What happened Wednesday

A review of things you need to know before you go home on Wednesday; higher retail rates, more fossil fuel, Kiwibank's issues extend, Aussies target housing risks, China injects more funds, swaps steepen, NZD falls, & more

29th Sep 21, 3:59pm by David Chaston

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

MORTGAGE RATE CHANGES
ANZ raised rates across the board, taking them back towards the levels originally set by ASB. More here.

TERM DEPOSIT RATE CHANGES
ANZ raised TD rates for terms 1 to 5 years, by about +15 bps. NZCU Baywide raised theirs more aggressively.

ON & ON & ON
Kiwibank is still experiencing "system overloading" issues today.

MOBILE PHONE SCAM ALERT
Officials are warning of large-scale malware scam which has generated thousands of complaints over the last 24 hours. The scam involves people being sent a text message indicating you have a parcel that is out for delivery, or that has failed, with a link included. This link is to a website that asks the recipient to download a new application to their phone. Upon downloading the application, the recipient’s phone will become infected with a piece of malware called “Flubot”. If installed, it uses malware to steal personal information from your phone including banking details, passwords, and other sensitive information. The app then accesses your contacts and sends their details to the perpetrators of the scam and send additional text messages from your device to other people's contacts, further spreading the scam. This scam appears to be impacting mobile network operators across New Zealand.

UNRELIABLE RENEWABLES SAVED BY RELIABLE FOSSIL FUELS
Boosted by coal use, total greenhouse gas emissions increased by +2.1% in the 2019 year, Stats NZ said today when it revealed regional emission levels. There were large emission increases in Waikato and Taranaki, largely due to an increase in coal being used for electricity generation and in manufacturing processes because hydro-generation dipped due to low rainfall in that year.

FORCED TRANSFER
263,000 people (9% of all KiwiSaver members) are set to have their savings shifted to a new KiwiSaver scheme under the new default provider arrangements.

LOOKING AHEAD
Treasury has released its combined Statement on the Long-term Fiscal Position, and its Long-term Insights Briefing, looking at how the taxpayer will fund its operations and obligations over the next 40 years.

CLAMPDOWN COMING
In Australia, their regulators have confirmed they are discussing how to clamp down on housing market risks and are preparing to release new lending restriction before Christmas.

MORE JUICE
In China, their central bank injected liquidity into their banking system for a ninth consecutive day, adding NZ$22 bln today in reverse repo transactions at 2.35%. But it isn't unusual for them to juice their financial system at thgis time, ahead of next week's National Day holidays. What is unusual is the quantum that is building up.

PANDEMIC PRESSURE SHIFTS
In Australia, there were another 863 new community cases in NSW reported today with another 634 not assigned to known clusters. They now have 10,362 active locally acquired cases which is lower, but they had a record high daily death toll yesterday. Victoria reported another 950 new cases today and again topping the NSW level. Queensland is now reporting four new cases from new investigations near their border with NSW. The ACT has 22 new cases. Overall in Australia, more than 53% of eligible Aussies are fully vaccinated, plus 24% have now had one shot so far. There were no new cases in New Zealand at the border, and 45 more in the community, all in Auckland and all linked to already isolating cases. So far, 44% of eligible Kiwis now have both shots, another 33% the initial shot. So far the New Zealand vaccination effort (77.6% of Kiwis and still rising) and the resistance seen in Australia is fading with theirs now up at 76.7%.

GOLD SOFTER TODAY
Compared to where we were this time yesterday, the gold price has slipped a further -US$14 at US$1736/oz in early Asian trade.

EQUITIES ALL RETREAT
The S&P500 ended its Tuesday session down -2.0% earlier today. The very large Tokyo market has opened down -2.2%. Hong Kong has opened down -0.8% in early trade today. Shanghai has opened down -1.0% in their early trade. The ASX200 is down another -1.4% in afternoon trade and compounding yesterday's. The NZX50 is down -0.7% near its close.

SWAP & BONDS RATES STEEPEN
We don't have today's closing swap rates yet. They probably fell at the short end on the pandemic numbers, but rose at the long end on the global pressures. We will update this if there are significantly different changes when the end-of-day data comes through. The 90 day bank bill rate firmed +1 bp to 0.65%. The Australian Govt ten year benchmark rate is now at 1.50% and up another +6 bps from this time yesterday. The China Govt 10yr is now at 2.90% and unchanged. The New Zealand Govt 10 year rate is now at 1.99%, up another +3 from this time yesterday, and still above the earlier RBNZ fix for that rate at 1.96% (+2 bps). The US Govt ten year is now at 1.55% and up another +7 bps from this time this time yesterday.

