What happened Monday

A review of things you need to know before you go home on Monday; rate cuts, fees irrelevant, drinks stronger, rulers reject limits, swaps lower & flatter, bitcoin unchanged, NZD slips

26th Feb 18, 3:59pm by David Chaston

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

MORTGAGE RATE CHANGES
HSBC Premier have launched a 3.95% two year mortgage rate, the lowest since October 2016.

TERM DEPOSIT RATE CHANGES
ASB has cut some term deposit rates and raised some others.

A THIRD LEVEL CONSIDERATION
If you have been worrying about KiwiSaver fee levels based on a growing volume of public discussion and a new bill before Parliament, you may want to read this analysis.

LUSHES
We are rejecting low-alcohol versions of beer in favour of high-alcohol versions, even as we drink less and less beer. Maybe that is because low alcohol beer drinkers are abandoning the beverage. Or maybe they are just switching to RTDs. But the uptake of the potent stuff is what the remainder seem to want. Beer consumption fell -1.2% in 2017, wine consumption rose +1.5%. But RTD consumption rose +6.4% and consumption of straight spirits rose +1.3%. RTD consumption is up +16% in three years.This data may help understand the binge priorities of some drinkers. It is not evidence that the 'moderation' message is getting through.

EMBARRASSING EVIDENCE
In Australia, banking regulator APRA is expected to face questions about an official probe into fraud risk in the AU$1.6 tln mortgage market when he appears at Senate estimates this week, after it was confirmed major banks provided the regulator with external audits on the topic at least nine months ago. It is not clear why APRA isn't releasing the review and there are suggestions that is because it undermines APRA's previous public stances on immediate risks.

THEY ARE ALL NUTS
In China, they are about to remove the constitutional restriction on the maximum number of terms the president and vice-president can serve. That will pave the way for Xi Jinping to become President-for-Life. Try reading this link and not wonder how that can fool 1.3 bln people. It's like a 19th century throwback of the worst kind. It is hard to see how it can end well. The only cover is that the Americans have compromised their democracy in a similar type of extremism. I hope we can keep our oasis of civility and freedom.

BENCHMARK INTEREST RATES DOWN
Wholesale swap rates lower and flatter today. The two year is down -1 bp, the five year is down -2 bps and the ten year is down -4 bps. The UST 10yr is now at 2.86%. The Aussie Govt 10 yr is down very sharply today, down -8 bps to 2.76%. The China 10 yr is down -1 bp to 3.89%. The NZ Govt 10 yr down another -3 bps at 2.95%. The 90 day bank bill rate is down -1 bp at 1.91% today.

BITCOIN UNCHANGED
The bitcoin price is now at US$9,654 and almost exactly where is was at this time on Friday. It is unusal for the bitcoin price to record a no-change like this week so far..

NZ DOLLAR SLIPS
The Kiwi dollar is a little lower the greenback at 73 USc, a little softer against the Aussie at 93 AUc and unchanged against the euro at 59.3 euro cents. That puts the TWI-5 at 74.1 and still anchored well within its 2018 range.

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Daily exchange rates

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Source: RBNZ

Source: CoinDesk

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34 Comments

by kdm17 | 26th Feb 18, 4:56pm 1519617400

How does it happen that your commentators quite often comment on the NZ dollar slipping in a given day and yet its actually gone up? The NZ dollar today has gone up against currencies such ad the US and the AUD.

by David Chaston | 26th Feb 18, 5:16pm 1519618611

We report the change from the previous edition of this report. So this change is from the Friday edition.

by printer8 | 26th Feb 18, 4:57pm 1519617468

Re: Beers
There is clearly a shift to craft beers (don't have the stats on hand but just look at the taps in one's local and the rise in numbers of craft breweries) reflecting a change amongst beer drinkers; rather than same old same old in quantity, its looking for something different and savouring the taste.
Many of these craft beers are high in alcohol - I have one Garage Project beer at 14% cellared for a special occasion (I'm told by someone with good knowledge that the high percent alcohol will act as a preservative and it will keep like a good wine).

by Roger Witherspoon | 26th Feb 18, 5:08pm 1519618116

Why is it that new brewers just can't resist either (a) adding enough hops to completely numb your mouth after half a pint, or (b) making the beer so alcoholic that you can't drink much without having had too much? Is it that making a deliciously drinkable 4% beer is too hard for them?

