Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
ANZ has added +15 bps to their 1.68% "Blueprint to Build" rate, taking it up to 1.83%. (It is now higher than ASB's "Back my Build" rate of 1.79% which remains unchanged.) There have been a range of non-bank floating rate rises over the past few days, but none of the challenger banks have moved yet.
TERM DEPOSIT RATE CHANGES
Heartland Bank has raised rates, including taking their two year rate to 1.80%. Heretaunga Building Society, and China Construction Bank also raised rates today
SOLID ACCOUNTS
Treasury released the Crown Accounts for the tumultuous 2020/2021 to June. Despite all the ups and downs, in fact they ended in reasonable shape. The operating balance was a deficit of -$4.6 bln or just -1.3% of GDP. The full financial result which brings in valuation changes (just like a private company) reported a surplus of +$16.2 bln or +4.8% of GDP. The Crown's net worth rose to $157 bln of 46% of GDP and back to where it was pre-pandemic. Total Core Crown spending fell to 31.7% of GDP, down from over 34% in the prior year, but above the 28% in 2019. These are not the accounts of a distressed institution. They take 29% of all economic activity in tax however. And they owe $162.5 bln in total borrowings (on assets of $468 bln).
WHO'S PAYING ALL THAT TAX?
Total taxes collected rose +20% in the year to June 2021 above the year to June 2020. Income taxes from individuals rose just on +10%, those from companies rose +53%, and GST collected rose just under +20%. There would have been very few workers or companies who saw their incomes rise at such a handsome rate in the same year. Taxes on interest income fell +35%, whereas taxes on dividend income rose +84%. All this data is revealed in the Tax Outturn detail released today.
FASTER IN THE SLOW LANE
ANZ reports that their Truckometer is seeing the Light Traffic Index up +6.4% in September from August, while Heavy Traffic rebounded +13.4% on the same basis. But both are still well below both 2018 and 2019 September levels. And as ANZ notes, differing regional lockdown restrictions mean that the Truckometer indexes are unlikely to be a reliable GDP indicator in the near term even if they do confirm substantial weakness still.
MANY LOSERS, ONE WINNER
Retail spending (using electronic cards, which has to be most of it) was down -15% in September from a year ago, and down almost -13% from pre-pandemic September 2019. Stepping back and looking at that two year timeframe it is no surprise that most retail sectors are suffering big hits (hospitality -43%, apparel -43%, vehicles -27%, fuel -17%). But one sector stands out as a big winner - "consumables" (+18%) and the biggest part of that are supermarkets. On its own, the September 2021 spending result was much weaker than expected,
CLOSED UP TIGHT
With overseas student arrivals down by -96% and overseas workers down by -94%, migration added a net gain of just +353 people to New Zealand's population in August.
A FINAL BURST FOR 2021, THEN ON HOLIDAY UNTIL FEBRUARY
The LGFA has cancelled its October 13 bond tender and replaced it with two fixed rate offers. The $300 mln May 2028 bond will pay a fixed rate of about 2.25%, and the $300 mln May 2035 bond will pay about 3.00%. Both bonds will be listed. The LGFA also says it won't issue any more until February 2022.
GETTING OUR EXPORTS OUT, AND OUR AMAZON PACKAGES IN
Air NZ says it will get Government financial support for flights within a five-month period from November to March 2022 is expected to contribute between $150 mln and $170 mln towards the airline’s cargo revenue.
IMPROVING
Insurance ratings agency AM Best is undertaking a review of Cigna Life Insurance New Zealand "with positive implications".
RECORDS REACHED
Petrol prices at the pump are now just shy of $2.50/L, a new all-time record high. That has to be taking spending money out of circulation, even if volumes are very much lower.
