What happened Wednesday

A review of things you need to know before you go home on Wednesday; really low mortgage rate, lower dairy prices, lower home loan approvals, lower yields, swaps slip, NZD down

17th Feb 16, 4:00pm by David Chaston

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

TODAY'S MORTGAGE RATE CHANGES
HSBC has launched a 3.95% mortgage rate fixed for 18 months. Details here. Also, ASB has introduced specific low equity margins in place of varying fees on high LVR home loans. It blames the RBNZ for having to make this move.

TODAY'S DEPOSIT RATE CHANGES
But no changes reported for these today.

BUCKLE UP EVEN TIGHTER
This morning's dairy auction brought more price disappointment although some had feared it would be a lot worse. But after four consecutive falls, prices are painfully low for farmers and it is now clear that Fonterra's recent reduction in current season payout guidance is not low enough.

NO BACKING OFF
The Mondayised Waitangi Day holiday limited the level of 'new' home loans being approved last week. There were 5,538 put through, compared with 6,003 the previous week (when Auckland was on holiday on the Monday). However, growth on a rolling quarter comparison basis is down to just +4.9%. On a value basis however it is +11.4%.

2016 STARTS OUT NORMAL
January farm sales were 120 in the month of January. This is a seasonal low point in the selling season, and volumes this year are higher than last year's January. Dairy farm sales were also seasonally low, but not unusually so. But in the North Island, prices for dairy farms have held up. But they are softer in the South Island.

LIFESTYLE BLOCKS STILL SELLING WELL
Sales of lifestyle blocks is continuing at a healthy pace according to the January data released by the REINZ today.

WELL RECEIVED
Today's LGFA bond tender was popular across all maturities, especially the 2023's. The average weighted accepted yield was 3.63% for those 2023's compared with the prior tender when it was 3.90%

GOING TO THE WELL
Fonterra announced today that it is to make an offer of up to NZ$150 million of senior fixed rate bonds to institutional investors and to New Zealand retail investors. No details are available at this time.

START SAVING EARLY
Stats NZ today published its latest update to its Life Tables. If you are female and aged 30, you should expect to live to age 84. If you are 65, expect to live to at least 86. For males, the life expectancies for these two ages are 81 and 84. The main take-away from this data is that by the time you retire at 65 you will need a nestegg to last well over 20 years.

UP, SORT OF
Following Wall Street's +1.5% gain (S&P500) earlier today, the NZX, the ASX, Hong Kong and Shanghai are all showing gains, although most are more modest than the New York one.

WHOLESALE RATES SLIP
NZ swap rates were -1 to -2 bps lower today. The 90-day bank bill rate is unchanged at 2.60%.

NZ DOLLAR HOLDS
The narrow range-trading for the Kiwi dollar continued today after adjusting lower following the inflation expectations survey results yesterday. It is now at 65.6 USc, 92.3 AUc and the TWI-5 is now at 70.3. Check our real-time charts here.

You can now see an animation of this chart. Click on it, or click here.

Daily exchange rates

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Source: RBNZ

Source: CoinDesk

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21 Comments

by profile | 17th Feb 16, 6:09pm 1455685770

"China's imports of major commodities presented a "steady-as-she-goes" picture in January, which doesn't sound that exciting but should go some way to hosing down some of the more alarmist fears over the state of the world's second-biggest economy.

In a month where commodity prices were rattled by ongoing global growth fears, and equity markets also stumbled, it has to be reassuring to some extent that the physical flow of commodities to China looked more or less normal.

January's commodity imports were generally unremarkable, which is remarkable given the turmoil that was taking place in financial markets at the time."