NZ DOLLAR SOFTER
The Kiwi dollar is now at 69.4 USc and -60 bps weaker than this time yesterday. Against the Aussie we are lower at 96 AUc and down -30 bps. Against the euro we are unchanged at 59.4 euro cents and down -50 bps. The TWI-5 is now just on 73, and suddenly back in the middle of the 72-74 range we have been in for most of the past eleven months.

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BITCOIN SLIPS AGAIN
The bitcoin price is now at US$41,368 and another -2.1% below where we were this time yesterday. Volatility in the past 24 hours has been moderate at just under +/- 2.4%.

This soil moisture chart is animated here.

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Daily exchange rates

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Source: RBNZ

Source: CoinDesk

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36 Comments

by CWBW | 29th Sep 21, 4:06pm 1632884784

Looks like Bitcoin is heading towards an old hole. I wonder how many times can a dead cat bounce before taxidermy.

by Carlos67 | 29th Sep 21, 4:19pm 1632885565

As much as I think Bitcoin is a joke it looks like an easy way to make money. The pump and dump cycles are quite predictable. Have only been following the numbers for a few months but looks like a great way to make 20% PA, problem is most people have only a couple of thousand invested in it so who really cares if it amounts to a free coffee every day.

by Jonny.Foe | 29th Sep 21, 4:29pm 1632886165

As a youngster I used to sit in the corner of pubs and wait until someone lost heavy on the pokies, then I'd step up, make a few dollars, and sit back down again. Bitcoin is just the modern version of that (with added cult following).

by J.C. | 29th Sep 21, 7:28pm 1632896916

problem is most people have only a couple of thousand invested in it so who really cares if it amounts to a free coffee every day.

I think it's approx 50% of bank accounts in NZ don't even have have $1000, so there's little there to speculate on BTC let alone an equiv of a 'few $1000'.

by refactornz | 29th Sep 21, 8:53pm 1632902009

Which is irrelevant and doesn't indicate anything.

- Banks make it easy to spawn new accounts these days. I have easily 10 bank accounts and a bunch of them have $0 balances.

- Many people with a revolving credit mortgage won't have positive balances in their accounts

- Why keep cash when you can invest your money for higher return?

by J.C. | 29th Sep 21, 9:05pm 1632902759

Which is irrelevant and doesn't indicate anything.

Cash at hand is a good indicator of the extent people are living paycheck to paycheck. It's used by orgns such as Gallup.

by frazz | 29th Sep 21, 8:11pm 1632899470

Hang on you are quoted here saying BTC will decline to less than 20K then zip? You are forever changing your tune..whos is the joke on here?

by J.C. | 29th Sep 21, 5:45pm 1632890720

Bit of ignorance shining through here about the ol' rat poison. On-chain analytics from Glassnode shows that the total volume of Bitcoin held by Long-Term Holders has reached a new all-time-high of 80.5%. Of those holdings, 67.7% are at a value above their purchase price.

Comparing BTC to pokies is silly because the above shows that the majority are not short-term punters. The punters are the ones that get wrecked and the data shows that the HODLers are doing just fine. TBH, the more leveraged punters the better. That increases the volatility and makes it better for those who want to pick up BTC on the cheap. I include myself in those bargain hunters.

by theglc | 29th Sep 21, 5:51pm 1632891107

once it has 100% holders, that will be great, we wont have to hear about it anymore...

by powerdownkiwi | 29th Sep 21, 6:05pm 1632891950

One could analyze a ponzi that way; early holders in positive territory.

by J.C. | 29th Sep 21, 6:26pm 1632893201

One could analyze a ponzi that way; early holders in positive territory.

Yes Power. One of the funniest things I heard this week is that if you had invested $1000 every time China banned Bitcoin, you'd be a millionaire by now.

To understand the defn of what a 'long term holder' is, it is defined by time since the (averaged) purchasing date for each entity. If this duration exceeds 155 days, then the entity is considered to be a long-term holder. It is a relatively sophisticated method using probabilities and actual data.

https://insights.glassnode.com/sth-lth-sopr-mvrv/ 

by frazz | 29th Sep 21, 8:06pm 1632899172

Just hug your barrel of oil each night CBW..your closer yo a dinosaur than you realise.

by lonewolfnz | 29th Sep 21, 7:58pm 1632898694

A few people here were laughing at me when I was buying at $13k (printer8 comes to mind). My average buy-in was at 6.5k or so.

I'm not currently buying, but have a buy in play if we fall below 39k. Regardless I'm more interesting in ethereum, defi and other blockchains (luna, sol, ada etc) with staking and passive income opportunities.

