A review of things you need to know before you go home on Thursday; Auckland house prices drop, Auckland winning diversity race, NIMBYs worried, linkers soft, factories and tourism humming, swaps fall

A review of things you need to know before you go home on Thursday; Auckland house prices drop, Auckland winning diversity race, NIMBYs worried, linkers soft, factories and tourism humming, swaps fall

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

TODAY'S MORTGAGE RATE CHANGES
No mortgage rate changes to report today.

TODAY'S DEPOSIT RATE CHANGES
No term deposit or savings rate changes either.

AUCKLAND PRICES DROP $50K
A housing downturn has hit the Auckland market with both prices and sales volumes falling substantially last month. Actually, that is the third month in a row for -10% or greater lower year-on-year volumes. Other centres also fell back, although regionally it was more mixed. But it should be noted that a fall-back in price December-to-January is not an unusual trend. But sliding volumes year-on-year are not. Interestingly, asking prices are falling too. And Colliers data shows capital gains are declining for investors too.

FOURTH MOST INTERNATIONAL
Auckland has beaten out London, Paris and New York in terms of its diversity and welcome for migrants. We are changing for the better as most residents notice and welcome (but some [white?] people do feel threatened by the changing ethnic mix).

NIMBYS FLEX THEIR MUSCLE
In a split that also has some hallmarks of a similar division, it seems a majority of councillors may not now be in favour of the latest Auckland housing rezoning.

DEMAND SOFTER THAN RATE
The September 2035 Government inflation linked tender saw the average weighted yield at 2.4% (2.5% last time) (plus future inflation). But for this tender there was lower demand reflecting the deterioration in global risk sentiment.

SIZZLING SUMMER
The one sector that you might think is suffering is far from doing so - manufacturing. The BNZ-BusinessNZ PMI for January is well in expansion territory and has been continuously since January 2015. In fact, the seasonally adjusted expansion was its highest over that period at 58. Since October 2012 manufacturers have only recorded one month of contraction, an impressive run.

TOURISM BOOMING TOO
National guest nights for December 2015 were +6.2% higher than in December 2014, Statistics New Zealand said today. The gains were everywhere, but best in the South Island.

STILL SIGNING UP OR SWITCHING
Home loan approvals
were down last week from the week before, but that was due to the Auckland and Nelson regional holidays. But it should be noted that 2016 is running higher than the same period in 2015.

SUNCORP GROWS PERSONAL INSURANCE BUSINESS
Suncorp’s New Zealand general insurance business, which consists of Vero New Zealand and AA Insurance, has reported an insurance trading result of $74 million for the six months to December 31, 2015. The result is down 19% from the same period the previous year, while Gross Written Premiums are up 2.7%. Vero New Zealand chief executive, Paul Smeaton, says significant growth in personal insurance, particularly home and motor, have supported the result. 

WHOLESALE RATES LOWER
NZ swap rates were -3 and -4 bps lower today across curve today with a slight flattening bias. The 90-day bank bill rate also slipped and is now at 2.63%.

NZ DOLLAR HIGHER
The NZD is currently at 66.9 USc, 94.1 AUc and the TWI-5 is now at 71.2. Check our real-time charts here.

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auckland house prices drop no no no can not happen , this is NZ we are different from the rest of the world

The property market is a market like any other. A lot of people got burnt in 1987 and went all in on residential property for their retirement. Eggs in one asset class is very risky.

NZ swap rates were -3 and -4 bps lower today across curve today with a slight flattening bias.

Commonwealth Government Securities are flying out the door as well.

The nation’s benchmark 10-year yield has dropped half a percentage point since Dec. 31 to 2.38 percent as of 12 p.m. on Thursday in Sydney. It sank Tuesday by the most since 2013. Government debt hasn’t had this kind of start to a year since the recession a quarter of a century ago that helped push unemployment to a peak of more than 10 percent and caused a number of local financial institutions to fail. Read more

I sometimes think I am dreaming when such significant risk free windfalls are delivered courtesy of tax paying underwriters. 1987 was good for sovereign debt traders, but this latest fiasco measures up well.

"Should the Chinese banking system lose 10 percent of its assets because of nonperforming loans, the nation’s banks will see about $3.5 trillion in equity vanish, Bass, the founder of Dallas-based Hayman Capital Management, wrote in a letter to investors obtained by Bloomberg. The world’s second-biggest economy may end up having to print more than $10 trillion of yuan to recapitalize banks, pressuring the currency to devalue in excess of 30 percent against the dollar, according to Bass."

http://www.bloomberg.com/news/articles/2016-02-10/bass-says-china-s-bank...

It's pleasing to see manufacturing and tourism doing well. Industry that creates jobs and income for the country gets the big thumbs up.