NZX JOCKEYING
Last week, the NZX50 had a negative run, with the total capitalisation falling -1.4% to $133.1 bln. The toughest sector was the Energy group which fell -2.3% and a decline of -$554 mln. There were some notable retreats with F&P Healthcare (FPH, #1) falling -4.6% in the week. Pacific Edge (PEB, #36) fell even more, down -4.7% in the week. Fletcher Building (FBU) fell to 9th on this ranking, overtaken by Intratil (IFT, #8). The biggest percentage gainer was near the bottom of the 50, Tourism Holdings (THL) who rose to 48th place and was up +5.3% for the week.
A THREAT FROM A LOCAL ECONOMIC MAGNET
In Sydney, there are reports that the State's top bureaucrats have advised the incoming state Premier to consider opening their borders to migrants, and seek an 'explosive ' 2 mln more immigrants over a five year period to kick-start a period of sharp growth. Apparently, he is taking the advice seriously. (And if it is acted on, it may well suck in many skilled Kiwis, not to mention those from other Australian states.)
BUSINESS GLOOM LIFTS
Meanwhile, business confidence is bouncing back strongly in Australia, at least according to the widely-watched NAB business sentiment survey for September.
PANDEMIC UPDATE
In Australia Delta cases in Victoria have fallen to 1466 cases reported there today, and they may have peaked. There are now 19,012 active cases in the state. In NSW there were another 360 new community cases reported today with another 249 not assigned to known clusters, but Delta seems in retreat there. They now have 6,299 active locally acquired cases which is lower, but they had 5 deaths yesterday. Queensland is reporting zero new cases again. The ACT has 28 new cases. Overall in Australia, more than 62% of eligible Aussies are fully vaccinated, plus 20% have now had one shot so far. There were three new cases in New Zealand at the border, and 43 more in the community. So far, 58% of eligible Kiwis now have both shots, another 24% the initial shot. So far the New Zealand vaccination effort is faltering (82.2% of Kiwis nationally aged 12 and over and only rising slowly) and the Australian rate is also slowing with theirs now at 82.4% of all 16 year olds and over.
GOLD LITTLE-CHANGED AGAIN
Compared to where this time Saturday, the gold price is down -US$1 at US$1756/oz in early Asian trade.
EQUITIES FALLING EVERYWHERE
The S&P500 fell away sharply at the end of its light Monday trading in New York today. The very large Tokyo market has opened down -0.9%. Hong Kong has opened down -1.1%. And Shanghai has opened -0.6% lower. The ASX200 is -0.4% lower in early afternoon trade. The NZX50 is down -0.2% in late trade.
SWAP & BONDS RATES STILL RISING
We don't have today's closing swap rates yet. They probably rose again, at the long end anyway. We will update this if there are significantly different changes when the end-of-day data comes through. The 90 day bank bill rate is unchanged at 0.66%. The Australian Govt ten year benchmark rate is now at 1.72% and up another +1 bps from this time yesterday. The China Govt 10yr is now at 2.97% and up +3 bps. The New Zealand Govt 10 year rate is now at 2.14% (+4 bps from this time yesterday) and matching the earlier RBNZ fix for that rate at 2.13% (+6 bps). The US Govt ten year is still at 1.61% and unchanged from this time yesterday, but will be back trading tomorrow when New York bond markets reopen after their holiday.
NZ DOLLAR HOLDS
The Kiwi dollar is holding at 69.3 USc today. Against the Aussie we are little-changed from the morning open at 94.4 AUc. Against the euro we are firmish at 60 euro cents. The TWI-5 is still at 73.1 and still in the middle of the 72-74 range we have been in for most of the past eleven months.
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BITCOIN RISES
The bitcoin price is now at US$56,989 and a rise of +3.3% from this time yesterday. Volatility in the past 24 hours has remained moderate at just on +/- 2.2%.
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47 Comments
https://www.eia.gov/outlooks/steo/report/global_oil.php
At these prices, 2018 might have been 'it'.
