What happened Tuesday

A review of things you need to know before you go home on Tuesday; NZCU Baywide cuts mortgage rates, mortgage demand strong, car demand strong, ANZ stumbles, swap rates rise, RBA cuts

3rd May 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
NZCU Baywide cut their 1yr, 18 mth and 2 yr fixed home loan rates. The cuts are large (-26 bps) but the resulting rates are not especially competitive.

TODAY'S DEPOSIT RATE CHANGES
None here either.

IT'S THE YOUNG
Activity in the housing market remains strong, with mortgage applications up +11.6% year-on-year in the March quarter, according to credit agency Veda. They have seen increased mortgage applications by younger people. The rate of inquiry by those younger than 28 jumped a remarkable +38% in the September 2015 quarter, but growth has since fallen back to 'only' a +22% increase in the March 2016 quarter.

A LIGHT PAT
Craigs Investment Partners got a formal warning after an FMA investigation into its Anti-Money Laundering Act compliance. This is a limp response given that the law they broke was passed in 2009 and became effective in 2013. They are not the first to be 'warned' (remember Kiwibank, JP Morgan, others ?) so it is hard to understand why they get the kid-gloves treatment.

HAVE I GOT A DEAL FOR YOU
Private equity firm Claris has IPO'd Tegel Chicken on both the ASX and NZX using a fat valuation. Investors are valuing the business at more than NZ$550 mln. based on "excellent product and prospects". PE floats have a chequered record. Buyer beware.

A HOT MARKET
New car and new commercial vehicle sales in April hit their low point of the year as usual, except that this year's low point is the highest it has been in more than 30 years plus. Strong regional growth, plus immigration are the reasons according to the new car dealers.

EARNING LESS
ANZ, New Zealand's biggest bank and biggest rural lender has had a -13% fall in half year profits to NZ$763 mln. But that fall has not come from a rise in dairy writedowns. This period's fall came more from a change in accounting policy to writedown software costs faster. ANZ NZ is a bank with a little under NZ$150 bln in assets (mainly lending) supported by shareholders equity of a touch under $13 bln. It is leveraged 11.6x.

GLASS MORE THAN HALF FULL
According to the Treasuary's Monthly Economic Review, the local economy is performing well. Recent data indicates the economy experienced reasonable growth over the March quarter, they said, although there are hints the pace of growth may ease in the current quarter. Consumer price inflation remains low, while the housing market has picked up again they noted. International economic data were generally softer in April and the IMF downgraded its global growth forecasts.

RBA REVIEW
Update: The RBA cut its cash rate by -25 bps to 1.75%. The NZD jumped to 92.6 AUc immediately as the news broke. It also caused the NZD to weaken agains the USD.

WHOLESALE RATES RISE
Swap rates rose +4 bps across the board. NZ swap rates are here. The 90-day bank bill rate is unchanged however at 2.38%.

NZ DOLLAR RISES
The Kiwi dollar is still rising and is now just on 70.5 USc, at 91.5 AUc and 61.1 euro cents. The TWI-5 is at 72.7. If the RBA cuts, these rates could change quickly. Check our real-time charts here.

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

Daily exchange rates

Select chart tabs

Source: RBNZ

Source: CoinDesk

We welcome your comments below. If you are not already registered, please register to comment

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

40 Comments

by head_down_bum_up | 3rd May 16, 4:33pm 1462250010

RBA just did what RBNZ should've...

by notaneconomist | 3rd May 16, 5:07pm 1462252023

If Wheeler won't resign he needs to be given his marching orders.!!!

There needs to be action taken against the RBNZ through the courts.

by David George | 3rd May 16, 5:19pm 1462252776

With the current dangerously high credit growth do you seriously think a cut to the OCR is justified?
http://www.interest.co.nz/property/81330/amount-borrowed-mortgages-grow…

by OnwardsUpwards | 3rd May 16, 5:59pm 1462255190

Yes. I do think a cut is justified. Wheeler has dropped the ball yet again.

by steven | 3rd May 16, 6:19pm 1462256345

Yes because there is more to our economy than just FHB's and speculators buying property.

by Stephen Hulme | 3rd May 16, 6:51pm 1462258318

Well then, we the citizens don't need an elaborate central banking cost structure. Any government apparatchik fool can indiscriminately cut interest rates fully expecting to see no visible economic recovery response whatsoever. ECB, BoJ, Fed to name a few, have done exactly that.

by steven | 3rd May 16, 7:04pm 1462259084

And if the rate is too high the country goes into recession just like every other country that has tried to have it too high.

by steven | 3rd May 16, 7:19pm 1462259951

It is also quite well documented Keynesian economics to cut so its not a case of indiscriminate action, unlike your wish to keep it high which doesnt seem to be based on fact or economics --edit-- no wait its based on the fantasy novels by a loopy woman.

by dictator | 3rd May 16, 7:21pm 1462260093

Well documented where? Neoliberalism was about throwing away the Keynesian failure. Now neoliberalism is being shown not to perform, it's only function is to cover up economic problems so politicians can remain in power. EU, Japan and the US went to ZIRP because the money didn't do anything. Our OCR is a joke, we don't have control over the rest of the world so inflation targeting is a farce.