http://www.reuters.com/article/column-russell-china-commodities-idUSL3N…

by Andrewj | 17th Feb 16, 6:18pm 1455686313

Last month when China’s exports “only” declined by 1.7% (revised) the entire orthodox world took it as a definitive signal for the long-awaited monetary stimulus effects. Whether it was the yuan’s “devaluation” or the six rate cuts and the often double shots of reserve requirement reductions that accompanied them, December trade figures were so very encouraging. Economists, in particular, were quick to convince themselves of their faith in monetarism, as exports for January then were expected to “only” slide by 1.9%, similar to December, while imports were predicted to be almost flat – an unbelievable improvement given that imports had been contracting regularly by 15%-20% throughout most of 2015.
As it turns out, these expectations for the turnaround were literally unbelievable since the latest trade figures from China were nowhere near them. Instead, both exports and imports collapsed yet again as if December’s monthly variation was only that. Exports dropped by 11.2% in January, the worst since March 2015 and the third worst of the “cycle.” Imports fell by 18.8%, more in line with last year’s baseline and nothing like a turnaround or even the hint of one.
http://www.alhambrapartners.com/2016/02/16/china-trade-unsurprisingly-c…

by steven | 17th Feb 16, 7:22pm 1455690176

YoY exports are however down 11%

http://www.wsj.com/articles/china-exports-imports-fall-more-than-expect…

by profile | 17th Feb 16, 6:12pm 1455685946

Renewables in context. "Most of the millennials I’ve spoken to drastically overestimate the amount of energy generated from wind and solar power in the United States. I am often met with incredulous looks when I explain the United States generates only about 2 percent of its total energy consumption from wind and solar combined and that these two sources of power produce less energy for the nation than burning wood."

http://www.bostonherald.com/opinion/op_ed/2016/02/as_you_were_saying_en…

by Afewknowthetruth | 17th Feb 16, 7:34pm 1455690869

'Just four sources of energy account for 89.5 percent of the total energy produced in the United States. Thirty-five percent comes from oil, 28 percent from natural gas, 18 percent from coal, and 8.5 percent from nuclear.'

And it gets very interesting from here on because....

'In 2013 the growing production curve intersects with the declining import curve at around 7.5 mb/d i.e. a production/import ratio 50:50. Since then production grew another 2 mb/d but has peaked in April 2015 because of low oil prices which hit the shale oil industry. Imports did not continue to decline but remained basically flat.'

http://crudeoilpeak.info/the-myth-of-us-self-sufficiency-in-crude-oil

So, with the fracking boom now almost busted, (just waiting for the crash) America will soon be attempting to import more oil to maintain is outlandish level of energy consumption.

However, global extraction outside US-Canada has been essentially flat:

'World outside US and Canada doesn’t produce more crude oil than in 2005'

http://crudeoilpeak.info/world-outside-us-and-canada-doesnt-produce-mor…

with numerous nations in severe depletion decline.

Nothing adds up any more, and, much to the dismay of all mainstream acolytes, we are facing the rapid termination of present living arrangements.

The other side of the fossil fuel addiction predicament just gets worse and worse, of course:

'Global temperatures leap higher in January, smashing records

Just a month after the world notched its hottest year on record, January's global land and sea-surface temperatures were 0.52 degrees above the average for 1981-2010, Japan's Meteorological Agency reported.'

The record is helped along a bit by El Nino, but most of it - more than 80 per cent - is due to human-caused global warming

The departure from the norm easily eclipsed the previous record of 0.29 degrees shared equally by 2002, 2007 and 2015, the agency said.'

http://www.smh.com.au/environment/climate-change/global-temperatures-le…

by profile | 17th Feb 16, 8:37pm 1455694640

How many years have you been waing for the oil supply to crash? It's been around the corner for 100 years. So what if some shalers go bust, they will just be hoovered up by competitors. Creative destruction and all that.

Hottest evah!!! - if one chooses to ignore satellite data. It is nothing more than boring interglacial warming with an el nino thrown in..

http://www.climate4you.com/images/MSU%20RSS%20GlobalMonthlyTempSince197…

by Afewknowthetruth | 17th Feb 16, 9:45pm 1455698727

Your graph comes from no recognised organisation........indeed no source cited at all. presumably just a made-up graph from some wacko Internet blogger.

If we are going to look at satellite data we had better look at this:

http://nsidc.org/arcticseaicenews/charctic-interactive-sea-ice-graph/

and associated satellite data from the University of Colorado, which show unprecedented meltdown, due to record temperatures. .

As for oil crash being 'around the corner for100 years', that statement is just plain stupid.

In 1956 M. King Hubbert correctly forecast the peaking of conventional extraction in the US (1970-1971). Most of his peers sniggered and laughed until he was proven correct in 1971.