US shale oil output to double by 2035. So much for the gleefully anticipated shale fail.

"But in the longer term, shale production is set to grow from around 4 million barrels per day (bpd) today to 8 million bpd in the 2030s, accounting for almost 40 percent of U.S. production."
http://www.rigzone.com/news/article.asp?hpf=1&a_id=142982

"Citing up-to-date analysis of production data and cash costs from over 10,000 oil fields, Wood Mac said it believes 3.4 million b/d, or less than 4% of global oil supply, is unprofitable at oil prices below $35/b.

Even the majority of US shale and tight oil, which has been under the spotlight due to higher-than-average production costs, only becomes cash negative at Brent prices "well-below" $30/b, according to the study."
http://www.platts.com/latest-news/oil/london/less-than-4-of-world-oil-su...

"After a year of low oil prices, only 0.1 percent of global production has been curtailed because it’s unprofitable, according to a report from consultants Wood Mackenzie Ltd. that highlights the industry’s resilience."
http://www.bloomberg.com/news/articles/2016-02-05/how-much-global-oil-ou...

Global warming?Ocean acidification?
Crisis-what crisis??

'US shale oil output to double by 2035. So much for the gleefully anticipated shale fail'

Actually, the world will be largely uninhabitable or completely uninhabitable for humans by 2035 as a direct consequence of overconsumption of fossil fuels. .

Atmospheric CO2 is at an all-time high (404ppm, 175ppm above normal), and is increasing at an unprecedented annual rate -currently in excess of 4ppm per annum, which is twice the previous annual rate..

https://www.co2.earth/co2-acceleration

The damage done to climate systems is already staggering, and once the ice in the Arctic has melted -possibly later this year- we enter a completely new regime of climate chaos (Abrupt Climate Change) which will wreck industrial civilisation, due to much faster warming associated with lack of ice.

With accelerating CO2 accumulation in the atmosphere we will be well past the so-called safe level 450ppm by 2028..

And then there are the humungous quantities of methane leaking into the atmosphere from gas wells, such as Porter Ranch.

http://www.latimes.com/science/la-me-porter-ranch-greenhouse-20160124-st...

(Methane having a warming potential at least 100 times CO2 for time frames that matter.)

So 1960's afktt... "By the year 2000 the United Kingdom will be simply a small group of impoverished islands, inhabited by some 70 million hungry people … If I were a gambler, I would take even money that England will not exist in the year 2000."

"
“The battle to feed all of humanity is over. In the 1970s hundreds of millions of people will starve to death in spite of any crash programs embarked upon now. At this late date nothing can prevent a substantial increase in the world death rate,” he said. He predicted four billion deaths, including 65 million Americans."

Paul R. Ehrlich's views are certianly not mainstream, however s just one example since the 1970s fish stocks have halved and a lot of ppl rely on fish. The Green revolution converted oil and gas into food trebling production and by 2050 and the expected 9 billion it will effectively be gone.

So in effect what you are proposing/supporting is a growth for ever model on a finite planet v Ehrlich who sees finite if a bit un-clearly.

Anyway a more interesting look at his work,

https://en.wikipedia.org/wiki/Paul_R._Ehrlich

The guy was manistream enough to be made a Fellow of the Royal Society - which about sums up the Royal Society of the present day. He should have stuck to butterflies given how woeful his predictions were - but where are the speaking fees and book sales in butterflies? The doom industry is a much better paying profession than science.

Growth forever? Peak baby was 1990. Bomb defused.

Not likely that its CC by 2035, 2235 yes, maybe even 2135, but not in 20 years. Though the impacts of loss of food production etc could cause a few riots and wars and if someone throws a few nukes around, then yes.

A more realistic opinion on that same page is "The head of Russian state-run oil company Rosneft, in which BP holds a near 20 percent stake, said on Wednesday he expected U.S. shale oil production to peak by 2020 and decline in the long term."

Funny, but even if it were true/possible that entails a huge quantity of rigs which in turn entail water on a scale un-achievable even if land owners/voters put up with the eco-destruction from the rigs. But that is still only 5% of world supply, yet 34% more demand. I more expected outlook is not even 1/2 what is produced today feeding into a world where every major oil producer is in decline as per the russian's view.

The price comment at $35/barrel is interesting this makes it cheaper than conventional oil to get and since it sells for less as refiners dont like it hmmm.

"global production has been curtailed because it’s unprofitable" actually once oil is drilled its very cheap to keep it pumping, ergo there is little reason to stop once its flowing. What is being impacted and massively is future oil field production.

Meanwhile BP also seems to think there will be a price recovery soon, others point at a drop as being more likely,

http://peakoil.com/production/opec-production-cut-unlikely-until-u-s-oil...

Though there are so many wild cards such as arab springs it's a guessing game,