A review of things you need to know before you go home Wednesday; trucks slow down, tourist accommodation growth slows, inside trader accused, infant formula pushback, swaps down, NZD bumps up

A review of things you need to know before you go home Wednesday; trucks slow down, tourist accommodation growth slows, inside trader accused, infant formula pushback, swaps down, NZD bumps up

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

MORTGAGE RATE CHANGES
No changes to report here.

DEPOSIT RATE CHANGES
None here either.

HITTING A POTHOLE
ANZ's Truckometer series showed some signs of weakness in September for the first time in a while. They noted: "The ANZ Truckometer indexes fell modestly in September. The Heavy Traffic Index fell 1.5% (seasonally adjusted), while the Light Traffic Index dipped 0.1% m/m (charts are 3-month average). The Heavy Traffic Index has flattened off and suggests GDP growth was weak in Q3. The GDP data is released near Christmas. This is consistent with softer construction and housing, key pro-cyclical parts of the economy. The good news is that rejuvenated economic drivers are on the horizon, but that horizon is still a way off and there is an election-related uncertainty pothole in the meantime."

FLAT-LINING
For the year ended August, 39 mln guest nights were spent in short-term commercial accommodation, an increase of +1.1 mln on the previous August year. This August, a fall in domestic guest nights in the North Island caused a relatively flat month for tourist accommodation, meaning they were -0.3% lower than August 2016. This data does not measure the fast-growing Airbnb sector.

MIGRANT INFLUENCE
A new update from Australia shows there were 605,200 people in their resident population at the end of 2016 who were born in New Zealand, or 2.5% of their total population. (For some reason I thought it would be more than that.) The same data shows that 5.0% of the Aussie population was born in the UK, 2.2% were born in China, and 1.9% were born in India. In total 28.5% of Australia's estimated resident population (6.9 mln people) was born overseas. (The equivalent NZ data is only from the 2013 Census and back then our proportion was 25.2%. Of our population, 5.4% was born in the UK, 2.2% were born in China, and 1.6% were born in Australia.)

INSIDER TRADING
The FMA has filed criminal charges against an individual in the Auckland District Court alleging insider trading in contravention of the Securities Markets Act 1988. The charges relate to trading in shares of VMob Group Limited, which now trades as Plexure Group Limited (NZX: PLX). The individual was formerly engaged in a senior role in the company.

BABY HEALTH VS MARKETING
Tension is brewing between public health officials and the infant milk formula business. WHO officials see breastfeeding rates falling sharply at the same time the marketing of infant formula is rising sharply, and they don't see this as a healthy thing for newborns under six months. More than half of the global growth in infant formula sales since 2003 has occurred in the "Western Pacific" region.

NAME-AND-SHAME
We have issues relating to borrowers who just walk away from loan obligations. It's is hard on them, but if these defaulters leave the country, there is little our authorties can do. China as a similar issue, but at home. A system to name and shame “deadbeats” who fail to repay their bank loans will be rolled out across China by the end of the year, with anyone who defaults to be blacklisted and have their personal details made public. In many Chinese cities, laolai, or “deadbeat borrowers”, are already publicly shamed in a bid to make them repay their loans. Now, the Supreme People’s Court, the China Banking Regulatory Commission and the Communist Party’s Publicity Department have decided to make this a national policy, the official Xinhua news agency reported on Tuesday. Those who fail to repay a bank loan will be blacklisted, and they will have their name, ID number, photograph, home address and the amount they owe published or announced through various channels – including in newspapers, online, on radio and television, and on screens in buses and public lifts.

WHOLESALE RATES DOWN
Local swap rates were down -1 bp for 2 and 3 years, down -2 bps for all terms longer. The 90 day bank bill rate was unchanged at 1.93%.

NZ DOLLAR BUMP
The NZ dollar jumped +30 bps at 1:30 pm today and is now at just under 71 USc. It is not clear why but it may just be trade orders rather than political events. On the cross rates we are also higher at 90.9 AUc and just over 60 euro cents. These rates are higher than where we started this morning. The TWI-5 is now at 73.6. The bitcoin price is down -2.1% to US$4,748.

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Truckometer may have been inflated by the truckeration needed after the Kaikoura quake which knocked out the N-S rail link. (Sidebar - neatly demonstrating the exquisite vulnerability of rail if no alternative rail routes are available - poster child now the Gisborne line). Now that KR is back in the freight business in the upper SI, trucking will naturally fall off a bit. ANZ do say that ' adjusting for seasonality and altered heavy traffic patterns due to the Kaikoura earthquake' has occurred, but still...

China is moving forward with plans to issue its first dollar-denominated bonds since 2004, casting aside any concerns triggered by two sovereign-rating downgrades this year.

The Ministry of Finance is scheduled to meet with bankers in Beijing Wednesday to discuss the sale, according to people familiar with the plans. The deal is aimed for as soon as this month, according to one of the people, who asked not to be named as the specifics aren’t public. The MOF said in a statement that it will sell $1 billion of five-year notes and the same amount of 10-year debt “soon.” Read more

Plummeting costs for renewable energy in Australia may tilt the government toward scrapping subsidies designed to encourage use of the technology.

A sharp decline in the cost of solar and wind power has raised the prospect of ending the incentives as renewables are now able to compete or even beat fossil fuels. That may give Prime Minister Malcolm Turnbull sufficient cover to avoid setting clean energy targets as he seeks to avoid further political infighting that’s plaguing his government.

Australia, one of the largest exporters of coal and natural gas, has struggled to maintain reliable domestic power supplies and a coherent renewable energy policy over a decade of political squabbling and missteps. While the nation has committed to subsidize clean energy via its existing Renewable Energy Target until 2020, setting a formal policy beyond that has become a battleground for the divided coalition government as it tries to balance competing energy sources amid spiraling power costs. Read more

Someone very high up at NZF told me today "the Greens are not very smart, they have the same number of seats as us, yet we get to negotiate our policies and decide who WE will govern with and they have no say whatsoever"

They're so dumb that they failed to understand a coalition between National/Green is a change of government and a change of the status quo. I have wasted my party vote for them...

It seems they are incapable of seizing the day.

Sorry to inform you, but it's politics we are talking about.
how on earth would the party members of a party way left of centre accept a coalition with a party to the right of centre where there is very little common policy ground?
Especially when they have an agreement in place with Labour.

The Greens could form a coalition with National for "political" reasons. National are actually a little left of centre when viewed from a broad historical perspective.

The same perspective that considered Obama to be a Socialist.

Guess that is the difference between principles and win at any cost

You think winning should have no cost?

Some cost? Yes. All cost? No

Don't forget that lots of people came to NZ with the sole intention of getting to Oz, so there would be many who have NZ passports but were not born in NZ.

Another day, another record for the NZX50

https://www.nzx.com/markets/NZSX/securities/FNZ

All we hear is 3 cheers for house prices. Combined with this stellar performance, it's like being in the hot seat at the peak of some kind of bubble.

Yep, I am starting to sell down and re-allocate. Probable future returns look low for both housing and shares.

reallocate ... LOL ... to what exactly? Guns & groceries?

Mostly to paying off debt on a revolving credit facility for a guaranteed 5% tax-free return. Then when a good buying opportunity presents itself, I will be in a position to act.

..we haven't yet had the hysteria in the share market as per we had with housing, or what we had prior '87. So more upside to come is my bet.

I know market timing is a fool's game but after 9 years of gains and 1929 equivalent CAPEs, I think a downturn is due. It's hard to tell with QE still going on when this party will end. I can live with missing out on a few years gains if I have the opportunity to buy near the next market bottom. The guaranteed return on the mortgage will see me through.