Sam Stubbs comes out swinging at the ethics of the ol' rat poison (well crypto in general), even though he admits to being an indirect investor in EasyCrypto. Don't think the relationship is strong enough to warrant the label of hypocrite.
Anyway, the arguments are quite predictable or just flat out nonsense. For ex, he says that he thinks most investors will lose. But the data shows that anyone who has dollar cost averaged into Bitcoin, even starting from its all-time highs, would have a positive return almost 99% of the time. And the longer one has DCA'd into Bitcoin over time (1 yr, 2 yrs, 4 yrs,......), the higher the return has been.
https://www.stuff.co.nz/business/opinion-analysis/126635309/is-it-ethic…
From a risk perspective, it is actually fiduciarily irresponsible not to have at least a 1 or 2% portfolio allocation to Bitcoin. Do the match as Greg Foss would say.
Is there any reason to expect the NZ response will be more enlightened?
It's no different to what the Aussies were doing pre-Covid. Pumping GDP with immigration and showing the scorecard to the sheeple as proof of how well they doing. They're just trying to amp it up to a new level. In terms of infrastructure investment, Aussie is light years ahead of NZ at least, but it's still not requisite with population growth. The share of national income per capita will be awful.
Not just housing. I find it quite concerning that the fiance of the current PM has TV deals going at all. I understand it was his job before the PM, but I think it creates a legitimate conflict of interest, that should of been addressed.
Even more so after the police made an "Unprompted" public Statement about how he wasn't being investigated, when the rumours were flying around.
It reeks of specialist treatment and I would say borders on corruption. How are we supposed to believe that the media are able to provide a fair and impartial political view, when he is the "Media" and clearly has special police priviledges.
He’s not really “the media” doing a fishing and house moving show. If he was a reporter or similar that would be different. I doubt he’s going to convert people to labour in his shows.
But if you want to talk about conflict of interest, you might want to look at the leader of the opposition.
Probably why Japan is letting its population age and decline? In the age of declining resources of all sorts, Japan is in trouble. Japan can basically support only a third of its current population with food! https://www.japantimes.co.jp/news/2019/08/06/national/japans-food-self-sufficiency-rate-hits-lowest-level-25-years-due-drop-wheat-production/
Mate have you actually been to Japan? Check it out someday, seriously!
Posting such article about the country that economically (and potentially socially, tho that's harder to measure) is more developed than NZ is kinda equivalent to saying that NZ is Hell on Earth as:
1. "There are around 682,500 people in poverty in this country or one in seven households, including around 220,000 children" source
2. "New Zealand had more gangs per head than any other country in the world, with about seventy major gangs and over 4,000 patched members" source. Oh and a number has doubled since.
Check those stats for other places, you might be surprised.
UK? Check out their energy crisis and tell me they have a sustainable population? Neither can the UK feed itself. https://www.theguardian.com/business/2021/sep/21/what-caused-the-uks-energy-crisis
Haha you are hilarious!
How do you propose we rectify this overpopulation Oh Mighty One.
It's not that I necessarily disagree, but how do we meaningfully address this? You seem to be full of abstract idealistic notions, which is fine, but only up to a point.
As you know I am a proponent of much lower immigration.
Other thoughts?
Manukau DHB has done some “grim” Covid modelling that shows they could get 45 hospitalisations a week if vaccination is at 80% and the borders are open. My god are we really locking down for 7 patients a day? This is a hospital with 800 beds! Sometimes I wonder how other people can read that and be worried? I’ve seen Shortland street episodes where they had more than 7 extra people turn up and they somehow managed.
that hospital runs at max occupancy during winter, it covers from onehunga bridge to past pokeno and has a population of 600k to look after, as far back as 2017 it was already running at capacity, and since then you have had huge population growth in that area, pity we did not spend any of the money on MIQ on the hospitals instead
I’m sure it is full, but wouldn’t there be better ways to stop 7 extra patients a day than locking down an entire city? How about a $5 a litre fuel tax to make people walk and cycle more while also helping out the planet?
