A review of things you need to know before you go home on Monday; TD rate cuts, fewer consents, business confidence strong, ANZ takes huge hit, S&P warns on 25 banks, debt grows fast, swaps slip

A review of things you need to know before you go home on Monday; TD rate cuts, fewer consents, business confidence strong, ANZ takes huge hit, S&P warns on 25 banks, debt grows fast, swaps slip

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

MORTGAGE RATE CHANGES
No changes to report today, so far.

DEPOSIT RATE CHANGES
Westpac reduced its 1 month term deposit by -15 bps to 0.35%. SBS Bank reduced its headline 3.60% 18 month term deposit by -15 bps to 3.45%.

FEWER HOUSING CONSENTS, MORE PEOPLE
Nationally, new dwelling consents fell in September from August, with a big drop in Auckland. It was the downshift in approvals for apartments, townhouses and retirement units that were the bigger movers, rather than for houses. None of this helps the Queen City's housing shortage while migration sits at new highs. (Also, the pick-up in Wellington is notable.) Bill English says the previous business cycle migration pattern they were expecting may not happen this time, and that a structural change may be underway.

FLOOD COMING
There were weak non-residential consent levels too. However, here is Infometric's analysis of these: "There was $508m worth of non-residential building consents issued in September, finishing the quarter just below our expectations. Much of the slowdown from last year was due to a lack of large projects, with the volume of consents being mostly maintained by smaller pieces of work.  Looking ahead, we expect non-residential building consents to surge to around $1.8bn in the December quarter, with increasing building costs exacerbating the lift in consent values."

BUBBLING AWAY NICELY
Business confidence is still at higher-than-normal levels. Although it dipped in October, it rose when firms were asked about their own prospects. Only manufacturers and those in the services sector were less enthusiastic than last month, but these two sectors still have very high positive levels. ANZ noted "the economic cauldron is still boiling away nicely. However, more difficulty in accessing credit and skilled labour could tip some cold water on the fire eventually. That’s a normal business cycle in operation so nothing to fret about."

THE MIKE SMITH WRITE-OFF
ANZ said today will take a NZ$280 mln profit hit after offloading its retail and wealth business in five Asian markets to Singapore’s DBS Bank. (Been looking for a notice of a claw-back on Mike Smith's bonuses ... )

25 DOWN
S&P Global Ratings has revised its outlooks on the credit ratings of 25 financial institutions operating in Australia to negative from stable. S&P is concerned about strong growth in Australian private sector debt and residential property prices. This may presage a similar move here for our big four banks, says the credit rating agency.

ONE UP
Liberty Financial has seen its credit rating raised today, from BBB- to BBB, improving its investment grade.

SOLID ENERGY CREDITORS (INCLUDING TSB) TO GET BACK UP TO 55C IN THE DOLLAR
Owed about $300 million, Solid Energy's bankers ANZ, ASB's parent Commonwealth Bank of Australia, BNZ, Westpac and the Bank of Tokyo-Mitsubishi, are likely to get back between 45 cents and 55 cents in the dollar, administrators KordaMentha say. Solid Energy has reached agreement on the sale of the Stockton, Strongman and Liverpool mines on the West Coast, the Rotowaro and Maramarua mines in the Waikato, and the New Vale and Ohai coal mines in Southland. Stockton, Rotowaro and Maramarua are being bought by Phoenix Coal Ltd, a joint venture between Bathurst Resources and Talley’s Group, New Vale and Ohai have been bought by Greenbriar which is owned by the Palmer MH Group, and Strongman and Liverpool have been purchased by Birchfield Coal Mines Ltd. With the mines sold as going concerns, "a good majority" of jobs will transfer to the new owners. 

KordaMentha confirmed to interest.co.nz that TSB, which wrote off a $53.9 million bond exposure to Solid Energy and subsequently wrote back $13.7 million of this, will receive the 45c to 55c in the dollar payout. "The bonds were participant creditors in the DOCA [Deed of Company Arrangement] and therefore will get 45 to 55c in the dollar," KordaMentha's Brendon Gibson said.

JAPAN STUMBLES
Japan's industrial output stalled in September. Separate data showed retail sales fell more than expected in September from a year ago. Both are a worry because they show that private consumption remains a drag on growth and economic momentum may have evaporated.

BUSINESS GO TO THE WELL
There have been a few notable benchmarks set in today's RBNZ release of data on debt through to September. Total debt borrowed from banks and NBFIs by businesses hit a record $94 bln by growing +7.8% in the year to September. That is the fastest growth in indebtedness since February 2009. In contrast, farmers debt grew just +4.0%, its slowest in 23 months.

HOUSING DEBT GROWS 3X FASTER THAN THE ECONOMY
Households are still racking up housing debt with a new record $226.6 bln owed on houses, up +9.2% in a year, the equal fastest growth rate since May 2008.

WHOLESALE RATES SLIP
Swap rates fell today and steepened, reversing some of last week's rises. The one year is down -1 bp to 2.08, the five year is down -3 bps to 2.41, and the ten year is down -3 bps to 2.82%. Going the other way, the 90-day bank bill is up +2 bps to 2.14%. We are not seeing any changes to NZGB yields today.

NZ DOLLAR LITTLE NET CHANGE
The NZD/USD has a little volatile today, but is closing where it ended last week. It is still at 71.5 USc. On the cross rates, it is trading at 94.2 AUc, and is at 65.2 euro cents. The TWI-5 is now at 75.7. Check our real-time charts here.

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Can you feel it yet? Times are about to change

Could see the ANZ Asian writedown coming from a mile off.

Faced with meat shortages due to greater demand from a burgeoning middle class, Indonesia lifted a ban on Indian buffalo meat this year, with 10,000 tons arriving til the end of September. Selling at as much as 40 percent less than Australian produce, the meat is finding a ready market in the nation where the World Bank estimates about 100 million people live near the poverty line income of 4 million rupiah a year.

“It’s cheaper than beef and tastier,” said Elis, who was weekend shopping at an upscale market west of Jakarta for her family of five. “I can make stew or soup from the buffalo meat.” Read more

Yes, the calm before the storm. We have weathered the 2008 crisis and are now about to exit the eye of the hurricane with most unaware that what is to come will be much much worse. How can people be so blind.

What do you think is coming, Real old thing?

Do you think you could be a little more specific?

Unfortunately you are most likely correct about the coming storm Real Money.
However as you most certainly already know, the only real trick the central bank's have is print print print....

If the central banks keep printing with debts paid in cheaper dollars eventually people will lose faith in their currency being a store of value. We will get raging inflation and the market will force up interest rates. The western economies with their debt cannot stand rising rates. How can this end well.