by Foxglove. | 26th Feb 18, 6:35pm 1519623335

That is so right. It’s getting like Seattle where you are hard pressed to find anything other than a pale ale that you can stand up a fork in. Will somebody please start importing Lowenbrau again!

by scarfie | 26th Feb 18, 10:17pm 1519636655

As a craft brewer I am also distressed at the dearth of good malt driven beers, but the bonus is I can just brew them myself :-)

by Computer | 26th Feb 18, 11:21pm 1519640504

Maybe some people (like me) actually like strong, hoppy beer? But yes, you can get a half decent session beer at around 3.5-4.5% - 8-wired semiconductor, Tuatara Iti come to mind.

by Roger Witherspoon | 26th Feb 18, 5:09pm 1519618182

Quite how you can compare an authoritarian ruler centralising power to America is beyond me. America is a democracy, that's why the rabble can elect an Obama or a Trump as they see fit. It is also why the president's power is constrained by the upper and lower houses of parliament, Senate and Congress. The constitution is written to ensure deadlock most of the time. The fact that the Americans wash their laundry in public makes them look worse than the countries that agree everything behind closed doors and happily kill off or imprison anyone who disagrees with The Boss (corruption charges = purge of competitor).

by waymad | 26th Feb 18, 5:32pm 1519619561

Poster child: Turkey

by NorthernLights | 26th Feb 18, 6:18pm 1519622282

Like Congress is constricting Trump ? Ditto Senate
The only thing holding Trump in check is the legitimate media excluding Foxnews
and the DOJ allowing Mueller to continue the investigation
Like the founding fathers never envisaged the fools of today allowing AR15s for youths they also never envisaged a Congress so collusive in exacerbating the excesses of a POTUS

by Ralph | 26th Feb 18, 6:25pm 1519622703

Yes, very hard for China to compromised their democracy when they don't have one. No free press, no land ownership, no rule of law, no political freedoms, no free internet, people who disappear at night .. it's a long list.

All China is doing is formalising the method that already exists.

by Advisor | 27th Feb 18, 8:05am 1519671906

3 decades ago, such a power grab would have certainly invited some measures from the West in terms of reinstating people's votes. However, the promise of better returns on investments has blinded us to such an extent that our conscience-led decision maker Wall Street has welcomed the rise of another tyrant in China with fanfare.

by Foxglove. | 26th Feb 18, 6:38pm 1519623525

USA since last century has always been the easiest of targets. What beats me though, is if it is so damned bad, why all immigrants busting to get in.

by Zachary Smith | 26th Feb 18, 6:36pm 1519623415

Sydney housing market is showing signs of warming up again. This weekend just passed saw a record number of houses going under the hammer and the results were pretty healthy. Auckland is likely to follow this lead.

Open homes for Sydney auctions seeing much higher attendance, agents say

Sydney posts 70 per cent auction clearance rate off large volume of sales

by Retired-Poppy | 26th Feb 18, 6:50pm 1519624234

Zachary, what complete balderdash. "Auckland likely to follow this lead" What evidence can you provide to substantiate this prediction? Did you read it in the tea leaves?

by Zachary Smith | 26th Feb 18, 6:47pm 1519624054

It's just obvious really. Auckland is to NZ what Sydney is to Australia. Property buyers have been looking at Sydney as an indicator of the future of Auckland's housing situation for a long time. Similar culture, similar people, similar systems and language. Global cities. It's been a pretty reliable system so far.

by Retired-Poppy | 26th Feb 18, 7:21pm 1519626118

Zachary Smith, if Auckland is to follow suit then further falls are indeed a certainty;

http://www.abc.net.au/news/2018-02-01/home-prices-dragged-down-by-sydne…

Looks like selling pressure, Ozzy vendors appear to be more realistic than those in Auckland. Of course where Australia goes, we will surely follow - down.

