What happened Tuesday

A review of things you need to know before you go home on Tuesday; fresh costs more, Heartland trumps Turners, fewer board members for Fonterra, more for ASB, NPDC sells up in Tasmania, NZD rise runs out of steam

13th Oct 15, 4:00pm by David Chaston

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

TODAY'S MORTGAGE RATE CHANGES
No more rate cut announcements today as the home loan market absorbs the recent flurry. The current low points are HSBC's Premier one and two year carded rates of 4.25%.

TODAY'S DEPOSIT RATE CHANGES
NZCU Baywide cut some term deposit rates today.

FRESH FOOD COSTS MORE
Food prices fell in September from August but were +0.7% higher over the past year, in data out today. This follows an increase of +0.4% in the year to August. Fruit and vegetable prices increased +5.3%, with higher prices for avocados, lettuce, potatoes, and bananas. Overall, fruit prices increased +7.8% while vegetable prices increased +3.9%. Much lower rises were recorded for processed foods, with grocery prices actually lower than for the same month in 2014.

HEARTLAND TRUMPS TURNERS WITH MTF OFFER
Heartland Bank has topped a rival offer from Turners Ltd for Motor Trade Finances shares. The bank says it's offering $1.50 per share for between 10% and 20% of MTF. The offer is subject to satisfactory due diligence. Heartland says it's still keen to acquire all of MTF's shares, subject to full due diligence and reaching agreement with MTF's board. Turners has offered $1.15 per share for up to 20% of MTF. Turners' offer is due to close on October 17. Heartland also says it wants to offer its insurance, operating lease, plant and equipment, livestock, marine and unsecured personal loans through MTF’s originating shareholders. Here's Heartland's full statement.

'FEWER IS BETTER'
Two Fonterra shareholders and former Fonterra board members are calling on Fonterra shareholders to reduce the number of directors in a move to improve the company’s performance. The two, Greg Gent and Colin Armer, want shareholder support for a reduction of board members from 13 to nine.

THERESE WALSH JOINS ASB BOARD
ASB has named Therese Walsh as a new independent director, lifting the number of directors the bank has on its board to 11. Five are women. A chartered accountant, Walsh has worked for KPMG and been chief financial officer of the New Zealand Rugby Union. She also oversaw the NZ side of this year's Cricket World Cup. Walsh is also a director of NZX and TVNZ and a trustee of Wellington Stadium. ASB's board is chaired by Gavin Walker and also features managing director Barbara Chapman.

THE MINERALS-TO-FOOD PIVOT
The New Plymouth District Council has sold its huge dairy farm operation in Tasmania to two billionaire Chinese investors in a $270 mln deal that will require Australian regulator approval. Sale of such land is a sensitive topic for some Aussie politicians although the Tasmanian government is reported to be 'thrilled'.

NO LONGER RISING
Today's dairy futures trading held the line, but with a continuing sense of softness. The next dairy auction is on Wednesday morning, October 21, 2015. WMP pricing about US$2,950/tonne seems to be currently indicated, so that represents gain of about +5%, something that could easily slip away in the next week. Or build.

PESSIMISTS WINNING?
The Aussie Reserve Bank has warned that Australians must not let their current uncertainty about the future mutate into "chronic pessimism" if they want to stop their living standards deteriorating. It has warned if pessimism became ingrained in Australia's culture then "many of the opportunities that we do have are likely to go begging."

THE NEXT GREAT LEAP
China is preparing a high-wire reform act, trying to transition quickly into a market and consumer-based economy. There are likely to be many rough edges along the way. We will need to see their speed bumps in that context. Their next 5-year Plan is a daring experiment in regulatory speed, one Roger Douglas would have been proud of.

WHOLESALE RATES
The 90-day bank bill rate is down -1 bp at 2.84% today, as are all swap rates, across the curve. There have been very limited rate signals from overseas today as markets are partially closed on Wall Street for their Columbus Day holiday.

NZ DOLLAR RISING
The Kiwi dollar rose strongly today pushing well up over 67 for a time but is now back at 66.8 USc after an afternoon sell-off, it is holding against the Aussie at 91.1 AUc and has slipped marginally at 58.8 euro cents. The TWI-5 is at 70.8 however. Check our real-time charts here.

