A review of things you need to know before you go home on Friday: no rate changes, 10K new Mangere dwellings, CBL update, PMI sinks, Aussie housing weakness, swaps slip, NZD firms

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

MORTGAGE RATE CHANGES
No changes today.

TERM DEPOSIT RATE CHANGES
None here either.

10,000 NEW DWELLINGS
The huge economic news today is that the Housing Minister announced plans to build 10,000 homes in Mangere - including 3500 new KiwiBuild homes, 3000 new state homes and 3500 new ‘market homes’. That is a project that is worth at least $6.4 bln. The timeline is from 2018 to 2033. This project is now listed in our tally of major Auckland projects and pushes up the tally totals above $60 bln on ongoing or future work. The Mangere project involves replacing 2700 existing properties described as 'worn out'. As with the Greys Avenue project (replacing 80 dwellings), it is not clear what where the displaced residents go in the meantime, or where the additional workforce for all these projects will be housed during construction.

DIGGING DEEPER
The FMA has revealed more about its investigation into insurer CBL. It says it has concerns about the insurer's directors and the disclosures made when it first listed on the NZX. It is also investigating CBL's auditor, Deloitte and their reports.

FACTORY WARNING SIGNS
New Zealand’s Performance of Manufacturing Index (PMI) slowed further in June. In fact, at an index level of 52.8 s.a. that is the second lowest reading since May 2015. On an actual basis (not seasonally adjusted), the PMI of 51.2 is barely expansionary. The separate production, employment, and inventory sub-categories are all contracting. It is the employment contraction that will worry any policy makers who care to look.

EDUCATED GUESSING
For readers who are convinced they know the economic future, you may wish to test your guesses with a recent OECD "Long View" study. That takes estimates out to 2060 in some detail for the world's major economies. Essentially they see growth rates shifting lower as both China and India complete their transitions as "emerging markets".

FALLING AWAY
Other than for secured housing purchases, most lending in Australia is either not growing, or declining. That's on a year-to-May basis comparing 2018 with 2017. Lending for housing is up only +4.5% on that basis with data for the month of May 2018 itself only up +2.5%.

DOWNGRADING PROPERTY
And staying in Australia, NAB economists have downgraded their property price forecasts and say sentiment toward property has dropped to a two-year low. The move comes three weeks after rival bank ANZ cut its own property price forecasts.

SWAP RATES SLIP AGAIN
Local swap rates are down another -1 or -2 bps across the board. The UST 10yr is unchanged at 2.86%. The Aussie Govt 10yr is at 2.64, up +1 bp, the China Govt 10yr is at 3.54% (down -2 bps), and the NZ Govt 10 yr is at 2.88%, also down -2 bps. The 90 day bank bill rate is down -1 bp again at 1.94%.

BITCOIN OFF
The bitcoin price is now at US$6,237 which is -1.7% lower than this time yesterday.

NZD HOLDS MARGINALLY FIRMER
The NZD is marginally firmer than at this time yesterday and is at 67.8 USc. On the cross rates we are little changed at 91.5 AUc and 58.1 euro cents. That has the TWI-5 up at 71.3.

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30 Comments

And I listened to the better angel of my human nature and had a salad for lunch.

I had ravioli. Was a 7 out of 9.

Glad we're keeping this up. I had some hot chips, 2/9.

You guys were lucky – currently enjoying a horrendous mid-winter cold/flu thing – no lunch, didn't feel like lunch - 0/9.

I had a avocado smashed with lemon and pepper for lunch. I'm not even a millennial. Simple but 10/10

I had a glass of chardonnay, the avos i bought from a well known supemarket were overripe and I threw them out.
Like meat in that respect, too often a disappointment.
Im working on growing avo, grow your own is superior

What, no sub-par sandwiches to trouble-shoot?

Yesterdays left over scalloped potato and broccoli bake - followed by a peanut butter and jam sandwich.

At least you didn't say "and jelly".

D Chaston, maybe instead of asking for "support" for this website, you should just make it user pays, it should eliminate all the waste of time, childish, nonsense comments

The site does need some fine tuning to convince me to part with $. I will pay a site where the journalistic content is unique, and the journalists actively participate in discussion on the contents. If the discussion is to match the tone of the article it needs to be actively moderated. Is it possible to have a general discussion post where the moderators simply move a post across to it when it doesn’t meet the standards of a journalistic discussion?

Rex Pat, good grief, are you serious? They're not asking for much $$. Why you haven't already tuned out just paints you as a penny pinching miser. Do you also expect them to pay you a higher than market rate for use of your money too?

Now come on Rex Pat stop being so stingy, searching for feeble excuses not to part with a few precious bucks. We have to support the small local players and fight the mega corporations.

