A review of things you need to know before you go home on Wednesday; ASB posts record profit, CERA talks itself up, card spending stays high, Aussies confident, swaps rise, NZD volatile

A review of things you need to know before you go home on Wednesday; ASB posts record profit, CERA talks itself up, card spending stays high, Aussies confident, swaps rise, NZD volatile

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

TODAY'S MORTGAGE RATE CHANGES
No mortgage rate changes today. But we are expecting some.

TODAY'S DEPOSIT RATE CHANGES
Westpac has cut rates for both its 1 month term deposit and online savings accounts by 25 basis points.

BREAK FEES BOOST BANK PROFIT
ASB has posted a 7% rise in interim profit
to a fresh record high, with income boosted by customers paying fees to break fixed-term mortgage contracts in a falling interest rate environment. ASB's net profit after tax rose $30 million, or 7%, to $474 mln in the six months to December 2015 from $444 mln in the six months to December 31, 2014. The bank grew home loans by 8%, which was in line with the market, to $45.662 bln, and business and rural lending by 14%, above the market, to $21.310 bln.

POST QUAKE PR BLOWOUT
The Labour Party is pulling up the Canterbury Earthquake Recovery Authority (CERA) for having a public relations spending “blowout”, despite the fact it’s meant to be winding down. Labour’s Canterbury Spokesperson Megan Woods says, “CERA is meant to be closing up shop soon, but in the last financial year they had a 37% increase in the amount spent on public relation campaigns. CERA now employs a whopping 19 communications staff – that’s compared to just 11 by the Ministry of Education and 7 by the Ministry of Health.

SPENDING SURPRISE
Retail spending using electronic cards was +5.2% higher in January 2016 than the same month a year ago. However, the intriguing bit was the revisions to prior data. Sales of durable good sales have apparently been understated previously by about 4% in both November and December. After adjusting for this, spending on durable goods was really very healthy in Q4-2015, and this may show up in a surprisingly stronger Q4 GDP result.

A BIG WOOL PRIZE
A new PGP partnership between MPI and the NZ Merino Company has agreed to spend $22 mln developing new opportunities that are targeting $335 mln in revenues within nine years

MORE CONFIDENT
Following the surprisingly strong rise in Australian business confidence we reported recently, today Westpac said their consumer confidence survey is equally positive. Consumer confidence in Australia surged +4.2% to a score of 101.3.

WHOLESALE RATES
NZ swap rates were +2 bps higher across the 2-10s curve today, bucking the broadly lower trend globally. The 90-day bank bill rate is unchanged at 2.64%.

NZ DOLLAR VOLATILE
NZD/USD reached a low of 0.6560 in the early hours of the morning before climbing 1c to a high of 0.6665. The moves higher were halted this afternoon as Australia and Asia markets opened and stocks began to fall in response to what happened overnight on Wall Street and in Europe. Asian markets continue to be sold down and Japan's Nikkei index is down a further -2.5%. The NZD is currently down across all the majors in this afternoon's session, with the biggest falls being against the Euro and Yen (-1%). The NZD is currently at 66.2 USc, 94 AUc and the TWI-5 is now at 70.9. Check our real-time charts here.

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9 Comments

Break fees, so-called, a great little money spinner for banks.
Threaten rate hikes or 'hit bottom' marketing messages. Get borrowers fixing for 3 - 5 years, then let the rates drop. Then charge the break fees.
Why on earth would any sane person fix for 5 years? The media needs to educate the public on what rates all other developed countries are paying - e.g. 2% mortgages.

Indeed, so Wheeler knows what he is doing? yet just about everywhere else the OCR is way lower. When is the voter going to start asking hard Qs? never as long as they are fed soothing platitudes and crumbs it seems.

"Let me be blunt: this next crash will be far worse and more dramatic than any that has come before. Literally, the world has never seen anything like the situation we collectively find ourselves in today. The so-called Great Depression happened for purely monetary reasons. Before, during and after the Great Depression, abundant resources, spare capacity and willing workers existed in sufficient quantities to get things moving along smartly again once the financial system had been reset."

This time we dont have the resources.

Its well worth the read IMHO.

"“We see the price of major financial stocks, particularly in Europe, which are truly frightening,” Gundlach said. “Do you know that Credit Suisse, which is a powerhouse bank, their stock price is lower than it was in the depths of the financial crisis in 2009? Do you know that Deutsche Bank is at a lower price today than it was in 2009 when we were talking about the potential implosion of the entire global banking system?”"

http://peakoil.com/business/the-return-of-crisis

tend to agree the debt mountain is huge, who is going to pay it back or will rates have to become negative to be able to reduce it.
reminds me of the person that gets a second credit card to pay the first, then a third to pay the second and so on until it all comes crashing down made bankrupt and pay back 15 cents in the dollar if your lucky.

It will default, as paying it back assumes BAU. So "BAU" assumes a growing economy with inflation on a finite planet running out of essential materials. Especially oil, you cant grow without using more and more cheap oil every year to do so and that is not possible.

Steven - when will this next crash take place?

....the frog in the boiling water.....

How the heck would I know? Sit back for the ride there is nothing anyone can do.

I sold all my shares that I can sell already, though too early as it turns out. I think the biggest thing (--edit-- that you cannot calculate) is the human factor. Greed (and maybe desperation) has kept the debt game going for 5 years longer than I and I think most other ppl I read thought.

--edit-- All I can say right now its switched from a clear minority writing "2nd great depression tomorrow" to quite a lot of ppl (bankseters etc) writing "recession tomorrow". What I wonder on is what they are really thinking....but not saying. Actions speak louder than words, watch the banks shares I think.

Another interesting indicator of a recession,

"the scale of the decline in distillates demand in January has only ever been seen before during full-blown US recessions."

http://www.businessinsider.com/barclays-note-on-distillates-showing-us-r...