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A review of things you need to know before you go home on Tuesday; Aussie budget deficits, land tax coming?, new syndication, new 24hr dairy trading, the Tokyo Whale, swaps higher

A review of things you need to know before you go home on Tuesday; Aussie budget deficits, land tax coming?, new syndication, new 24hr dairy trading, the Tokyo Whale, swaps higher

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

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

TODAY'S DEPOSIT RATE CHANGES
None here either. All eyes are now on Thursday's OCR review by the RBNZ. BNZ and Kiwibank economists are the outliers thinking they will cut. No-one else does.

NEGATIVE FEELINGS
This week is not starting off too flash for equities. Yesterday we noted regional declines of between -0.3% and -1%. And today is little different, with the ASX200 and the NZX50 are also posting falls of about -0.3%. This follows Wall Street which was down -0.2% earlier today. Oddly, Shanghai is holding today with no change in mid-day trading.

HUNGRY MONSTERS I
The Aussie Federal government budget will be big news when it is published next week, on May 3. The focus will be on how big the 2016/17 deficit will be and how long it will take for them to project a surplus (not that anyone will believe that projection). However the Federal government is only part of their government sector. In 2015 that Federal deficit was AU$39.6 bln (3.2% of GDP). But their State governments actually recorded a surplus in 2015 of AU$9.3 bln, and other government agencies recorded a surplus of AU$1.3 bln. Total Aussie taxes in 2015 amounted to an eye-popping 29.2% of GDP - that's AU$357.4 bln. Equivalent NZ taxes are even higher at 32.2% of GDP and presumably why our books will be balanced for two years in a row. The NZ 2016-17 Budget will be released on May 26.

NEW TAX COMING?
PM Key has repeated the idea he floated in July last year that a land tax on non-residents, as a way to control a 'runaway train' property market, would not conflict with FTAs we have signed, although he says no decisions have been made yet. The Labour Party's Phil Twyford says Key is just tinkering and he says an outright ban would be better.

FOR YIELD CHASERS
Augusta has launched a new property syndicate of a Brisbane industrial building. Each share costs NZ$50,000 and the promise is for a 7.65% return. For 'investors' who can handle the illiquidity and are prepared to take the exchange rate risks.

A NEW MARKETPLACE
The Fonterra-owned GlobalDairyTrade platform is expanding. It will still conduct bi-weekly auctions but is also launching a new GDT Marketplace, a 24/7 dairy trading platform.

VERY HUNGRY MONSTER II
Something that may amaze you as much as it did me. The Bank of Japan has used its printed money to buy up a top-10 shareholder position in more than 90% of the 225 companies on the Tokyo Nikkei225. It's nationalisation by capitalism! The Bank of Japan has had an outsized influence on the Japanese bond market for a long time now. That is morphing to an outsized influence of their equity markets. About the only saving grace in all of this (if that is what you might call it) is that all this activity is domestic. The debt and assets cancel each other out within the Japanese economy. But the ownership is changing. And presumably the sellers (to the BofJ) have moved their funds out of the country. QE distortions just go on and on.

WHOLESALE RATES INCH HIGHER
Wholesale swap rates rose today in a steepening trend. Two year rates are up +1 bp, five year rates are up +2 bps and ten year rates are up +3 bps. This rise follows Wall Street benchmark bond rises earlier today. NZ swap rates are here. The 90-day bank bill rate rose +1 bp, to 2.33%.

NZ DOLLAR IN THE ZONE
The NZ dollar is still doing its thing in the fairly tight range it has been in all year. The NZD is now at 68.9 USc, at 89.2 AUc and 61.1 euro cents. The TWI-5 is at 71.9. Check our real-time charts here.

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16 Comments

Hunan Dakang blocked by Australian Treasurer Morrison three days after Kidman accepted offer . Initial two month period to review in full . Shanghai Pengxin the government controlled private company must be getting annoyed. The Chinese sham of stockpiling every single commodity , artificially pushing up prices will be affecting every dairy farmer in the years to come . The only question will be if government and OIO allow foreign investors to buy distressed assets as farmland prices fall. $7000 debt per milking cow. At least Shanghai pengxin has a Queenstown hotel for the Amway visitors.

sssh that was sold as a coo for NZ, now you have let the cat out of the bag Fly to NZ on a chinese airline and stay in a chinese hotel.

Equivalent NZ taxes are even higher at 32.2% of GDP and presumably why our books will be balanced for two years in a row. The NZ 2016-17 Budget will be released on May 26.

More than a balancing act is called for to extinguish this lot the Nats piled upon the taxpayer to service - and that excludes the $1.95bn net April coupon issuance, yet to confirmed, at month end, by NZDMO.

Well done JK for looking at introducing a land tax on foreign buyers, go ahead with it asap

Agree, or course you have to figure out who is foreign, ie find those hiding behind a shell company or relative.

The Aussie Federal government budget will be big news when it is published next week, on May 3. The focus will be on how big the 2016/17 deficit will be and how long it will take for them to project a surplus (not that anyone will believe that projection).

Have the Aussies have gone all in with deficit infrastructure spending with another jurisdiction?

The largest naval public spending project in Australian history, worth some AU$50 billion ($38.5bn), has been awarded to a French company which will build 12 subs to replace and double the size of the Royal Australian Navy’s currently outdated submarine fleet. Read more

I suppose the Aussie taxpayers will be more than happy to subsidise French farmers' incomes, as long as they leave the land fallow - right?

Again in English please??

"will result in more jobs as the new submarines are set to be built in Adelaide's ASC shipyard. At least 2,800 new jobs will be offered to construct the new fleet of French-engineered subs in South Australia."

Dave, you are behind the times. You have got the wrong flag flying there.
John Key lost, NZ moved on.....

Stephen, I think this is just the beginning of Sub-Prime.

Out sourcing ones deep and meaningful budget to help others, when cash flow poor will bring much relief to the French regime. The euro needs a lift, not hand-out.

But seriously...why cannot they build their own defense systems, The Frogs nay be able to swim better, but 50billion, would go along way to paying those surfers debts down.

Like the outsourcing of pension liabilities - the understory.

http://www.theguardian.com/business/2016/apr/25/bhs-owner-retail-acquisi...

In summary, one of the UK's largest pension funds couldn't sustain the current trajectory of cash flows, so they decided to cut defined benefits and put the burden on money managers to live up to member expectations in retirement. This is a plan that we already know will end poorly once the markets reset and wealth is once again transferred from the savers to the asset owners, as is the recurring cycle under the central banking regime. Of course, there is always helicopter money tied to bailouts of such pension funds, which is forever a possibility with the PhD's behind the central banking curtain. read more

Indeed, pension funds are really parasitic, they skim a % off the actual makers of goods profits to pay out to members, almost like a tax really. Indeed I suspect they have grown so large that do to their size they stifle economic growth I suspect. If you work on BAU of course, ie exponential growth on a finite planet. That game is ending and hence these pensions ability to pay will also end, its going to be a very tough retirement for most of us.

David, I am mildly surprised that you are surprised that the Japanese government own so much of their share market. You may presumably then be surprised at how much of our sharemarket they own. And lots of other sharemarkets besides.. All with printed money.

AND.... here we are in NZ.... wishing our exchange rate was so much lower.....
Maybe the JCB is as well...
Makes our assets all that much cheaper.... thou ..I don't suppose that is an issue when it is the "counterfeiter" that is doing the buying...???

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Days to the General Election: 26
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