What we need is a scientific field to replace economics.

by Stephen Hulme | 3rd May 16, 7:55pm 1462262146

In other words, they thought it acceptable for government policy to “buy” higher employment (lower unemployment) through rising prices; and they did so because of this faith in quantity theory where economists could define all relevant terms including any factors dealing monetarily. It was an abject failure, as the world would find barely five years later and then struggle with for a further seventeen in what we call now the Great Inflation.

It was such a clear disaster that by 1980 both Republicans and Democrats had denounced it and the Keynesian theory behind it. So thoroughly discredited was this approach that the US Senate produced a bipartisan document denouncing any such “demand side” approach. In the 1980 election, George Bush actually decried Ronald Reagan as being not sufficiently a “supply sider” because he dared include in his tax cut proposals some that were intended for taxpayers rather than just businesses (“demand side” was his infamous “voodoo” charge).

But where 36 years ago it was settled that attempts to influence “demand” was “voodoo”, today “demand” policies have not just been rebirthed they are all that are even offered. “Stimulus” still takes the form of what Solow and Samuelson were writing about in 1960, only it has been updated (so its proponents claim) to include more complexity as if that were all along the mistake. Complexity is made to stand in for comprehensiveness though in reality it is a very poor substitute. We know this because of the stunningly elegant statistical models that have been created that at their core still share the same basic flaws that have thwarted everyone from Newcomb to Fisher to Arthur Burns (and now Alan Greenspan, Ben Bernanke and Janet Yellen follow in the same incapacity). Read more

by murray86 | 4th May 16, 7:06am 1462302402

Can Friedman's ideas be implemented at the same time as keynes? Do they not conflict? Underlying policy is based on Friedman's theories, tweaking them with Keynesian adjustments could be asking for trouble?

by steven | 3rd May 16, 6:42pm 1462257763

No, the voting booth.

by Penguin | 3rd May 16, 6:14pm 1462256073

Seems a fairly high chance a rate cut here will happen later in the month.

by Justice | 3rd May 16, 7:33pm 1462260808

Most probably, what I want to know is though, what will be the ultimate breaking point figure for depositors on mass to withdrawal?

by dictator | 3rd May 16, 7:38pm 1462261098

I thought the bank run trigger was when the media reports that the bank is in serious financial trouble.

by Justice | 3rd May 16, 7:44pm 1462261445

yeah, that's way too late and not really what I was asking. Let my put it another way . too 'start' withdrawing on mass?

by moa man | 3rd May 16, 7:44pm 1462261475

That would depend on wether the Bank has friends in the media. Or the media have friends in the Bank. Doesn't really matter. Joe Average is the last to know in any case.

by ObeseBallerina | 3rd May 16, 10:30pm 1462271403

Its already happening...... it going into houses Nationwide.

by ObeseBallerina | 3rd May 16, 7:55pm 1462262118

god I hope so! Wheeler is actually ruining my life.

by sharetrader | 3rd May 16, 6:15pm 1462256126

great, my friends moving to aussie will get a better rate

by profile | 3rd May 16, 5:10pm 1462252253

The Uberization of Banking - probably caused by climate change.

"...learned that no one from the business school had defaulted on a student loan in 30 years. This was his lightbulb moment.

Mr. Cagney got a lending license then asked 40 alumni for $50,000 each, paying them 5%. He planned to lend $20,000 each to 100 students at 6.25%, pocketing the spread. What banks do every day.

...Mr. Cagney says SoFi has refinanced close to 100,000 student loans, with just 14 defaults. And half of those were because the borrower died."

http://www.wsj.com/articles/the-uberization-of-banking-1461967266

by Afewknowthetruth | 3rd May 16, 6:46pm 1462258006

Can't you get anything right, profile?

Climate change caused by the Uberization of Banking.

'The current interest-bearing debt money system drives the world-devouring engine of perpetual growth, causes growing debt and massive environmental harm. The profit making bank-created money system we live with is a monoculture that causes people to behave competitively in a dog-eat-dog world.'

http://neweconomics.net.nz/

by profile | 3rd May 16, 8:18pm 1462263495

Gold. Can you tell me how climate change caused Princes' death - I can't wait. People have only behaved competitively since interest bearing debt was invented. ...right.

