90 seconds at 9 am with BNZ

90 seconds at 9 am with BNZ: US jobs growth weak, but inflation fear rising; Rental market madness reports; Family trust boom beckons

7th Feb 11, 9:08am by Bernard Hickey

Bernard Hickey details the key news overnight in 90 seconds at 9 am in association with Bank of New Zealand, including news from the United States late on Friday night that jobs growth in the world's largest economy was weaker than expected.

However, the US unemployment rate fell to 9%, which was better than expected. See more here at MarketWatch

This unexpected drop in the jobless rate helped fuel hopes for US economic recovery and fears about rising inflation.

The US 10 year Treasury bond yield, which is a closely watched indicator of how worried bond investors are about future inflation, has risen 31 basis points to 3.63% in the last month. See more here at Bloomberg.

Meanwhile here in New Zealand, NZHerald and TV3 have reported "madness" in Auckland's rental property market, neglecting to mention the seasonal strength in demand due to the return of University students.

See more here on our site.

Meanwhile, there are growing expectations that the government's decision announced quietly to drop gift duty will spark an explosion in the creation of family trusts in anticipation of higher tax rates in future.

Without the tax on gifting into family trusts, it will be much easier to quickly gift assets into family trusts to use the 33 cent family trust tax rate.

See more here from Rob Stock here at Sunday Star Times.

One solution would be to put up the tax rate on family trusts. Your view?

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24 Comments

by Wolly | 7th Feb 11, 9:16am 1297023360

"Think it's all good down on the farm? Think again. Property values are plunging, and the crisis could yet hit the cities too, reports Karyn Scherer" herald

Finally....somebody at the poodle media centre managed to get passed the editor with the truth...well done Karyn.

" While urban land prices have not yet fallen to anything like the same extent as rural land, there is a rough correlation between the two. And more importantly, the rural economy is what underpins the New Zealand economy."

by Malarkey | 7th Feb 11, 9:53am 1297025615

She is so fired.

by Wolly | 7th Feb 11, 9:44am 1297025063

Readers should go here to discover the "statistical bullshit" behind the US employment numbers...

http://www.marketoracle.co.uk/Article26100.html

and here....

http://globaleconomicanalysis.blogspot.com/2011/02/labor-force-and-unemployment.html

also

http://globaleconomicanalysis.blogspot.com/2011/02/whats-inside-bls-magic-black-box.html

Note to idiots: Govt data everywhere amounts to effluent.....

by anonentity | 7th Feb 11, 1:19pm 1297037993

Absolutly right Wolly...They removed 500 thousand from the Unemployment list,they ran out of unemployment benifits..so they were no longer classed as looking for work.On "Economic collapse blog" one poor girl trying to get to work got her feet frostbitten and because she couldn't afford to go to the hospital had to have her feet removed.Its starting to look like the place has had its day.

by Wolly | 7th Feb 11, 9:38am 1297024690

Stupid greedy Kiwi being targeted....... http://globaleconomicanalysis.blogspot.com/2011/02/phoenix-property-scam-targets.html

by Mark Hubbard | 7th Feb 11, 9:49am 1297025358

Of course there is a rental crisis, and it'll get worse. We all know why, the change in tax policy you've been pontificating on and pushing for (welcome to the unintended consequences), local government ramping up development charges and levies, and on and on - to sum up, bureaucrats distorting the market, as ever .... all so boringly predicable.

Separating the influence of government from the markets (the economy), that's the answer. Do you think you'll ever get yourself to such a wise position Bernard?

by Malarkey | 7th Feb 11, 9:52am 1297025525

Yep, there's a rental crisis: all those idiots who raced out and loaded up on debt to buy rental property are now in crisis. Great for potential tenants, though...

by powerdownkiwi | 7th Feb 11, 9:59am 1297025984

Tribeless - no. We're into sequentially more-expensive everything now. The cheapest (of everything) has been cherry-picked.

Each piece of new infrastructure - whether public or privately funded - will be the least expensive option, followed by the next least expensive, so each step will be relatively more expensive.

Even as that happens, real incomes have to reduce, indeed they have been for some time - disguised by personal and collective debt-levels rising exponentially.

The 'markets' are the sphere of activity that are terminally ill - were always going to be past peak - and the only way to address that phase-shift, is with long-term strategic governance.

Which I've almost never seen from a boardroom - except Case (tractors) early last century.

by Bernard Hickey | 7th Feb 11, 10:40am 1297028449

Do you trust unfettered markets after what happened in the last 5 years?

Do you wonder why people have lost faith in unfettered markets?

Even arch Ayn Rand supporter Allan Greenspan has lost the faith recently.

cheers

Bernard

by Mark Hubbard | 7th Feb 11, 11:16am 1297030578

Do you want to indicate which market, anywhere, that you're referring to was unfettered and not crony capitalism (which is not laissez faire)?

Hint: if the market has a central bank its not unfettered. And that's before we even consider all the taxing and regulation that stifles every economy that I know of.

