What happened Friday

A review of things you need to know before you go home on Friday; bigger Govt. surplus, more imported cars, lower dairy prices, Hart's troubles, swaps unchanged, NZD up

4th Mar 16, 3:59pm by David Chaston

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

TODAY'S MORTGAGE RATE CHANGES
There have been no changes today.

TODAY'S DEPOSIT RATE CHANGES
No changes here today either.

SURPLUS GROWS
Treasury reports the Government's budget surplus for 7 months to January was NZ$934 mln, which was NZ$724 mln more than forecast. It was higher because of stronger GST and PAYE tax collected, but lower spending due to Treaty settlement payment timings was also a factor. The Government's cash position is NZ$1 bln better than forecast.

240,000 NEW CARS IN A YEAR
NZTA today reported that used imports are still flooding into the country. In February we imported 11,736 cars; over the past year that totals more than 144,000. And that is on top of the 95,000 new cars. The used imports are running +8.2% higher on an annual basis; new cars are +3.6% higher. (Commercial vehicles are on top of this data.)

SOME UP, MOST DOWN
USDA monitoring of Oceania dairy prices shows that WMP bids are higher, SMP bids are lower, along with lower butter and cheese prices. The slightly lower NZD couldn't overcome the drift.

GOOD RETAIL IN AUSTRALIA
Retail sales in Australia rose +3.1% in January over the same month a year earlier. For the twelve months to January they were up +4.2%. These numbers are higher than their inflation rate (+1.7%) so they reflect real gains in their retail sector. The out-performing sectors were "household goods" (that is Harvey Norman) and clothing.

DEBT IS A TOUGH MISTRESS
Part of Graeme Hart's debt-fuelled empire is wobbling. The risk of higher US interest rates has brought a swift and furious reassessment about the value of some of his traded debt. The reassessment could well spread to other parts of his junk-bond funded holdings.

A REASON TO CHECK IN TOMORROW
Keep an eye our (here) tomorrow morning for the crucial US non-farm payrolls result. The market expectation is 195,000 new jobs. And wage growth at +2.5%. Any significant surprise will move markets, especially to the up side.

WHOLESALE RATES UNCHANGED
There has virtually no change to swap rates today. NZ swap rates are here. The 90-day bank bill rate is down -1 bp at 2.57%.

NZ DOLLAR UP
The Kiwi dollar is a lot firmer from this time yesterday. You can see why from some items above. It is now at 67.4 USc, at 91.6 AUc and 61.6 euro cents. The TWI-5 is at 71.9. 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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17 Comments

by Stephen Hulme | 4th Mar 16, 4:28pm 1457062120

The Government's cash position is NZ$1 bln better than forecast.

Certainly welcome given the 2016 linker was redeemed on 15 February at an approximate value of $1.910 billion, including inflation related capital accrual.

by antonymouse | 4th Mar 16, 4:45pm 1457063104

A warning from Bill Gross.

Sunshine, Lollipops and…

What readers should know is that the global economy has been powered by credit – its expansion in the U.S. alone since the early 1970’s has been 58 fold – that is, we now have $58 trillion of official credit outstanding whereas in 1970 we only had $1 trillion. Staggering, is it not? But now, this expansion appears to be reaching an ending of sorts, at least in its current form. Private sector savers are growing leery of debt piled upon debt and government regulators have begun to build fences against further rampant creation. In addition, the return offered on savings/investment whether it be on deposit at a bank, in Treasuries/ Bunds, or at extremely low equity risk premiums, is inadequate relative to historical as well as mathematically defined durational risk.

Banking/finance seems to be either a screaming sector ready to be bought or a permanently damaged victim of write-offs, tighter regulation and significantly lower future margins. I’ll vote for the latter.

https://www.janus.com/bill-gross-investment-outlook

by Stephen Hulme | 4th Mar 16, 5:13pm 1457064814

A sorry state of affairs

Consumers across the country are borrowing more to buy cars and go to school
— St. Louis Fed (@stlouisfed) March 3, 2016 Read more

by Andrewj | 4th Mar 16, 5:35pm 1457066119

Warren on student debt
https://www.youtube.com/watch?v=VNUNGRPVZDo

by Stephen Hulme | 4th Mar 16, 6:40pm 1457070014

And still this type of nonsense prevails.

House flipping - buying and reselling a home to make a quick buck - has risen in some hot housing markets, prompting concerns that local housing bubbles could be developing, according to a report published on Thursday.