Hubbert was very close to the actual global peak when, in 1976, he forecast it to occur around 2000 -just 5 years out as a consequence of the decline in consumption that occurred as a result of the oil wars of the 1970s .

https://www.youtube.com/watch?v=ImV1voi41YY

Of course Dr Colin Campbell and Laherrere revisited Hubbert's work in the late 1990s and correctly predicted the peak of global conventional oil extraction

http://nature.berkeley.edu/er100/readings/Campbell_1998.pdf

described by ASPO

https://www.google.co.nz/search?q=aspo+peak+oil+graph&biw=1093&bih=521&…

It must be infuriating for you to have your spurious arguments constantly demolished by inconvenient facts and analysis from reputable sources.

by profile | 17th Feb 16, 11:06pm 1455703607

The source is cited on the chart there. "RSS" stands for Remote Sensing Systems Microwave Sensing Unit - it's a satellite. Have you heard of it? There is another one, UAH, when has a very similar plot. You can get the RSS data from here if you don't want to sully your good self.

http://images.remss.com/msu/msu_time_series.html

Note the boring, typical interglacial, warming trend of 0.124/decade - if it is going to increase by 6.4 degrees by 2100 it had better get a wriggle on! 0.124/dec is even slower rate of increase than 1910-1940, before we had SUVs and white middle class guilt, but that is another story.

Check out the South Polar zone negative 0,022/decade. I hope the Antarctic can cope.

The climate4you site updates regularly and is quite handy as it also plots CO2 as observed from Hawaii. Note the lousy correlation of CO2 level with temperature. Not exactly runaway warming is it, more like same old interglacial warming. If you know of another chart source that regularly updates satellite and CO2 levels let me know and I'll be sure to use it.

Thanks for the Arctic link why don't you ever bother to post the Antarctic anomaly? Does it not suit your narrative? Is it going in the "wrong" direction?

https://nsidc.org/data/seaice_index/images/s_plot_hires.png

As for recognised organisations please do keep spamming all the crackpot peak oil websites.

by profile | 17th Feb 16, 11:04pm 1455703453

"The theory of peak oil, the idea that global crude production may be at or near its limit, is based on the work of M. King Hubbert, a geologist working for Shell in the 1950s. His prediction that oil output in the lower 48 states of America would peak by around 1970 has been adopted and expanded by hydrocarbon doomsayers, who reckon that global production has peaked and the world is running out of oil. But Mr Hubbert’s curve, which neatly fitted American oil production and rightly predicted a peak in 1970, may need to be redrawn according to analysis by BP, a British oil company. The technology that has unlocked huge volumes of gas from American shale beds can also been used to extract oil. As drilling for oil from shale intensifies America looks set for another peak in the next couple of decades. Mr Hubbert’s curve and the peak-oil brigade look out of date."

http://cdn.static-economist.com/sites/default/files/imagecache/full-wid…

by King of the whiners | 18th Feb 16, 6:32am 1455730359

Disclaimer - the high intensity production of methane (a very potent greenhouse gas which is a major contributor to global warming) is a by product of Profile's interests in dairy factory farming. Accordingly his climate change denial has its roots in the same sort of denial an Australian coal baron would parrot.

As Sinclair put it: 'It is difficult to get a man to understand something, when his salary depends on his not understanding it.'

Deniers generally fall into 3 camps - the aged (basically the 'we are too old and we aren't changing our habits just to benefit a future in which we have no stake') group, the libertarian/right ('we don't care because we hate government action and climate change reversal requires LOTS of co-ordinated government action') group and finally those who's jobs depend on being able to release large amounts of carbon into the atmosphere without penalty ('we don't care because our jobs depend on it not being true') group. We know Profile fits in the 3rd group (because he told us), but that does not of course preclude him from being in the first 2 as well.......

by profile | 18th Feb 16, 10:52am 1455745971

Gold mate - all the manure (and all potential nitrate leaching urine patches) ends up and in a bio digestor/CHP so the site exports electricity and utilises the waste heat for processing. Know many dairy farms that do that? I've also planted millions of trees so I need your CO2 as I don't produce enough. Other business interests utilise waste wood to displace oil and coal - curse those frackers taking my margin... So you'll have to try a bit harder. I'm all for green energy if it makes business sense and doesn't require subsidies. You'll have to dream up a new category.

by steven | 17th Feb 16, 7:50pm 1455691840

and so? I wonder what the response would be in say Denmark? or NZ?

by Zombie ponzi | 17th Feb 16, 6:58pm 1455688737

You know it is getting very difficult to get money out of China when schemes like this start popping up.

http://www.macrobusiness.com.au/2016/02/just-how-hard-has-it-got-to-get…

by Alter Ego | 17th Feb 16, 7:42pm 1455691375

http://www.scmp.com/news/china/money-wealth/article/1908096/chinas-hk59…

I bet a billion to one......that a simple question is...