Again, Google Mises Bailout Reader.

by Wolly | 7th Feb 11, 9:56am 1297025808

New mortgagee listings on Trademe last week.....42

by Boatman | 7th Feb 11, 9:59am 1297025989

With regards to the rental shortage story , one needs to stand back and see the wood for the trees.

1) Have we had a surge in migration to NZ ?

No, the figures are down on 2009 , nearly half of all Chinese mainland migrants were parents of people already here . These older folk are not usually wealthy and tend to double up in homes

2) Have landlords been selling down investment properties ?

Yes , but its close to a zero sum game , because buyers are either investors or lived somewhere else , causing a vacancy where the moved from. There is unlikely to be a net gain in renters .

3) Have there been a surge in employment resulting in more people confident enough to move into their own home ?

No , unemployment figures are up for Q4 of 2010, so its unlikley there are more newly emplyed people moving into their own rented homes

4) Did about 25,000 New Zealand and foreign uni and college students start the new academic year last week ?

Hullo ?

The quality of journalism at the Herlad and TVNZ is frankly , shoddy . Dont they teach journalists to question their topic thoroughly these days

by Mark Hubbard | 7th Feb 11, 10:04am 1297026261

Why would there be a 'tax incentivised' rush into Family Trusts to use the trustee 33% tax rate when the top personal tax rate is now 33%, and the corporate rate is about to move down to 28%?

by Bernard Hickey | 7th Feb 11, 10:47am 1297028820

Preparing for when an outraged electorate revolt at the widening gap between rich and poor and try to impose a higher tax rate.

Or when the IMF and the Australian government forces us to get out budget deficit under control.

cheers

Bernard

by Mark Hubbard | 7th Feb 11, 11:15am 1297030512

The rot talked in the MSM about the wealth gap:

http://tribelesshispursuitofhappiness.blogspot.com/2010/12/income-inequ…

by fmr ca | 7th Feb 11, 10:48am 1297028904

Because if Labour get in (and they will at some stage) they will reinstate the top personal tax rate at some unspecified level at an unspecified threshold. All very vague but a bit worrying for anyone on a bigger income. A big spread in tax rates always prompts much tax planning from business people to minimise tax and so Labour will end up with less than they think from their plans. Such top individual tax rates always hit PAYE earners disproportionately hard as they are taxed at source; and benefits business people, lawyers and accountants.

by Wolly | 7th Feb 11, 11:10am 1297030228

If the socialist idiots ever get another turn at the pig trough....it will be time to leave.

by Alex Tarrant | 7th Feb 11, 11:23am 1297031006

Are you stating here and now Wolly that if Labour get in then you'll leave NZ?

There could be Greens-led govt with Labour as the coalition partner looking at our poll on the right ;)

Can I interview you at the airport on your way out?

by Wolly | 7th Feb 11, 11:33am 1297031598

No Alex but you can count my capital as it departs the scene for safer locations....where it will be used to create real employment for others and more income for me.

by Alex Tarrant | 7th Feb 11, 12:42pm 1297035753

No all good in the lucky country...

Despite a booming labor market, many household incomes in Australia are stretched due to rising cost pressures, with the rise in the cost of living, as measured by the Australian Bureau of Statistics (ABS), outstripping official inflation, owing mainly to the inclusion of mortgage interest charges in the living cost index.

These pressures will worsen, with day-to-day living costs increasing in the aftermath of the flooding in Queensland, in particular. The anticipated jump in food, fuel, and electricity prices, which account for about one-fifth of total household spending, should prove temporary, but further rises in interest rates will have a more lasting negative impact on consumer spending. This reaffirms our view that real consumer spending will be subdued this year and next, growing below trend.

https://mm.jpmorgan.com/stp/t/c.do?i=4A668-361&u=a_p*d_542857.pdf*h_rmgsmklu

by Andrewj | 7th Feb 11, 12:51pm 1297036272

Isn't it all about growth. We cannot afford the Government weve got, and now its spending $112,000,000 a week in interest, the matters is becoming of some importance.

http://richardheinberg.com/222-the-end-of-growth

by Wolly | 7th Feb 11, 2:25pm 1297041928

"It appears John Key is telling the New Zealand public one thing while his officials stitch up a deal in secret with the United States that will impact adversely on our economic sovereignty." Norman

http://www.voxy.co.nz/politics/key-must-clarify-disturbing-report-washington/5/81001

Nah...John Key wouldn't do something like that...why it would be an absolute shit of a thing to do!

by Wolly | 7th Feb 11, 2:34pm 1297042473

Hey Walking Eagle...we have heap big work for you...come quick...

Police on Easter Island raided the grounds of a luxury hotel yesterday to evict the last of dozens of indigenous protesters battling for ancestral lands and a larger share of profits from the tourists who come to see the Pacific Island's mysterious statues of giant heads.

by Andrewj | 7th Feb 11, 2:58pm 1297043881

The real problem in Egypt

http://globaleconomicanalysis.blogspot.com/2011/02/egyptians-banks-open…