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A review of things you need to know before you go home on Friday; Some minor rate changes, tourism keeps on booming, dry in North, wool prices crashing, swaps inch up, NZD stays high

A review of things you need to know before you go home on Friday; Some minor rate changes, tourism keeps on booming, dry in North, wool prices crashing, swaps inch up, NZD stays high

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

MORTGAGE RATE CHANGES
NZCU South has riased rates.

DEPOSIT RATE CHANGES
Westpac, Kiwibank and the Police Credit Union has all raised term deposit rates today.

REGIONS BEAT THE MAIN CENTRES
It is the New Zealand regions that are really benefiting from fast-rising tourism numbers. In the year to December the fastest growing region was Nelson, which increased +15% over the year to $340 mln, followed by West Coast, up +13% to $488 mln and Otago up +12% to $3.5 bln.

WHY THERE IS A HOTEL BUILDING BOOM
Delayed data from Statistics NZ shows that international visitors have again pushed up guest-night numbers, particularly for motels and hotels. National guest nights for October 2016 were +6% higher than in October 2015. Occupancy rates were up to 40.9%, an industry average level we have never seen before. (Ten years ago it was 34%, twenty years ago it was 29% in October.)

A NEW MAKHLOUF DEPUTY
Bryan Chapple has been appointed as the Treasury’s new Deputy Secretary, Macroeconomics and Growth. He is moving from MBIE where he is Head of the Office of the Chief Executive and prior to that, General Manager, Strategic Policy. Prior to MBIE, he held a range of policy and economic functions at the Ministry of Economic Development, De Nederlandsche Bank (the Dutch Central Bank), the Bank of England, and the Reserve Bank of New Zealand.

GETTING DESPERATE
It is very dry in the Far North. And the Council up there is accusing residents of stealing up to 90,000 litres of water in Okaihau and Rawene to top up low personal supplies. Although there was some welcome rain in the past week, it is looking very dry from here on. The Council has an extensive ban in place for many water uses.

WOOL PRICES CRASHING
Crossbred wool prices are crashing and are now at levels last seen 10 years ago. This is because there is now little interest by Chinese buyers, and the stronger currency is sapping demand from other sources. Lambs wool is especially weak with the majority passed in at the North Island sale this week and most of the lambs are still to be shorn. Prices are so low, some farmers will not cover their costs of shearing, packs, cartage and selling, let alone the annual effort to grow the crop.

UNINTENDED CONSEQUENCE
China is now saying its birth rate is too low. It is worries that even at the increased rate following the relaxation of the brutal one-child policy, births are running below replacement levels. They are ageing fast and faster than their wealth is growing. The drive is now on for more babies and a new policy is for two-child families. Even so, that will deliver only 20 mln new babies per year, much more than previously, but still too few to change the prospects of a falling population and one that ages very fast. A winner out of this new focus on new babies will be New Zealand infant formula producers and infant food producers as well. The new changed population policy will be very expensive to implement.

WHOLESALE RATES INCH UP
Even though the benchmark rates on Wall Street were pretty much unchanged earlier today, local swap rates have risen especially at the long end. They are up +1 bp for two years, up +1 bp for five years, and up +2 bps for ten years. The cumulative rise is still building. The 90 day bank bill is unchanged however 1.98%.

NZ DOLLAR STAYS HIGH
The Kiwi dollar has slipped a little against the greenback and is now at 72.5 USc level. The NZD is not at 72.9 USc. On the cross rates, we are still high at 96.2 AUc, and at 67.9 euro cents. The TWI-5 index is now at 78.2. Check our real-time charts here.

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16 Comments

Perhaps of equal consequence to China as the low birth rate is the estimate that 30 million men will never find a female partner in life; and all the social consequences that go with that, at every stage of their lives, not the least being "What will they do if they lose their jobs?"

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Bryan Chapple has been appointed as the Treasury’s new Deputy Secretary, Macroeconomics and Growth. He is moving from MBIE where he is Head of the Office of the Chief Executive and prior to that, General Manager, Strategic Policy. Prior to MBIE, he held a range of policy and economic functions at the Ministry of Economic Development, De Nederlandsche Bank (the Dutch Central Bank), the Bank of England, and the Reserve Bank of New Zealand.

