Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
Heartland Bank has raised all its rates today, mostly by +30 bps, ending any fixed rates by banks under 2%. ICBC has also raised all its mortgage rates.
TERM DEPOSIT RATE CHANGES
The Co-operative Bank has raised term deposit rates +10 bps to +35 bps. ICBC has raised many TD rates too.
JOBS MOMENTUM BUILDS
Stats NZ released some technical data today on employment indicators. Westpac has looked at this data and reports: "Employment has continued to gather momentum in recent months, with the number of filled jobs up 1.1% in June. This was even stronger than our forecast of a 0.6% rise. Filled jobs are now 1.8% above their pre-Covid peak. The strongest growth over the last year has been in construction and healthcare, and more recently in professional services. ... Notably, jobs in manufacturing have been flat, even though this sector has seen some of the strongest growth in job vacancies. It may be that this sector is losing out to construction in terms of attracting workers. This release also includes data on gross earnings, which have risen sharply in recent months. This doesn’t easily translate into an estimate of wage growth, as it can also be affected by changes in the composition of jobs. Nevertheless, it does fit with recent anecdotes of pay rates being being bid up in many sectors in response to labour shortages."
FOREIGNERS ABSENT IN THE CURRENT PROPERTY FRENZY
There were 44,517 home transfers in the June 2021 quarter, the highest June quarter figure since 2016, Stats NZ said today. Foreign owners continue to offload their NZ residential properties. Foreign owners are selling at more than twice the rate they are buying.
LAST WEEK'S NZX50 WINNERS - & BIG LOSER
Last week, the capitalisation of the NZX50 rose 0.5% to $13.7 bln. It is up 0.9% in a month and more than +8.8% in a year (or more than +$10 bln). Last week A2 Milk (ATM) fell -3.25% in the week, dropping its capitalisation so it slipped -2 places in the NZX50 to #10. It's quite the come-down because it is a fall from #2.
TAX EVADERS
I got a notice today from Google advising that their clients in the EU/UK will have a 2% fee deducted from what Google pay them, because of a Digital Services Tax being brought in there. No doubt Facebook and Microsoft will do the same. It does seem quite ironic that Google is quick to pass on the cost of a tax aimed at them to others, after it has made deliberate and strenuous effort to avoid paying any taxes in those jurisdictions. Google started out with a mantra of 'Don't Be Evil' 'do no harm' and has morphed into just another greedy MNC as it grew up. It reminds me of the idealised know-all hippies in my youth who were going to save the planet from the previous 'greedy' generation. Now they(we) have captured all the household wealth, and tax-free at that. You do wonder what the Greta Thunbergs and Chloe Swarbricks, today's idealistic know-all 'young things' will grow up to become over the next 20 years. The next versions of do-little Tim Shadbolts?, or rogue Bjorn Lomborgs? Certainly we can see Google's idealism has vanished, replaced by greed. In the June quarter, Apple, Microsoft and Google earned US$56 bln tax paid. Facebook and Amazon are yet to report and they will add another set of billions.
PRICES RISE FAST ACROSS THE DITCH
In Australia, they released their June CPI result today. It rose +0.8% this quarter and over the twelve months to the June 2021 quarter, the CPI rose +3.8% exactly as expected. The increases there were led by petrol (+6.5%). The last time weekly earnings data was released it showed wages up +3.2% in a year. The next time this gets updated is August 19. NZ has already released its June CPI result and it was up +3.3%. (Oddly, there is an expectation that the RBNZ will raise its OCR soon to tame the inflation impulse, but the RBA is not expected to raise their official rate even though their inflation rate is running faster. They are expecting the base effects to unwind quickly.)
UNRELENTING PRESSURE IN NSW, EASING ELSEWHERE
There were 177 new community cases in NSW today with a record 103 not assigned to known clusters, so still going backwards fast there. Their lockdown has been extended by four weeks. In Victoria their lockdown has been lifted and they reported 8 in the community (and all in isolation). But the border with NSW remains closed. South Australia is also out of lockdown. Queensland has closed it's border with NSW, which is a last-resort action for them. There was one new case in New Zealand, none in the community.
GOLD RANGE-BOUND
Compared to where we were this time on yesterday, the gold price is up +US$3/oz to US$1802/oz in early Asian trading.
EQUITIES STILL UNDER PRESSURE
The NZX50 Capital Index is flat near the end of its Wednesday session but it is falling away giving up earlier gains. The ASX200 is down -0.6% in early afternoon trade. In Asia however, the openings are grim again but at least Hong Kong has stopped the bleeding as is flat at its open. However Shanghai down -1.0% at its open and Tokyo has now caught the bug and is down -1.3% in their early trade today. The S&P500 ended today's session down -0.5% and off its new record high. Considering it was down a full -1% at one point, this close represents a comeback.
