A review of things you need to know before you go home on Tuesday; PSI slips but still strong, Juken retreats, tourism strong, SFO nabs corruption, World Bank positive, swap rates steady, NZD unchanged

A review of things you need to know before you go home on Tuesday; PSI slips but still strong, Juken retreats, tourism strong, SFO nabs corruption, World Bank positive, swap rates steady, NZD unchanged

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

MORTGAGE RATE CHANGES
No changes to report today.

TERM DEPOSIT RATE CHANGES
No changes here either.

SERVICE SECTOR DOING OK
The BNZ-BusinessNZ services survey did not have the sharp drop we saw for manufacturers. It was a little lower but still expanding healthily. BNZ said: "we judge the weakness in the PMI to be related to business investment caution, for now, while the ongoing robustness in the PSI suggest the more day-to-day business keeps ticking over relatively well."

INVESTMENT PULLBACK
Part of that manufacturing investment caution can now be evidenced in Gisborne where the large timber processor, Japanese-owned Juken New Zealand, is 'consulting with staff' to halve its processing by mothballing its plywood output.

TOURISM PRESSUE HIGH
Commercial tourist accommodation benefited from widespread growth in November 2017, with total guest nights up +4.3% from November 2016. International guest nights increased +5.6% on the same basis, with domestic guest nights close behind, up +3.1%. The hotel occupancy rate reached 77.2%, a record high for November. In fact in Auckland it reached 80.7% across all types of accommodation and hotels would have been higher than that. Auckland has a real tourist accommodation problem. March is the season peak.

FRAUD AND CORRUPTION
The SFO has had a guilty plea from a manager, Saul Roberts, at Te Roopu Taurima O Manukau Trust (Te Roopu) and Trustee and employee of Te Kawerau Iwi Tribal Authority (Te Kawerau), who faced five charges under section four of the Secret Commissions Act and today pleaded guilty to all charges. While acting as a Trustee at Te Kawerau in 2009, Roberts received a secret payment of $45,000 in return for withdrawing public submissions he had lodged on behalf of Te Kawerau in opposition to a proposed change to a District Plan. The company that made the payment was unaware that Roberts was acting without the knowledge and consent of his employer. In 2012, while employed by Te Roopu, Roberts received secret commission payments in return for contracting work to certain suppliers to Te Roopu, including businesses owned by his co-defendant, Atish Narayan. Roberts received a certain percentage of each invoice as a cash kickback. Narayan has already plead guilty and received a sentence of home detention and $14,000 reparations.

MULTIPLE BREACHES
In Australia, Thorn who own Radio Rentals there, will pay NZ$24 mln in refunds and penalties for breaking Aussie consumer credit laws over 280,000 times.

MORE UPSIDE YET
Yesterday, the IMF forecast expanding global growth over 2018 and 2019. Today the World Bank said the global economy is experiencing a broad-based cyclical upturn, which is expected to be sustained over the next couple of years, although with downside risks. The IMF said global growth would hit +3.9% in 2018. But the World Bank has set its sights a little lower at +3.1%. In both cases this represents an immprovement from prior forecasts.

WHOLESALE RATES STEADY
Local swap rates are unchanged across the curve today. The UST 10yr has settled back -2 bps in the short-term US Budget 'resolution' at 2.65%. In China, their sovereign 10yr yield has also settled back to 4.05% retreating by -4 bps today. The NZ Govt 10yr yield is now at 3.01% (down -1 bp). And the Aussie 10yr is also -1 bp lower at 2.86%.

NZ DOLLAR UNCHANGED
The NZ dollar is a little changed since this time Friday at 72.8 USc. We are still at 91.1 AUc and level pegging at 59.5 euro cents. This puts the TWI-5 at 74.1.

BITCOIN GOES SOFT
Bitcoin is now at US$10,787, down -2.6% from this time yesterday. In fact, four hours ago this price was thretening to go under US$10,000 (it got down to US$10,068) but the bear conviction deserted sellers and it has been up from there. (Gold is a little changed today.)

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NZD
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Source: CoinDesk

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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9 Comments

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Oh look. Japan has a supply problem too.

Condominium prices in the greater Tokyo area are reaching levels not seen since Japan's bubble economy 27 years ago as major developers aggressively price new properties in popular areas amid a limited supply.

https://asia.nikkei.com/Japan-Update/Tokyo-condo-prices-tower-near-recor...

The NZ Govt 10yr yield is now at 3.01% (down -1 bp)

Discounting the upper boundary of the RBNZ's 1–3 percent on average over the medium term inflation target and not much else. Profitable risk adjusted investment opportunities that warrant swapping out of the riskless liquidity protection of sovereign debt remain elusive.

The IMF reckon that world GDP growth will hit 3.9 % in 2018 ...

... Wild Bill English must've phoned up the leaders of all the other nation's and told them the trick is to import hundreds of thousands of Chinese guys as chefs , and Indian chaps as courier drivers ...

It worked for us !

Interesting comments from Robert Shiller, comparing bitcoin to tulip mania (and differences to gold).

https://www.express.co.uk/finance/city/907069/bitcoin-price-collapse-cra...

Be warned - QE "theoretically" has to be unwound (reversed) - Bernanke advises against it

"Pharmaceutical companies are subject to laws forcing them to test for unintended consequences before they launch a drug, but central banks launched the huge social experiment of QE with carelessly little thought about the side-effects".

We are now told 10 years later it was a thought bubble experiment

The US Federal Reserve is reversing bond purchases - ignoring warnings by former Fed chair Ben Bernanke - and will ratchet up the pace to $US50 billion ($62.4 billion) a month this year. It will lead to a surge in supply of US Treasury bonds

http://www.canberratimes.com.au/business/the-economy/perfect-storm-globa...

From the IMF; "The next recession may be closer than we think, and the ammunition with which to combat it is much more limited than a decade ago, notably because public debts are so much higher."

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=1198...

Isn't excessive debt deleveraging one of the main causes of deflation? To start with, interest rates are likely to peak at a lower level than the last boom so it be hard not to predict the next slump to be deeper and longer lasting. It's practically impossible to predict the timing without just guessing.

Japan would be the poster child for deflation. I think it's fair to say that they've been through a fair bit of private sector deleveraging. According to Trading Economics, h'hold debt to GDP never exceeded 80%.(https://tradingeconomics.com/japan/households-debt-to-gdp). Furthermore, Japanese public debt is contained within their own country. The concept of "deleveraging" doesn't seem to exist in the Anglosphere.