"world-devouring engine of perpetual growth" - that that will be why forest areas has increased by a third, and farmland area decreased, in Europe in the past 100 years - and made Huggies pull out of Europe because there weren't enough babies being made to make it worthwhile.

"Countries in the European Union delivered 5,469,000 babies in 2008 but only 5,075,000 in 2013—a drop of over 7%. That was too much for Kimberly-Clark, the maker of Huggies nappies, which announced in 2012 that it would pull out of most of Europe."

Some population bomb - do you still worry about population bombs or has that doom scenario be laid to rest like eugenics and all the other crackpot doom fantasies that have been kicked to the curb?

http://www.economist.com/news/international/21697817-financial-crisis-h…

by Afewknowthetruth | 3rd May 16, 9:11pm 1462266679

'People have only behaved competitively since interest bearing debt was invented. ...right.'

No completely wrong. But the invention of interest-bearing debt put them onto treadmills that forced them to compete in situations where they would have normally co-operated.

'that that will be why forest areas has increased by a third, and farmland area decreased, in Europe in the past 100 years'

Just where do you get this crap, or do you make it all up yourself?

'World annual deforestation is estimated as 13.7 million hectares a year, equal to the area of Greece. Only half of this area is compensated by new forests or forest growth.'

https://en.wikipedia.org/wiki/Deforestation_by_region#Europe

No, I don't worry about global overpopulation: Gaia is in the process of dealing with that. At the moment climate related deaths are only measured in the thousands per incident and millions per year, but as the planetary meltdown accelerates the numbers will increase to tens of thousands per incident, then hundreds of thousands per incident and tens of millions per annum, overtaking the birth rate.

'The death toll from Pakistan's killer heatwave rose past 1,000 on Thursday'

'About 330 million people are suffering from drought in India, as the country reels from severe water shortages.'

'Zimbabwe’s president, Robert Mugabe, has declared a state of disaster in rural areas hit by a severe drought, as more than a quarter of the population face food shortages.'

'Wildfire potential large for Hawaii due to drought conditions'

'Coffee crops die in Vietnam, Thai rice yield shrinks'

http://robinwestenra.blogspot.co.nz/2016/05/the-dying-earth-extreme-wea…

And it's not even summer in the Northern Hemisphere yet..

Burn baby, burn.

by profile | 4th May 16, 4:16am 1462292175

Where do I get all my crap? Try science journals rather than William Connelly's wikipedia. Try to look at the bigger picture rather than cut and paste spam of day to day weather events. How did the acid rain doom predictions pan out again? Ended up like Y2k, population bomb, eugenics, MMR vaccines... etc. etc.

"More than 100 years ago, timber was used for almost everything: as fuel wood, for metal production, furniture, house construction. Hence, at around 1900 there was hardly any forest areas left in Europe. Especially after World War II, many countries started massive afforestation programs which are still running today," Fuchs told The Washington Post.

As a result, Europe's forests grew by a third over the last 100 years. At the same time, cropland decreased due to technological innovations such as motorization, better drainage and irrigation systems: Relatively fewer area was needed to produce the same amount of food. Furthermore, many people migrated from rural to urban areas, or overseas.

Fuchs' fascinating conclusion: Forests and settlements grew at the same time and Europe is a much greener continent today than it was 100 years ago."

https://imgur.com/nRy4q15
http://www.geo-informatie.nl/fuchs003/#
https://www.washingtonpost.com/news/worldviews/wp/2014/12/04/watch-how-…

"Foresters refer to a “forest transition” when a nation goes from losing to gaining forested
area. France recorded the first forest transition, about 1830. Since that time French forests
have doubled while the French population has also doubled. Forest loss decoupled from
population."

http://phe.rockefeller.edu/docs/Nature_Rebounds.pdf

Greening of the Earth and its drivers.

"Here we use three long-term satellite leaf area index (LAI) records and ten global ecosystem models to investigate four key drivers of LAI trends during 1982–2009. We show a persistent and widespread increase of growing season integrated LAI (greening) over 25% to 50% of the global vegetated area, whereas less than 4% of the globe shows decreasing LAI (browning)."

http://www.nature.com/nclimate/journal/vaop/ncurrent/full/nclimate3004…

by Afewknowthetruth | 4th May 16, 10:15am 1462313718

And finally we get to the nub of it. By 1900 Europe had become so depleted of timber (because of overpopulation) it was on its last legs.......and along came oil as a temporary energy fix that prevented an immediate implosion but set in motion (along with coal) the CO2-induced catastrophe we are now witnessing. Shifting practically all heavy industry to Asia in the late 20th century alleviated the local European pollution problem whilst increasing the overall problem. So now we are witnessing bigger and bigger annual increases in the concentration of one of the most deadly gases in the atmosphere.

