A review of things you need to know before you go home on Thursday; Truckometer gives mixed Q1-18 signals, provincial rents jump, banks extract 78% of profits, swap rates & NZD stable, bitcoin slumps

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.

TURNING POINT?
ANZ's truckometer report is giving mixed signals now after a long period of strongish ones. The 'heavy' index suggests good GDP growth is continuing, whereas the 'light' index suggests things may be softening a bit. Data to support both bulls and bears for 2018-Q1. But 2017-Q4 is locked and loaded now and will be reported next Thursday and a +2.7% growth is anticipated by markets. That is consistent with ANZ's Truckometer series which if anything suggests any surprise might be on the up side. Was 2017 as good as it is going to get in this business cycle?

A POSITIVE BOOST
One of the last pieces of the Q4-2107 GDP puzzle fell into place today with the manufacturing data released. It showed income up an impressive +10.2% year-on-year which is the highest rate of gain in four years. Factory finished goods stocks rose +6.2%, something they did in all of 2017 in stark contrast to 2016 when they were being wound back.

PROVINCIAL RENTS JUMP
The median rent for a 3 bedroom house jumped to $450/week in the national data for February released by MBIE today. That is $30 or +7.1% higher than the same month a year ago. In Auckland, the rate was unchanged at $630/week, in Christchurch it was also unchanged at $420/week. But in Wellington the jump was $30 to $600/week. Really large rises are being recorded for Napier (+11.1%) and Dunedin (+11.4%). New Plymouth has recorded an +8.6% rent rise for a 3 bedroom house. Nelson, Palmerston North and Hamilton all recorded rises above +5%. The odd place out is Tauranga at +2.2% but at $460/week for a median rent, perhaps it already had its rise in the prior year. (Monthly numbers can be volatile, however.)

SQUEEZING THEIR CAPITAL HARD
For the first time ever bank profits exceeded $5 bln in the year to December 2017, coming in at $5,234 bln, tax paid, or $14.3 mln per day. Shareholders have $39 bln invested, so the average return on their investment is 13.8% pa. ranging from ASB's 15.4% down to Kiwibank's 2.4%. Their equity grew by just +$1.155 bln in the year, so that means shareholders took out just over $4 bln in distributions, or 78% of all profits, a very high extraction rate and no evidence they are investing their gain in the industry. The strongest bank in terms of capital is Rabobank (leverage is just 7.9 times) whereas the most risky is Kiwibank with leverage of 14.4 times. (Leverage measures the amount of shareholder capital supporting the 'assets' of the bank. And the primary 'asset' is a bank's lending protfolio.) Bank shareholders make their money using OPM. As I point out often, no banker would ever lend funds to a company with a capital structure like a bank. They would always insist the shareholders put up more capital. But regulators never ask them to do that in a meaningful way.

NEW 10 YEAR BOND
Treasury is planning to launch an April 2029 bond in a series of tranches depending on funding requirements. But this bond won't be tendered in the normal way, rather it will be placed through a syndicate. Between $1.5 and $2 bln is expected to by raised this way, over time. The syndicate managers were announced today and they are ANZ, BNZ, and the Sydney offices of both Deutsche Bank and UBS.

DIFFERENT LEAGUE
The New Zealand funds management industry manages NZ$124 bln. But the Australian industry is in another galaxy, with data today showing it growing by +AU$300 bln in one year to almost AU$3.4 tln by December 2017, a +9.7% rise. The Aussie level is 27 times larger than ours.

BENCHMARK INTEREST RATES MIXED
Wholesale swap rates are unchanged today for terms of 3 years and shorter, but slightly firmer for the longer durations. The UST 10yr is up to 2.89% today (+3 bps). The Aussie Govt 10 yr is up another +3 bps to 2.83%. The China 10 yr is also up by +1 bp to 3.89% while the NZ Govt 10 yr is unchanged 3.04%. The 90 day bank bill rate is also unchanged at 1.90%.

BITCOIN SPOOKED
The bitcoin price fell sharply this morning as the US SEC ruled that crypto exchanges need to be registered and meet all legal requirements as other exchanges do. The fall stopped at US$9,481 and since then there has been a 'recovery' of sorts to US$9,688 for a net change on the day of -10.9%.

NZ DOLLAR BECALMED
The Kiwi dollar is essentially unchanged today. It is still at 72.8 USc. We are at 93 AUc and at 58.7 euro cents. That puts the TWI-5 unchanged at 73.7.

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