The latter three institutions did their utmost to squander what credibility the citizens previously extended them. Substantial public rethinking has to pass before it can be recovered.

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Sheep farmers are on the ropes, at least they can still sell the farm for way more than it's worth.

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to who, pine forest,

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There appear to be buyers and farm debt is on the move up over 300 mill a month , how much of that is what the banks call 'organic growth', would be interesting to know.
There are buyers out there, sales have been very strong, dairy farm for $38 a milk solid, sheep and beef hill country $100 a stk unit. The market always knows best I guess.

I realise the cynicism behind the forest comment but,

Pine forests have a couple of issues, one is the huge amount of trees in NZ that are going to come on the market all at once, the number of farm blocks coming up in the next five years is absolutely huge.
I have seen the damage from the Pine beetle and pitch pine canker in the States, either would wipe our forest industry out. We have a few other diseases here that are not being talked about. Mind you they would solve the wilding pine issue in the Sth Island.
Most of our forest is exported whole log, very much a commodity. We get the top log sold in NZ, poor quality timber for building, the better pruned log appears to get exported.
Lots of other places also have a lot of forest ready to mill in the next few years and their costs are lower.
China could crash and burn.

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$1000 per stock unit is crazy , especially when most leases that I have seen are at most $20 su/yr, less than 2% yield . It's not like sheep & beef farmers have made any money, above wages , in the past 10yrs - at this point we are basically lifestyle farmers working hard to pay rates ... terrific

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Agree with what you wrote . It is a sad situation and disappointing to hear farmers are leaving and it's not easy to come to terms with .
This year we are looking at Trading surplus $29k on 7000SU a ridiculous result and we aren't really going forward and running out of $$ to cut . As you say just holding on, maybe the bees will save us
I appreciate your updates and wish you well

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No surprise that the regions, not the cities and especially the South Island is benefiting from increasing tourism numbers. No international tourist would come to NZ to see our cities and the South Island scenery is more beautiful than the N I (I've lived in both)

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Gosh, you must have really looooong legs

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The yen extended its biggest decline in a week and Japanese bonds rose as the nation’s central bank stepped in to buy debt. Asian stocks climbed in a day of thin trading with many markets closed for Lunar New Year celebrations.

The BOJ’s move was seen as a commitment to keep the 10-year yield at around zero percent. Read more

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I should have gotten into mergers and acquisitions instead of being a productive member of society. I could have been utilising cheap yen to profit from asset stripping public companies and firing everyone.

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F &P Healthcare , may not like the wall.

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they have a workaround already export from mexico to the rest of the world, export to the US from NZ
how many other companies will do the same, this is not new and happens all the time

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Customers cannot pay more for Beef, Lamb, etc as they are competing with others to pay the excessive mortgages and rents to live in a house, sorry..HOME...they could not afford in the first place. It takes two well paid jobs, just to stand still.

Plus 4% for un-real estate vested interests, is crazy.

When the stupidity compounds, of importing overseas debt, the costs do not help, so blame the suckers in the middle, sucking up your money for Australian Interests...to compound the situation and make it worse.

There is only so much profit to make, and you cannot compete with the bigger idiot.

It is simple arithmetic, even a computer could model it...but they do not help...either.

Sorry if you do not understand fund-a-mentals.

Debt is our/your collective problem, plus the overheads and that includes all our Politicians and Bankers.

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Making sure the masses do not have enough money for actual choice is how the few will end up controlling them. Turning us from a nation of home owners to a nation of renters is in the same basket, control of what food you eat is well under way. I will give you my prime examples of that, the following products, so many of them kiwi icons are now wholly owned by the world's largest palm oil processor, Wilmar, based in Singapore. These products include Edmonds, Meadowfresh, Vogels, Molenberg, Puhoi, Tararua and any other product under the Goodman Fielder umbrella and Chelsea Sugar.
People are just blissfully unaware of how little control they have over their own lives

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