Now where did the loot go??...in this simple ponzi..

And a trillion to one....in this reverse???...Govt Ponzi.

http://www.scmp.com/news/china/economy/article/1913388/chinese-banks-ha…

A hand out....??. Snatch it orf...Awklanders and gullible New Zealanders.....it will break all records....this is printing, like never before.. (Well not quite as much)..

No wonder we have escalating problems....cannot compete with a Chinese Govt Laundry, when possibly cleaning up in NZ Real Estate.

Disclaimer ...This is not xenophobic, just observational and reporting direct from..

The South China Mourning Post.

A lively read, on just what exported debt may bring to the rest of the World.

Capital controls...yeah right.

http://www.scmp.com/comment/insight-opinion/article/1913683/china-must-…

by Andrewj | 17th Feb 16, 7:48pm 1455691699

Soros has bet the house on China devaluing and he has the right connections.

http://www.freerepublic.com/focus/f-bloggers/2626002/posts

by waymad | 17th Feb 16, 8:26pm 1455693996

Superbly cynical view of the ME 30-years war from Spengler, over at Asia Times: http://atimes.com/2016/02/hopeless-but-not-syri-ous/

by profile | 17th Feb 16, 8:40pm 1455694849

"In what would be a milestone for advanced nuclear power, China’s Nuclear Engineering Construction Corporation plans to start up a high-temperature, gas-cooled pebble-bed nuclear plant next year in Shandong province, south of Beijing. The twin 105-megawatt reactors—so-called Generation IV reactors that would be immune to meltdown—would be the first of their type built at commercial scale in the world.

Indeed, China is rapidly becoming a test bed for innovative nuclear power technologies that have stalled in the United States and Europe. “What you are seeing is serious intent,” says Forsberg. “They may kick greenhouse gases out of their power sector before we do because of that serious intent.”

https://www.technologyreview.com/s/600757/china-could-have-a-meltdown-p…

by Afewknowthetruth | 17th Feb 16, 10:00pm 1455699637

More techno-fantasies.

Q. What do you need to build a nuclear power station?

A. Concrete, steel and copper, all of which generate humungous quantities of CO2 in their mining, transportation and manufacture.

Q. What do you need to keep a nuclear reactor and an electrical grid functioning?

A. Constant inputs of fossil fuels.

by profile | 17th Feb 16, 11:11pm 1455703913

Lucky we have lots of concrete, steel, copper and fuel then.

by pikowai | 18th Feb 16, 4:48pm 1455767314

And lucky all CO2 does is feed the world's plants - with more of it, more trees and plants grow!

by Afewknowthetruth | 17th Feb 16, 10:19pm 1455700784

Death of the Planet via Abrupt Climate Change (including dramatic photographs)

The mountain pine beetle - a single species of native beetle - had attacked an area that was 20 times larger than ever recorded. From 60 to nearly 100 percent of the trees in those forests were killed. It began in the late 1990s and was widespread from New Mexico to British Columbia. The reasons for the attack were many but largely, warming has virtually eliminated the cold temperatures that have previously kept beetle populations under control....

The beetles normally take two years to develop but a longer warm season has doubled their development rate to only a year. Climate scientists have long warned that insect infestations will be greater on a warmer planet. This attack is how that prophecy begins. Half the forests in British Columbia have fallen victim - 44 million acres in total if we include Alberta. This is an area 20 times bigger than Yellowstone National Park, bigger than New England, New York and New Jersey combined. There were so many beetles at the peak in the mid- to late 2000s that strong winds transported them 100 miles over the spine of the Rockies. It was said, "they fell like rain."

http://www.truth-out.org/news/item/34853-the-beetles-eighty-nine-millio…