The report by RealtyTrac found that home flipping in 12 active metropolitan areas last year was above a peak set in 2005, just two years before the U.S. mortgage market started to collapse, leading to a banking crisis and the Great Recession.

Profits generated by home flipping also hit a 10-year high, with home flippers netting an average $55,000 per sale before renovation and transaction costs. Profits topped $100,000 in expensive markets such as New York and Los Angeles. Read more

by murray86 | 4th Mar 16, 5:29pm 1457065787

Poor Mr Hart - hope he can still afford the cork for his nice new super yacht?

by sharetrader | 4th Mar 16, 9:00pm 1457078431

don't worry he sucked billions out of those companies if they go under he will be fine it will be the bond holders and employees that lose out

by Henry_Tull | 4th Mar 16, 6:29pm 1457069373

It's a fair cop, but society is to blame

http://m.smh.com.au/business/banking-and-finance/asic-sues-anz-for-rate…
In a statement on Friday, ASIC said it had commenced legal proceedings in the Federal Court in Melbourne "for unconscionable conduct and market manipulation in relation to the ANZ's involvement in setting the bank bill swap reference rate (BBSW) in the period March 2010 to May 2012."

Could this be their dead bishop on the landing moment....

by Stephen Hulme | 4th Mar 16, 6:44pm 1457070261

I wish somebody would undertake an investigation into the pricing of the NZ bank bill rate zero coupon curve out to 10 years at least.

by tim12 | 4th Mar 16, 8:37pm 1457077029

Just looked at one Network news "kiwimeter survey, what the hell is that all about? Is John Key behind this? A lame attempt to gain votes in the flag referendum? I don't know what others think I find this a bit creepy.

by Afewknowthetruth | 4th Mar 16, 9:44pm 1457081068

Just had a look, did several sections, and abandoned it part way through.

It is typical of the trite, propagandist crap that has become the hallmark of TVNZ (which I normally avoid like the plague these days).

NZ society is becoming more creepy by the week.....quite toxic, in fact.

Needless to say, the 'survey' totally ignores everything of significance, as we get herded ever closer to the cliff.

by ngakonui gold | 6th Mar 16, 1:04pm 1457222669

It seems to me that both tvnz and tv3 are trying to make news rather than report on actual news.Starting off with a survey on their respective breakfast shows,followed by more regarding the survey on the zb and Radio Live drive show and then finally it is delivered as a full news item on TVNZ and TV3 at 6pm.
Creepy is not the word for this type of behavior.

by Afewknowthetruth | 4th Mar 16, 10:14pm 1457082892

By the way ,here's something else everyone ought to paying close attention to: atmospheric CO2 hit a new high yesterday, 406.46ppm, up 5.48ppm on the year-ago figure. With 3 months of seasonal increase still to go, we could be looking at values well over 408ppm in May-June.

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

It's going to be a 'hell' of a summer in the northern hemisphere, what with burgeoning CO2 and extraordinarily low Arctic ice cover.

However, the most critical aspects of our predicament continue to be more-or-less universally ignored, as we rapidly march towards self-annihilation via industrialism, CO2 production and money-worship.

by steven | 5th Mar 16, 8:27am 1457119647

Temp records are being broken, so no reason to not expect a very hot summer, so fires, heat waves, crop failures. Meanwhile the latest SUVs are on the forecourts!!!!

by iconoclast | 5th Mar 16, 7:09am 1457114958

It was foretold - we were forewarned - now it has come to pass

TV One news last night

2 years ago the were 300 Infant Formula producers in NZ
After the Fonterra Botulism scare the Chinese authorities imposed strict import regulations on the importation of Infant Formula, permitting only approved NZ exporters access to their market. The list comprises 20 approved NZ exporters of NZ infant Formula. All of the 20 approved NZ exporters have Chinese affilliates or owners

Vertical integration - No GST - No transparency - Published Accounts?

by Casual Observer | 6th Mar 16, 9:05am 1457208305

200 Infant formula producers and how many dairy processors? Who was supplying these formula processors with their raw milk? Undoubtedly the majority would have been part of the 750million litres that DIRA forces Fonterra to supply to competitors at cost.

Why should I, as a Fonterra supplier be subsiding these formula producers, who will be making significant profits, as they don't have to compete on the open market for my milk?

edit: Those Chinese companies using vertical integration are buying their milk directly from NZ farmers as opposed to those who just took DIRA milk.

by Andrewj | 6th Mar 16, 9:03am 1457208233

The fight for survival has begun.