My current defi yield farm position has generated over 100% APR for months now, all compounded. Even my boring staking positions are at 6%. Try earning that at the bank

by J.C. | 29th Sep 21, 8:21pm 1632900090

A few people here were laughing at me when I was buying at $13k (printer8 comes to mind). My average buy-in was at 6.5k or so.

I'm not laughing. I would love to have an average buy-in at 6.5K. All power to you Wolfie. Even a boring staking at 6% is pretty good. I only get 5.4% on ETH at Celsius.

by powerdownkiwi | 29th Sep 21, 8:33pm 1632900818

Rentiers started with land.

Then they went to money (interest-charging).

Then they started renting digital money to digital speculators.

Good luck with that. Nothing real being done, nothing real created or backed - but the expectation is that all the digital numbers can be cashed-in for?

Real stuff.

And the correlation is? Faith/belief. No more, no less.

by J.C. | 29th Sep 21, 9:11pm 1632903114

Like your style Power but don't fully buy into your narrative. People have used money for eons, just in different formats. And money lenders existed in biblical times. The Unabomber had some good insights but I don't think it is the only path.

by powerdownkiwi | 29th Sep 21, 9:26pm 1632903994

A certain religion, based in an area which has been resource-raped longer than any other, ban usury. For good reason; there's not enough there, to trade to support interest

by J.C. | 29th Sep 21, 10:48pm 1632908931

There is no fatwa against Bitcoin Power. I'm sorry but it's just not so.

by Jonny.Foe | 29th Sep 21, 4:25pm 1632885906

Those CO2 and methane emissions are horrific. Our per capita share of the remaining global carbon budget (to stay within 1.5 degrees of warming) is around 250 megatonnes. We will blow through that in around 6 years and that's without even including methane and nitrous oxide. If the Emissions Trading Scheme is adjusted to reflect the size of the challenge, the price of carbon will be $200+ within the next couple of years. That will make the cost of fuel / energy politically unacceptable.

by powerdownkiwi | 29th Sep 21, 4:50pm 1632887457

Not just politically; it would kill the economy (which is on the downhill stretch anyway, globally).

by Jonny.Foe | 29th Sep 21, 9:22pm 1632903728

I don't know about that. Ultimately the economy is the mechanism we use to convert labour, energy, capital and materials into the things we need to live well day to day. If we focused on getting that right and stopped obsessing about dollars and GDP etc we would be equally well without destroying the world.

by Audaxes | 29th Sep 21, 4:38pm 1632886718

Compared to where we were this time yesterday, the gold price has slipped a further -US$14 at US$1736/oz in early Asian trade.

by Chris-M | 29th Sep 21, 5:36pm 1632890195

Greenhouse gas

The government have the cart totally before the horse re directing energy use to electricity. e.g. cars. This will increase total demand and at present all our renewable energy is committed with another 19% of our demand being met by fossil fuels. Any extra demand can only be supplied from fossil fuels as we have no surplus renewable supply. Buy an electric car and 100% of the energy will be supplied by fossil fuel most likely Coal. You will be increasing our carbon emissions by a factor of 2-3. We need to build the supplies of renewable electricity before going down this path. The same is even more true for the rest of the world where on average 80% of electricity is generated by fossil fuels, mostly coal.

Mind numbingly dumb politicians are pushing us even further into an environmental disaster. But hey. It's popular and gets votes. Don't confuse me with the facts.

by Carlos67 | 29th Sep 21, 5:11pm 1632888688

Well according to many on here all we need is a pile more solar panels. So the really hard bit is already done if you buy an electric car because you have the battery so my question is where are all these solar panels that people keep banging on about that will instantly solve the energy crisis ? Wouldn't be anything to do with cost would it ? By the way I love solar. Got a single 50W panel outside and a proper MMPT charger mounted inside the car and it keeps the battery fully charged and doubles as an emergency power source to charge a mobile phone. What I do realise is how hard it would be to implement a FULL replacement of my total current energy needs from only solar.

by powerdownkiwi | 29th Sep 21, 5:25pm 1632889526

We run a house on 300 watts of solar and less than 100 watts of micro-hydro. That's not water-heating, but it's everything else.

by Carlos67 | 29th Sep 21, 5:39pm 1632890346

Yeah but thats not going to cut it when you plug in the electric car is it ? What I would want is a setup that is a 100% grid replacement for I have now, I flick the kettle on, drop a couple of slices of bread in the toaster while the electric hot water cylinder is on while the heatpump is running. That calls for an inverter that can handle a high peak load, 24 panels on the roof and a huge battery. The upfront cost is huge and there are few advantages vs the disadvantages if you take everything into consideration.

by Rob Reid | 29th Sep 21, 5:41pm 1632890487

Does that cover stove too, or is that gas?

by Carlos67 | 30th Sep 21, 3:11am 1632924667

My stove is Gas which is great and on bottle which is also great in an emergency as its enough gas for at least a year.

by KH | 29th Sep 21, 7:50pm 1632898231

I'm one of those who advocate piling on more panels. We send 4 times as much spark out the gate as comes in. (2 x in Winter). Somebody somewhere is doing something useful with it.

