic-buying-pro...

Happy realization that toilet paper has replaced properties.

Question : Government acted fast to sooth FOMO over toilet paper what about FOMO on housing Market ?

May be because Mr Orr not controlling toilet paper, could be tamed.

See how RE Agents address Tony Alexander as independent economist - them highlighting independent economy suggests, he is anything but independent :)

Email from RE Agent to all on their mailing list advising on Bridge finance - borrow more :

What are Bridging Loans and how do they work? 

Bridging loans, as the name suggests, is a loan which bridges the gap between two home loans. If you currently already own a home and have a home loan, but are looking to sell and buy another home with a loan, then a bridging loan comes into play between the two properties.

 
Bridging home loans are a good way to buy a new property before the sale of your existing home, and are very common now due to the lack of housing stock and the fear of missing out on a dream home. Many people want to purchase a new home, before they have sold their current one to ensure they have a property to move into.

Bridging loans are most commonly used to finance the purchase of a new property while your current property is being sold, but can also provide finance to build a new home while you live in your current home.

The lender you choose takes security over both properties and lends against these properties until the sale and purchase process on both is completed. During a bridging loan period, your home loan will generally be charged as an interest-only loan.

While in the past these have been fairly straight forward, things have changed slightly with the LVR and investor rules which have been put into place.

There are two types of bridging loans, a closed-bridge and an open-bridge. A closed-bridge is where the settlement date for your current home and newly purchased home are both in place. Both dates are set in stone, so for the bank this is very low risk as they know how long the loan will be in place for.

An open-bridge is where you have the settlement date of your newly purchased home, and have the intent to sell your current home, but have no settlement date. Obviously this is a much higher risk to the bank, as there is always the risk that the current home may not sell or may sell for less than expected if the market changes.

In the past, houses could have been rented out to cover this loan, however with the new rules in place, doing so could mean the bank breaches its LVR restrictions, which would come with heavy penalties. Not being truthful to your bank about your intentions could also land you in hot water too, so this one can be a bit trickier to navigate.

Before taking out bridging finance, it’s a good idea to know what the lowest amount you could sell your current house for, and ensure that you won’t be too stretched financially, should you end up with two homes for a while. Extended settlement dates are also an idea, giving you a longer time to sell your current property.

Lenders have a huge range to choose from, each with their own criteria and rates and we can place you with the one that suits you best. Most bank lenders don’t like to go above 80% LVR on properties, and while most people need to borrow 100% on their new property, this means you will likely need at least 40% equity in your current home, however we have a range of non-bank lenders that don’t need to abide by these LVR rules.

Tony Alexander June Report

Tony Alexander, is an independent economist. An interesting read, Tony's aim is to help Kiwis make better decisions for their businesses, investments, home purchases and people by writing about the economy in an easy to understand matter. Link attached for your reading.

http://www.tonyalexander.nz/resources/Tony's%20View%2010%20June%202021.pdf

Look who is talking and if this gentleman is worried....it is real serious

Seems like he's in either of two characters: smarmy to the point of punchable or complete drama queen.

I'm reminded of this recent reference to toilet paper

Tony's just looking for click bait titles before repeating the same ol' speal

“Water reservoir dams are filling, but it is still relatively minor with them now up to 51.6% full. Usually at this time of year they are 78.3% full. The fundamental shortage remains.”

Well a quick look ahead suggests if it’s more rain you want, then this weekend in Auckland won’t disappoint.

It still seems to me that historically we've experienced some of the wettest “droughts” on record here.

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funny what adding half a million immigrants to Akld over 10 years will do....

I thought it was the washing of the shiny Utes and SUvs that was causing the water shortage in Auckland?

That’s what the population limit deniers want you to believe

The narrative is that there are more droughts, more flooding and that there are more violent storms as well. Huh? I haven't been out windsurfing in 40 knot winds in Ak since....can't remember, years ago.
I put the low water levels down to govt imprudence in immigration plus of course council incompetence.

I've never seen the Waikato river as low as it is at this time of the year. Usually the river paths are shut due to flooding.

Can someone explain. If the ice caps are melting, oceans rising, shouldnt there be more water? Hoping some weather expert reading this can explain...

.

"...Beijing is detaining and arresting analysts who report on crop yields."
The last Chinese famine was '59 to '61, it's within living memory. In China the public perception of food supply is really sensitive. In 2020 food prices in China increased substantially, I seem to recall it was something like +12%. We know the Chinese are already on an international buying spree for food commodities. They have also cracked down on speculators within food commodities. Their activity in the US futures market for next years crop has been unrelenting.