Daily CO2

May 1, 2016: 407.47 ppm

May 1, 2015: 404.00 ppm

Meanwhile, in other parts of the world deforestation far exceeded (and still exceeds) any reforestation Europeans had been able to achieve as a consequence of looting other parts of the world of their oil..... you know the expression: "How did OUR oil get under THEIR sand?"

As the oil game comes to its natural conclusion -rapid depletion of easy-to-extract reserves and destruction of the global climate system- what do you think Europeans (or impoverished Africans, Asians and Americans) will turn to keep warm in winter and cook food? Back to wood for a short time, and then nothing.

Your cherry-picking of outdated data and phony narratives convince no one by you that short-term thinking based on consuming natural resources as quickly as possible equates with progress, and you still record an absolute fail when it comes to any big picture analysis.

The latest data indicate the meltdown of the Arctic is accelerating

https://ads.nipr.ac.jp/vishop/vishop-extent.html

(just as I pointed out months ago was extremely likely to happen), the ice sheets of Antarctica are destabilising, and that all the predicaments associated with the ultra-rapid overheating of the Earth will be faced decades before most people imagined possible -including extinction of the humans species- all as a consequence of fuckwit humans determination to keep burning fossil fuels, whatever the consequences.

In a few months we'll have a better idea just how dire the predicament is.

by profile | 4th May 16, 11:23am 1462317831

So the statement isn't "crap or made up" - you are a person of character to admit it... Outdated? Th epaper was 2015...

by ObeseBallerina | 3rd May 16, 10:31pm 1462271476

The first rule of tree huggers is..... don't feed tree huggers.

by profile | 3rd May 16, 5:18pm 1462252691

Turns out Prince worked for the government - I can now see why musicians do drugs.

"Both the federal government and Minnesota’s state government will assess so-called “death taxes” or estate taxes on Prince’s assets, taking away more than half his estate."

http://dailysignal.com/2016/04/29/why-over-half-of-princes-estate-will-…

by avatar99 | 3rd May 16, 5:50pm 1462254642

The US exempts the first $5 million of any estate from federal estate tax so it's only because he was so wealthy. I fail to see a strong argument for property rights to continue after death.

by OnwardsUpwards | 3rd May 16, 5:58pm 1462255112

I bet if prince was your daddy, then your attitude would be different.

by profile | 3rd May 16, 8:19pm 1462263557

Insert link to climate change here:

by Afewknowthetruth | 3rd May 16, 9:20pm 1462267232

Okay.

'Go back even a few years and locals expected to see an ice cover on this vast manmade reservoir on the 3,650 kilometre Ob River at the start of May. Yet pictures taken on Sunday show it to be completely clear.

Compare these with images taken in several years between 2010 and 2015 when ice was plainly visible....

The Russian Hydrometeorological Center says that since May 2015 every month has been the warmest in history. February boasted the highest abnormal temperature deviation - more than 1.5C degrees. In March, the temperature deviation in on islands in the Barents Sea was 12C.'

http://siberiantimes.com/other/others/news/n0674-ob-serving-climate-cha…

by zorro15 | 3rd May 16, 8:12pm 1462263153

Fantastic it looks like an all out race to the bottom. Great news for retired people who saved all their lives so they can live out the rest of their lives on an ever decreasing fixed income. Why don't all countries agree to having ZIRP and no quantitative easing , then it is a level playing field. Only then can you have a truly "free market", otherwise it is just dog eat dog on the way to the bottom and beyond.

by moa man | 3rd May 16, 8:15pm 1462263341

Nothing wrong with dog eat dog. It's what every salesman does everyday.

by Afewknowthetruth | 3rd May 16, 9:30pm 1462267841

'it looks like an all out race to the bottom'

Been saying that for years. Good to see a few others getting it at last.

P.S. The bottom is still a way off, probably around 2020, though a severe jolt is likely before the end of 2016.

Share markets and housing markets would collapse without QE. Therefore, more QE.

by profile | 3rd May 16, 8:26pm 1462263978

Coming to an eyeball near you - "Sony has been awarded a patent for a smart contact lens that would be capable of recording video."

http://www.cnet.com/news/sony-patents-contact-lens-that-records-what-yo…

by Afewknowthetruth | 3rd May 16, 9:44pm 1462268649

Some people have things called brains to record what they see.

Most of NZ has been 0.5 to 2oC above normal.

http://www.niwa.co.nz/static/climate/last15daystemp.png?1234

Move along, nothing to see or record here, right, profile?

by Zeds are Us | 3rd May 16, 11:05pm 1462273503

My beach properties are now looking fab. Word is that DT will get out of CT and stick it to them, luck.

by moa man | 3rd May 16, 11:49pm 1462276161

GDP from construction on the rise again.
http://www.tradingeconomics.com/new-zealand/gdp-from-construction