Surely we aren’t locking down until 95% vaccination just because the hospital that will feel it worst (close to the airport and workers) will get a whole 7 patients a day?
Think a bit harder Jim. South Auckland is full of obese people. They aren't going to walk or cycle, they will either drive & drive themselves broke (and for many shift workers that's the only option) or jump on public transport. A bunch of wheezing unfit people in a public bus, sounds like the perfect covid spreading location to me.
7 Patients a day who tend to stay hospitalised for weeks on end once they get to the point of being admitted. If even half of those that are admitted stay on average 3 weeks that's 10% of the hospitals capacity tied up just with serious Covid patients. And most will be in need of serious amounts of care, not just a bed in the ward and a nurse to check in every hour or two.
Spread and Impact. Substance use disorders SUDs.
Increased risk for COVID-19 breakthrough infection in fully vaccinated patients with substance use disorders in the United States between December 2020 and August 2021
https://onlinelibrary.wiley.com/doi/10.1002/wps.20921
Among SUD patients, the risk for breakthrough infection ranged from 6.8% for tobacco use disorder to 7.8% for cannabis use disorder, all significantly higher than the 3.6% in non-SUD population (p<0.001).
"My god are we really locking down for 7 patients a day? "
It's not 7 patients a day. 7 patients a day is at 80% vaccination. We were at 15% fully vaccinated when we locked down.
Now once we get to 80% and open the borders, 7 people a day, with a average stay of 8.5 days for non ICU. About 10% hit ICU, staying 15ish day. Lets say 9 day average overall.
Where are you going to find 63 extra beds at middlemore? That needs some serious investment in hospital space, nurses, doctors, equipment etc. Quite doable long term i would have thought, but serious investment nonetheless.
Auckland is probably 3 weeks from 80% vax. If we dropped to level 2 now we probably won’t even ramp up to 7 hospitalisations a day at middlemore before we get to 80% vax. So why wait?
Do you honestly think Auckland should be in lockdown just for 63 beds? It’s hardly the dramatic end of the world we’ve been sold. I mean it’s obviously not ideal but I’m sure there is a better solution such as moving some of those people to another hospital or stopping elective surgery for a while.
Auckland is not in lockdown for 63 beds, it's 63 beds at middlemore at 80% vax. Repeat that for auckland city, waitakere, north shore. You're talking hundreds of patients not getting the care they need.
Now getting out of lockdown presumably you would relax the internal borders. So Wellington, Christchurch, Dunedin etc etc. What is their capacity? Were proabably talking 1000 beds nationwide
You started out with the premise that we are in lockdown for the sake of 7 patients. You've got the scale wrong.
- About 5 weeks for auckland to hit 80% at current rates. Xmas here we come!
We need another 27% of aucklanders to get their 2nd dose and then wait 2 weeks for it to be effective. That's 380K people, at the last 3 days avg rate of 20K/day, that's three weeks to get vaxed, two weeks to be effective.
Vaccines administered to Auckland residents to date (total): 2,149,995: 1st doses: 1,244,381 (87%); 2nd doses: 905,614 (63%)
Vaccines administered to Auckland residents yesterday (total): 26,102: 1st doses: 4,355; 2nd doses: 21,747
'Total taxes collected rose +20% in the year to June 2021 above the year to June 2020. Income taxes from individuals rose just on +10%, those from companies rose +53%, and GST collected rose just under +20%. There would have been very few workers or companies who saw their incomes rise at such a handsome rate in the same year.'
Tax revenue was really low in 2019/20 - just 61% of Govt expenditure into the economy. So, not a great baseline year. During the year just closed, tax revenue was 73% of Govt spending - just below the previous four year average of 76%. If Govt is spending nmore money into the economy, the recipients of that money are generally workers and companies, who can then afford to pay taxes. Unless of course that Govt spending ends up in the pockets of people who avoid tax!
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