A review of things you need to know before you go home on Wednesday; TSB trims TD rates, only 87 farms sold in January, lifestyle blocks a harder sell, job vacancies stay high, CPTPP analysis released, swaps stable, NZD unchanged

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

No rate changes to report today.

TSB has reduced its TD rates for terms 6, 9 and 12 months, all by -15 bps.

After three consecutive rises, today's dairy auction paused for breath, down an insignificant -0.5% and holding on to +12.9% of the +13.5% gains over the last four auctions. In New Zealand dollars today's slip was a little higher at -1.2% but still represents a 'hold'. Disappointingly, WMP prices were signaled to rise +2.3% again by the derivatives market but in the end only managed a +0.3% firming. SMP dipped -3.0%. Today's auction won't change any payout forecasts.

Across the whole of the country there were only 87 farms sold in January. This is not only low for a January, it is low for any month. And such low levels have been the norm for five of the past seven months. The last time we had such a skinny sales run was in 2011. An unusually low number of dairy farms, and grazing properties was behind the drop, and it is noticeably low especially in Canterbury. So far, prices/ha haven't reflected the slim demand yet. Perhaps some of the weakness was in the expectation that 'drought conditions' were on the way.

Farms are not the only property asset finding the going tough for liquidity. Lifestyle block sales in January reached their lowest level in three years. January is usually the lowest month of the year, but January 2018 sales of lifestyle blocks is a full -10% lower than 2017 and -21% lower than for 2016.

MBIE's online job vacancy survey has the level of onlline job ads holding at high levels. Skilled vacancies are trending up again and regional demand is high. Only Auckland seems to have topped out.

Today MBIE updated their assessment of the impact of tourism on our economy. The biggest spenders are the Aussies who spent $2.6 bln, up +2.8%. The Chinese spent $1.5 bln, down -11.4% and the Americans are coming up fast spending $1.3 bln up +17.5%. The Brits spent $1 bln here, up +12.0%. All up, international tourists spent $10.7 bln in 2017, up +4.7%.

Sharemarket darling a2 Milk has linked up with Fonterra today. A comprehensive deal has been announced but like most Fonterra-type deals, no figures are available. However, it does have the aura of Fonterra throwing in the towel over its defense of A1 milk, something it has championed for decades. a2 Milk's share price rose +25.6% on the news. Fonterra's rose less than +1%. a2 Milk now has a market cap of $8.4 bln. Fonterra has a market cap of $9.7 bln.

The CPTPP trade agreement will add between $1.2 bln and $4 bln to New Zealand's economy, according to the economic National Interest Analysis released today. That is much lower than the TPP deal when it included the USA. But the real purpose of this new deal may really be to entice the Americans back in. The problem for the USA is that they are no longer in the driver's seat. Their interest in being back in will be more about counterbalancing China (and its RCEP) and it will have to give up a much more than it did under the original TPP.

In Australia, data out today on wages shows a gain of +2.1% over all of 2017. That is slightly higher than the +2.0% in 2016. But this data is propped up by faster gains by public sector employees (+2.4%). For perspective, the Australian CPI rose +1.9% in 2017. (In New Zealand, wages rose +3.2% in 2017 and our CPI was up +1.6%.)

The IMF has released a largely positive Report on Australia. All the usual risks and vulnerabilities get an airing, but overall they see it well placed to grow from here.

Wholesale swap rates are unchanged today. The UST 10yr got as high as 2.93% a few hours ago but is now back at 2.90% and where it started this morning. The Aussie Govt 10 yr is also unchanged at 2.89%, the China 10 yr is unchanged at 3.90% along with the NZ Govt 10 yr still at 3.00%. The 90 day bank bill rate is unchanged at 1.92%.

About four hours ago, the bitcoin price had risen steadily to US$11,770. But then it fell sharply to $10,905 before a small bounce in the past hour back to US$11,990. That is a net -3.5% fall around a range of +3.5 and -4.1% all within 24 hours.

The Kiwi dollar is again marginally softer at 73.4 USc, at 93.2 AUc and 59.5 euro cents. That puts the TWI-5 at 74.4 and still well within its 2018 range.

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Here Macquarie Bank argue the strength of the AUD is in its fundamentals, specifically the resource exports:


“The key difference between now and 2000-01 is that the prices of Australia’s resources exports are around 180 percent higher and the terms of trade are up nearly 60 percent,” said Justin Fabo, senior economist for Australia at Macquarie.

Given the NZD is also tracking high does the same hold true?

Noble Phil, trying to reign in his $520,000 travel costs:


The survey found council and CCO bosses racked up $524,487 on overseas trips to Asia, the United States, Canada, Europe and Australia in the first 11 months of Goff's leadership from November 2016 to mid-September last year.

Makes you want to move
"According to the Christchurch City Council’s draft plans for the next 10 years, expected to be endorsed at a full council meeting today, its gross debt is forecast to rise about 50%, from $1.8 billion in the next financial year to $2.7 billion by 2025/26, before easing back to $2.65 billion in 2027/28.

Thank you Tony Marryatt and co. for your wonderful legacy.

Hahaha what a coincidence, our comments just minutes apart.

You can thank Tony Marryatt (Paul Anderson being the fall guy) for that. Council underinsured their assets and have subsequently been caught out after the earthquake.


We are talking billions though, how many rate payers are there?

150k maybe 200k tops?

From the article i posted:


A failure to insure a council facility has cost ratepayers $11 million. The best current estimate of total costs to Christchurch City Council (CCC) as a result of the earthquakes is $4.43 billion (includes facilities and below ground assets, emergency and response costs).

CCC expects to receive $1b in insurance payouts although at least $200m of that is in doubt.

After insurance payouts and government subsidies, the council still has to find $1.38b to fund quake recovery costs which include $175m for improvements or betterment.

Many expected the council's insurance policies to provide much more than $1b. Fixing below-ground assets alone will cost the council $560m above the insurance payout.

Some assets may have been substantially undervalued by valuers employed to set reinstatement values. This means repair or replacement will far exceed the amount insured.

A new government, another wave of education "reforms":

No wonder NZ Primary School principles burn out at 1.7X the rate of the general population:

Lifestyle blocks: too big to Mow, too small to Plow....

Life sentence blocks.
Some are very productive though, managinfg to make a income of 1.5 H.A..

To sum up, the private sector employees in the lucky country have not been so lucky in the past year as they were financially worse off than the year before when adjusted for inflation. The future of work with low-paying gigs is not so far in the future for our mates across the ditch.

Retail, the new class of working professionals.

Auckland Trade me listings move seamlessly thru the 12000 mark.There is speculation that Toothypoity may head back as the number of desirable properties available continue to increase. Real estate consultants ,particularly those from Ray White will work tirelessly to achieve vendor goals and buyer aspirations .Agents will leave no stone unturned,to maximise vendor expectations.All agents have a history of exceeding normal human behaviour while exhibiting morals and ethics beyond any other profession.

Wait a minute didn't the Ozzy's get that line from us Kiwis!? And where's Auckland's index! Pha!
BBC article: The Avocado Toast Index