SWAP & BONDS RATES HOLD
We don't have today's closing swap rates yet and if there are significant ongoing changes we will note them here. They are probably unchanged. The 90 day bank bill rate is unchanged at 0.47%. The Australian Govt ten year benchmark rate is down -3 bps so far at just on 1.17% and back at its July lows. The China Govt ten year bond is unchanged at 2.91%. The New Zealand Govt ten year is actually up +2 bps at 1.51% but still below the earlier RBNZ fix of 1.52% (unchanged). The US Govt ten year is down -4 bps to 1.24%.
NZ DOLLAR SOFT
The Kiwi dollar has softened slightly today to 69.6 USc although most of that retreat happened last night. Against the Aussie we are down at 94.5 AUc. Against the euro we are also down at 58.8 euro cents. The TWI-5 is now just on 72.5.
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BITCOIN JUMPS HIGHER AGAIN
The bitcoin price is now at US$40,116 having taken off higher again and is now +9.8% above where it was at this time yesterday. Volatility in the past 24 hours has been very high at +/- 5.3%.
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25 Comments
I got a notice today from Google advising that their clients in the EU/UK will have a 2% fee deducted from what Google pay them, because of a Digital Services Tax being brought in there.
I read it that the additional fees are for clients anywhere in the world that advertise in the EU/UK and some other countries. So NZ businesses would be hit too, if they have google ads targeting EU/UK/etc.
It's fair enough to pass on additional costs isn't it?
Great week for the ol' rat poison. We were staring at the abyss last week. Testing USD40K resistance again; closed a daily candle above the 200 day EMA (first time first time it has crossed since the crash started); fully reclaimed the multi-month higher low trendline.
I'm not sure why the ultra-orthodox have been so quiet.
Just cautious I guess. I don't want to encourage people into a volatile asset-class they know little about. Ignorance and lack-of-conviction go hand-n-hand. Such people buy high and sell low - incurring loses.
I'd rather see people dollar-cost-average and learn as their positions grow AND that includes learning good security practices. I'm sure you feel the same way J.C.
I'd rather see people dollar-cost-average and learn as their positions grow AND that includes learning good security practices.
Likewise. It would also be good for people to stop getting so emotional about the price and the volatility. If people go into the space purely with profit motive, I accept that. The ones who do and come out the other side with greater knowledge as to how important it all is beyond speculation are the real winners IMO.
People are getting more sophisticated I suppose and security wise, people at the bottom have improved dramatically. The price action is exciting and fascinating, especially in geopolitical terms.
In terms of vitriol/vindication most Crypto-Investors/Bitcoiners (including yourself J.C.) on interest.co.nz are pretty humble, all things considered.
No one bagging on it when its going up, so dont need to debunk any bullshit.
Good discussion on Bitcoin and other decentralised systems in the US senate recently. Cynthia Lummis brings the top quality questions.
https://www.youtube.com/watch?v=PQuqa7Iuwds
All I can say is DCA!
And i tried to get people to keep stacking at these prices, but you know how humans are...emotional.
The NZX50 is up 8.8% in a year however it only appears to be up about 4% since February 2020 (17 months ago). One year ago we were still coming up from the cliff the share market fell off when COVID hit. The market seemed to overshoot a bit. At the beginning of this year, when I dipped my toe in, it was 7% higher than it is now. NZX50 has dropped a lot since January 2021! It is still below where you might have expected it to be if COVID hadn't hit. Pretty 'average' performance which is British for not very impressive.
Compulsory Kiwisaver.
Given the overwhelming survey result, any political party who proposed this would be rewarded with votes.
https://www.newshub.co.nz/home/money/2021/07/strong-support-for-compuls…
When I was putting money into my govt super account it was at 6.5%. Plus an implied but unfunded amount of who-knows-what by the govt. Anyway, 6.5 as a employee contribution is a fair old whack higher than the 3% most efficient contribution into kiwisaver.
No wonder people are wondering if kiwisaver is big enough.
However, the elephant in the room about compulsion is means testing. Tread very very carefully!!!!!!!!! More may mean less :)
Yep, make it compulsory and increase it to 12%. We need to grow the financial planning industry. They really work hard. Then add in a means test in about 20 years when I have gone. I want the young to pay for my retirement and their own. They can afford it ....with the housing ladder pulled up its not like they will be tied up paying a mortgage. /sarc off.
REMOVE TAX ON KIWISAVER.
What the hell is the point of encouraging people to save for long term retirement using the power of the 8th wonder of the world, compound interest, if chunks are being taken out of it every year. The compounding loss of gains from those chunks would be massive after 40 years.
Even a flat tax on withdraw when you start drawing it down would actually be helpful.
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