Think of supporting Interest.co as localism. It won't be perfick and the journalists are brainwashed virtue signallers most of the time but it is the tolerance of dissenting views in the comment threads that makes it worthwhile.

You won't even notice an automatic payment of $10 a month from your credit card. That's just 33 cents a day! These sites cost money to run.

Speaking of educated guesses the govt announced they would replace the council of Unitec, after consideration of their submission of course
It apears the council may have been living the dream rather than doing due diligence.
Ok, so up to half their income was from International students but wasnt that a dream??

Part of the easy-out sugar rush of the last decade, from the sounds of it.

Universities in NZ are still living in the 20th century by living off student fees and government grants; most top-ranked universities got where they are by gradually building up their endowment funds to amass several millions, in some cases billions, of dollars.

American and British educational institutions have their own asset management teams with long-term growth mandates that fund research projects and maintain a rather diversified investment portfolios.

That is right, and the polytechnics were never endowed, created under the education act with provision to sell the land from under them.
In some ways they are the worst of all possible worlds, a genetic mutation from the community colleges that were a outcome of the technical colleges.
I think their only future is to develop their trade origins, strip the funding arrangements and revert to govt department administration.
Ha ha ha

And an ode to the Aussie Housing market crash from the Manic Street Preachers... Album title 'Everything must go.' (1996) - who would have thought the boom would have lasted that long..

https://www.youtube.com/watch?v=EG3fou1E6os

I don't know if I'm tired and I don't know if I'm ill
My cheeks are turning yellow
I think I'll take another pill
Praying for the wave to come now
It must be for the fifteenth time
I've been here for much too long
This is the past that's mine
I want to fly and run till it hurts
Sleep for a while and speak no words in Australia
I want to fly and run till it hurts
Sleep for a while and speak no words in Australia
In Australia
Praying for the wave to come now
It must be for the very last time
It's twelve o'clock till midnight
There must be someone to blame
I want to fly and run till it hurts
Sleep for a while and speak no words in Australia
I want to fly and run till it hurts
Sleep for a while and speak no words in Australia
In Australia
Australia, in Australia
I want to fly and run till it hurts
Sleep for a while and speak no words in Australia
In Australia
In Australia
In Australia

The NZ$ could be in for one very big stumble.

The US Fed may well invoke 2 more rate hikes before year end as they currently suggest – so we’re talking a further .50%.

This is significant – not just for EM’s, but for a very highly traded NZ$ that may run out of friends.

The Aussie Dollar will lead the way.. just found this interesting little piece about 'property investors' and the ability to get finance from the Australian banks. If you have a spare ten minutes its worth a watch. It's akin to giving the keys to the sweetshop to a four year old.

https://www.youtube.com/watch?v=BNAqA7R95Wo

Absolutely no sympathy. "But it's the banks fault, the banks fault".

FYI, that was filmed Feb 2016

Here's a few more stories in this

1) property investor couple in Western Australia 16:16
2) owner occupier in Western Australia 21:31
3) owner occupier couple in Sunshine Coast, QLD, Australia 23:40
4) property investor in QLD, Australia in 26:04

At the end of the story, you get the other end of the spectrum of a young property investor couple - 37:22 - they owe A$1.2mn on property value of A$1.5mn earning A$135,000 combined. (The LVR is 80%, and if you assume 5% gross yield on the investment properties, then the debt to gross income is about 5.7x)

https://www.youtube.com/watch?v=hYMiTlZ9iN4&feature=youtu.be&t=16m16s

Interesting video – though a pretty crap town they were focusing on.

More important takeaway probably was the overall attitude of the banks and apparent lax standards being exercised – if they were doing this in “crap town” – then what on earth have they been doing in the major cities and suburbs.

The Trumps arrive at Blenheim Palace

Magnificent and beautiful.

Why am I not surprised you are a Trumpster?

I've never hidden my support for Trump and was a very vocal supporter before his election. I even participated in the meme wars. I did jump off the Trump train briefly a few months into his Presidency so my support is not completely blind however he has made amazing progress and certainly seems to be on a roll now.
I feel a connection with Trump that is cultural, ethnic and ideological. Legions of us stand ready to rush to his defence should he call for it.

Watch his press conference alongside May. Awesome:

https://youtu.be/5OquZEMJub8

Friday the 13th and we should all pool our resources and see if we can drown our sorrows.

Flatly I think it would have been a bargain....and no need for :"House Arrest."....anywhere.

The nutters are running the system.. I think they should think ...again.

http://www.dailymail.co.uk/news/article-5947043/Residents-told-paddling-.....