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6 Comments

by dh | 13th Oct 15, 4:42pm 1444707745

Police have made an arrest in the Fonterra 1080 blackmailing case. Despite John Key's assertion at the time that it was eco-terrorist protestors, police allege it was a 60 year old Auckland Businessman with a financial motive.

by profile | 13th Oct 15, 5:07pm 1444709245

A world awash with gas.

"Five years ago, energy companies hungry for the next big thing started planning as many as 90 terminals to send natural gas around the globe. Now, it seems the world only needs five more.

Consulting firm IHS says only one in every 20 projects planned are actually necessary by 2025 as weakening Asia economies, cheap coal, the return of nuclear power in Japan and the ever-expanding glut of shale supply in North America temper demand for the power-plant fuel, putting tens of billions of dollars worth of export projects at risk.

Barring an unusually cold winter in Asia, global LNG supply will outstrip demand by next year, said Trevor Sikorski, an analyst at Energy Aspects in London. Seven new plants in Australia will flood the market over the next two years."

http://www.gasprocessingnews.com/news/analysts-global-lng-industry-has-…

by profile | 13th Oct 15, 5:08pm 1444709330

Where all those WW2 and Horizon oil spills disappeared to.

"The study suggests that the amount of hydrocarbons produced by cyanobacteria dwarfs the amount of crude oil released into the seas by natural seepage or accidental oil spills.

However, the hydrocarbons produced by cyanobacteria are continually broken down by other bacteria, keeping the overall concentrations low. When an event such as an oil spill occurs, hydrocarbon-degrading bacteria are known to spring into action, with their numbers rapidly expanding, fuelled by the sudden local increase in their primary source of energy."

http://www.sciencedaily.com/releases/2015/10/151005151417.htm

by Stephen Hulme | 13th Oct 15, 5:10pm 1444709407

The Aussie Reserve Bank has warned that Australians must not let their current uncertainty about the future mutate into "chronic pessimism" if they want to stop their living standards deteriorating.

Another meddling central bank apologist.

But, ultimately, the rate at which our living standards improve is unlikely to be driven by the actions of the central bank. Instead, the improvement in our living standards rests on our ability to improve our fundamentals and enhance the flexibility of our economy so that it can take full advantage of the opportunities in our ever-changing world.

Why don't they just stand aside and let the market make the adjustments without the intrusion of failed state enforced wealth redistribution policies based upon a redefinition of what constitutes inflation.

by profile | 13th Oct 15, 5:20pm 1444710048

Freeman Dyson on chronic pessimism yesterday:

"Now we've conquered a lot of these, but there seems to be an unquenchable thirst for apocalypse.

[Laughs] Yes. I don't know why, it's a mood of the times. I don't understand that better than anyone else. It is true that there's a large community of people who make their money by scaring the public, so money is certainly involved to some extent, but I don't think that's the full explanation.

It's like a hundred years ago, before World War I, there was this insane craving for doom, which in a way, helped cause World War I. People like the poet Rupert Brooke were glorifying war as an escape from the dullness of modern life. [There was] the feeling we'd gone soft and degenerate, and war would be good for us all. That was in the air leading up to World War I, and in some ways it's in the air today.

The years before 1914 were a tremendously promising time. Russia was getting richer, [but then] the whole thing fell apart. It's comparable today – we've done a much better job with feeding the world and if you look at the number of desperately poor people, it has been decreasing quite steadily.

The most important thing at the moment is China getting richer. What the rest of the world is doing doesn't really matter."

http://www.theregister.co.uk/2015/10/11/freeman_dyson_interview/?page=1

by profile | 13th Oct 15, 5:13pm 1444709621

" Chinese buyers are planning to bid for about 100,000 square kilometers of Australian land, approximately the size of China's Zhejiang province, Financial Times reported on October 7.

According to the FT, nearly 20 million heads of cattle are included in the sale, including Anna Creek, the world's largest cattle station. The deal is valued at 1.51 billion yuan (A$325m, US$231m)."

Interesting maths. How to turn 200,000 cattle into 20 million via google translate?

http://en.people.cn/n/2015/1012/c98649-8960724.html