So whats wrong with that?

Of course it drives our engineers mad, because that induces some inconvenient flows. But they are trained in big generation and one way flows to small users. Limited view.

With better training, and good advice to the politicians, we could have smart distributed generation and storage. Costs could be good compared to the mega sums mentioned for the likes of Onslow.

by solardb | 29th Sep 21, 5:53pm 1632891185

"Just over 90 percent of total household emissions come from transport".

Yes , we need to greatly increase renewable generation , but electric cars are not mind numbingly dumb.

by Computer | 29th Sep 21, 6:17pm 1632892665

If I buy a normal car, won't 100% of my energy be supplied by fossil fuel regardless? Not sure I understand your argument.

by Chris-M | 29th Sep 21, 9:53pm 1632905588

The marginal electricity demand in NZ at the moment is being supplied by coal burnt at Huntly. You can assume that all the rest is optimized to best meet the existing demand. As our demand has been increasing and weather patterns adversely affect hydro generation we have had to increasingly rely on coal fired power from Huntly. This trend has been increasing over the past few years. Now if we add extra demand for power to charge car batteries, then the system in its current configuration can only supply this by burning more coal at Huntly. Coal emits 46% more CO2 per gJ of energy than petrol. https://www.volker-quaschning.de/datserv/CO2-spez/index_e.php  

Lets look at the efficiency of converting that coal energy to car motion. Coal fired generators are typically 37% efficient. From the generator, through the power network, charging and discharging the battery and finally the electric motor to the wheels is 69% efficient. So the conversion rate from coal energy to diving power is 25.5% efficient. https://www.greenoptimistic.com/hydrogen-cars-efficiency/

The alternative, a hybrid car has a conversion efficiency of 36% according to Toyota and Volkswagen have made a prototype Hybrid that achieves 45% efficiency . If you crunch those numbers you will see that a pure battery car supplied with coal fired electricity will effectively emit a bit more than twice that of a good Toyota hybrid car directly fueled with petrol. Accordingly the government would be far better directing our car preferences to Hybrids while they migrate our power generation to 100% pure renewable energy sources.

by Computer | 30th Sep 21, 11:06am 1632953201

Thanks for the explanation. So TL;DR it's more polluting to drive an EV due to the emissions from coal-fired generation used to make up the shortfall between demand and renewable generation.

That seems to contradict most of the information I found on the net - here's an example, I couldn't find one state that showed a conventional ICE vehicle generating less emissions, not even Wyoming at 80+% of their energy from coal. Hybrid vehicle emissions only fell below EV/PHEV at 50% coal.

https://afdc.energy.gov/vehicles/electric_emissions.html

The same conclusion is reported here too:

https://thedriven.io/2019/12/09/are-evs-cleaner-than-ice-coal-grid/

"Using the Argonne full lifecycle model, which accounts for battery and vehicle manufacturing as well as a standardised 150,000 miles (about 240,000km) life, an average ICE vehicle will emit around 69 metric tonnes in its lifetime.

But an EV, in a state like Wyoming which is almost completely powered by coal, will only produce 66 metric tonnes if the vehicle is made by a manufacturer using a grid that is 13% renewables (the US national average)."

Then there's also the potential to add renewable generation capacity as demand grows, hopefully reducing the EV/PHEV emissions further.

by fortunr | 29th Sep 21, 4:59pm 1632887942

More interest rates raises, this time by ANZ. Good, and well overdue. This is just the beginning, though.

by TommyYank-old | 29th Sep 21, 5:52pm 1632891165

To my utter dismay last summer/autumn when 5 year terms at 3% were still being offered I could not understand the hesitancy of people to go long and seize the security of 3% long term.

Already on a $400,000 mortgage it amounts to over $100wk if you waited till now to grab a 5 year term. And this was while all the punters had been rising voice to rate hikes around the corner. It's not like break fees would be a concern since rates would be rising-not falling.

by Hummy | 29th Sep 21, 8:01pm 1632898901

We put last year half of farm loan away for 5 years @ 3% was called madman by bank manager.