The following article raises the issue of Bunnings feeling the brunt of cooling house prices. Just consider how Mitre 10 Mega, Bunnings and Placemakers will cope here in the near term. Current branch numbers and employees implies this sector is geared for boom times only. Of course this sector is very vulnerable to taking a hit going forward from here.

https://www.domain.com.au/money-markets/house-price-weakness-casts-a-cl…

by Zachary Smith | 26th Feb 18, 8:05pm 1519628736

That article about Bunnings is odd. They are expecting a halving of growth, a halving of, quite frankly, fabulous growth. This Christmas period was really great for them too. Oh and actually the main problem is their disastrous UK venture, nothing to do with Australian conditions, which are actually quite good.
I reckon Bunnings will thrive as people try and update their houses.

by Bobster | 26th Feb 18, 7:34pm 1519626865

Err, no, it’s not obvious at all. We have common major banks, that’s about it. The health of the nz property sector is reliant on the health of the Aussie banks, yes. But the rest of what you have said....mmm don’t think so

by Zachary Smith | 26th Feb 18, 7:49pm 1519627789

Auckland and Sydney don't have a similar culture, economy, history and so on? Interesting.

by J.C. | 26th Feb 18, 7:50pm 1519627808

The BBQ model to property investment, but more likely an internet troll looking for attention.

by Zachary Smith | 26th Feb 18, 7:59pm 1519628345

It's like you're living on a different planet.
Anyway Retired-Poppy now agrees with me. Most people would sense that a property crash in Sydney would be bad news for Auckland owners. The opposite would also be true would it not?
Sorry this news is so triggering.

by J.C. | 26th Feb 18, 8:10pm 1519629025

Agree. Sydney would be bad for Auckland, NZ, and Australia. Similarly, a property crash in NZ would have negative consequences for Australia too. Why? Because it would pressure on the banking system and negatively impact consumer spending, which is the lifeblood of both countries.

by Independent_Observer | 26th Feb 18, 10:02pm 1519635729

Without considering the emotional contagion of market players....

by Narrabeen Boy | 26th Feb 18, 7:32pm 1519626743

A friend of mine sold a three bedroom house on northen beaches for 1.6 million one month ago.third bedroom as tiny.one lounge room on a 400 sq metre setion.old and dated.I thought it was too expensive when he bought it for $560 k ten years ago!!!!bugger it!!!

by NorthernLights | 26th Feb 18, 6:08pm 1519621713

I know Zach isn’t it wonderful !
My apartment must be worth another 200K !

by Cowpat | 26th Feb 18, 6:44pm 1519623843

Piffle 1.3 billion, I pronounce Mr Chaston as Supreme Gilded Venerable Lily Lotus Leader of Herne Bay . What influence would 1.3 billion have on New Zealand.
Barfoots big auction week , 240 on the block. Another 'poor 'month of sales. Interesting occupation having to 'work' twice as hard to earn half as much. Why do these agencies cling to their commissions.

by J.C. | 26th Feb 18, 8:17pm 1519629436

Good article on the rottenness of NZ's 3rd biggest export earner. Unfortunately, social listening on WeChat will not be able to gauge what sentiment is going around.

Dozens of Chinese students feel abandoned and betrayed by New Zealand's export education industry and want the Chinese market to know New Zealand can't be trusted.

New Zealand's multi-billion dollar export education sector faces a repeat of a 2003 collapse in its key Chinese market after the forced closure of the privately run New Zealand National College left many students feeling betrayed by authorities and stuck without qualifications or full refunds.

https://www.newsroom.co.nz/@boardroom/2018/02/22/91153/export-educators…

by Pragmatist | 26th Feb 18, 9:45pm 1519634716

That should drop the rent on inner city shoebox apartments by a metric f-ton then.. always look at teh bright side of things :)

by russellj | 26th Feb 18, 9:51pm 1519635090

Quite

by russellj | 26th Feb 18, 9:55pm 1519635315

Quite was meant to support the earlier ref to Turkey

by delboy | 27th Feb 18, 7:34am 1519670090

Not sure how Americans have compromised their democracy. They had an election and people voted for the candidate they preferred.
People around the world are being enslaved and brutalised by dictators and yet the media are fixated on Trump.

by Robt. | 27th Feb 18, 9:25am 1519676734

It's not a true democracy when the voters are misled en masse by deceit and fake news. A biassed media undermines a basic requirement for democracy - that voters are empowered to make informed decisions. Even in NZ, attempts by polititians and media to mislead the public seem to be accepted without significant repercussions.

by delboy | 27th Feb 18, 9:54am 1519678447

That’s true however Trump still managed to win despite the MSMs fake news efforts to swing the voters against him.