Here are the key things you need to know before you leave work today:
MORTGAGE RATE CHANGES
No changes today.
TERM DEPOSIT RATE CHANGES
No changes here either today.
FIGHTING GREMLINS
We have been having real back-end issues today. Not nice. Apologies if you have been unable to read this afternoon. (And a reason this report is abbreviated.)
HAPPY CAMPERS
Consumer confidence rose in February according to the ANZ-Roy Morgan survey. They pointed to a tightening job market. They also noted that it rose strongly in Wellington, was stable in Auckland, and fell in the South Island. The core driver for the rise isn't current conditions; rather it is future condition expectations.
AN EXPENSIVE CITY
It has been an encouraging start to 2018 with building consents up strongly in Auckland compared to a year ago. They are up a strong +40% in the Queen City in January 2018 compared to January 2017. Not including Auckland, consent activity was down -3.4% on the same basis. Nationally, residential consents were up +9.4% in volume but up +24.4% in value which is a remarkable increase given the average building size was stable at 183 m2. The bias to Auckland was probably behind this shift, which is bad news for the Government's plans for many more Auckland houses.
ANOTHER QUAKE BOOST?
Infometrics reports: "At $479 mln, the value of non-residential building consents was high for a January. In seasonally adjusted terms, January’s consent result was the biggest we’ve seen since the $837 mln surge in March last year and the second-biggest result since August 2015. Bringing about this lift were increases in education, retail, accommodation, farm, and hospital building consents, but office building consents had another lacklustre month. We expect all six segments to grow over the coming year, even office buildings, which will be bolstered by post-quake replacement buildings and alterations work in Wellington."
A FAT RESULT
ANZ NZ has posted a big jump in quarterly profit to $520 mln to December 2017. That puts them on track for a $2 bln tax-paid year to September 2018. In the year to December 2017 they had a tax-paid profit of 1.887 bln. However, loan demand is soft while deposit growth remains strong. That signals a poor outlook for offers to savers.
BENCHMARK INTEREST RATES LOWER
Wholesale swap rates have been down -1 and -2 bps across the curve. This follows Wall Street which took fright after the US Administration announced some new punitive tariffs will be imposed. The UST 10yr is down -6 bps at 2.81% and back where it was on in early February. The Aussie Govt 10 yr is down another -2 bps to 2.73%. The China 10 yr is also down by -1 bps to 3.85% while the NZ Govt 10 yr is unchanged at 2.97%. The 90 day bank bill rate is down -1 bp at 1.91% today.
BITCOIN UP
The bitcoin price is now at US$11,120 or +7.3% higher than this time yesterday.
NZ DOLLAR SLIPS
The Kiwi dollar fell again today. It is now at 71.7 USc, but it is up at 93.7 AUc and holding against the euro at 59.2 euro cents. That puts the TWI-5 just under 73.6.
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13 Comments
From the ABC on lax lending for mortgages in Australia. Overstated incomes by mortgage brokers are placing people in situations where the banks have them by the gonads. UBS research shows that over 20% of mortgages issued state h'hold income in the income classification 200-500k p.a. An astounding finding. Furthermore, the data shows 42% of h'holds earning 500k+ took out loans in 2017 alone.
J.C, certainly the makings of another banking crisis. Jim Rogers had this to say about whats in store;
I really can’t see any good outcome from this credit mess in Australia. I don’t see how it can be painlessly managed away. They are at the mercy of events.
Imagine the possible outcomes it it hadn't of happened. Benign house price inflation and the Australian psyche are mutually exclusive. Probably more vitriol towards the govt and more pub glassings.
Since the early 1980s, market concentration has increased severely. Two corporations control 90% of the beer Americans drink. Four airlines completely dominate airline traffic, often enjoying local monopolies or duopolies in their regional hubs. Five banks control about half of the nation’s banking assets. Many states have health insurance markets where the top two insurers have 80-90% market share. For example, in Alabama one company, Blue Cross Blue Shield, has 84% market share and in Hawaii it has 65% market share. WalMart captures half or more of grocery spending in 40 metro areas. When it comes to high-speed internet access, almost all markets are local monopolies; over 75 percent of households have no choice with only one provider. Four players control the entire US beef market. After two mergers this year, three companies will control 70 percent of the world’s pesticide market and 80 percent of the US corn-seed market. We could go on and on. The list of industries with dominant players is endless.
https://www.mythofcapitalism.com/introduction?platform=hootsuite
A lot of this consolidation has been driven by simple marginal economics.
I'm not saying it's right or wrong - but if it is more profitable to have one commercial aircraft mfg in the US driven by a whole host of technology driven reasons - then over time that's what will happen.
Consider Apple and it's dominance in phones - earned in the market from a cold start. What's wrong with that.
A bit tough on Nokia and Blackberry - but that's what competition does and consumers are the huge beneficiaries.
Speaking of the 10 year plan. This just came in my email
The Mayor has set out his vision for Auckland, and developed a proposal for the budget and rates. Key elements of his proposal include:
Rates for basic services to be held to an overall average of 2.5% per year increase for the next 2 years, and 3.5% thereafter. Note that these figures are averages only, and include business and residential rates.
He proposes resuming the relative reduction of business rates compared to residential, so the rate increase for residential property will be an additional 0.5%
On top of this, he proposes various targeted rates;
a regional fuel tax of 10c/l with revenue to support transport infrastructure development (which will replace the existing $114/year Interim Transport Levy to be roughly revenue neutral)
a targeted rate to fund an accelerated programme to improve water quality for our harbours, beaches and streams - on average around $100 per year for our area (an additional 3%)
a natural environment levy to combat kauri dieback disease and other similar issues - on average either $30/year or $75/year depending on the option chosen (an additional 1% or 3%)
a targeted rate of $67/year from around 2021 for a new food waste collection system (an additional 2%)
It is complicated to understand what this means for you, but looking at the average property value in our area, we get a picture like this;
Base rates increase next year of 2.5%
Increase to reduce business/residential differential 0.5%
Water quality targeted rate 2.9%
Environmental targeted rate 0.9% or 2.1%
Less Interim Transport levy removed -3.3%
Plus 10c/l plus GST fuel levy - for average 14,000km/yr at 8l/100km equals 3.7% (not included in rates, but you still will be paying this to the Council)
Total change of 7.2% or 8.4% for next year
In addition, your rates would already be changing up or down based on last year's revaluation. If your valuation increased by more than the average increase for Auckland (46%) then your rates were already going to increase. If your valuation increased by less than 46%, then your rates were already going to reduce.
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