Here's our summary of key events overnight that affect New Zealand, with news pump prices are getting a one-two punch, boosting inflation and restraining discretionary incomes.
But first, international markets are in hold mode awaiting the outcome of today's US Fed meeting which will be announced tomorrow. A +25 bps rate hike is expected. And data out today indicates rising consumer confidence in the US, as one measure hit its highest level since 2000.
Meanwhile, US house prices are up +6.4% in the year to July, a slightly lower annual increase than recorded in June.
Progress on the Canada portion of the NAFTA renegotiation has slowed to a crawl and seems unlikely to be completed by the US-imposed deadline of September 30.
In Argentina, the head of their central bank has resigned. This is the second resignation from that position in four months. Their currency tumbled on the news.
In the Philippines, a senior official there indicated they will be raising their policy rate at their next meeting, taking their benchmark rate up +50 bps to 4.50%. The country is also considering imposing price controls on rice, pork and chicken in response to shortages after some recent weather events.
Locally, we are about to be hit with a new +3c/L national fuel tax, right at the time international crude oil prices are rising and driving pump prices higher. We currently pay more than 40% of the discounted pump price as tax and the new levies will push that up to over 42% nationally, over 45% in Auckland. The Government wins with its GST collections when the crude oil price pushed pump costs up. All this movement puts upward pressure in inflation. Petrol prices are now at record highs. And that will be restraining discretionary spending.
The UST 10yr is up +2 bps and now at 3.10% and approaching the recent peak in May - otherwise you have to go back to May 2011 to match today's rate - while their 2-10 curve is now just under +26 bps. The Aussie Govt 10yr is at 2.75%, up +4 bps, the China Govt 10yr is at 3.70%, down -1 bp, while the NZ Govt 10 yr is at 2.71% and up +2 bps.
Gold is up +US$2 at US$1,201/oz in New York.
US oil prices are holding at the new higher levels and now just over US$72/bbl with the Brent benchmark at just under US$82/bbl and a four year high.
The Kiwi dollar is unchanged today at 66.5 USc. On the cross rates we are also little changed at 91.7 AUc, and at 56.5 euro cents. That puts the TWI-5 at 70.1.
Bitcoin is now at US$6,377 and -4% lower than this time yesterday. This rate is charted in the exchange rate set below.
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56 Comments
Hopefully Jacinda and friends will use the extra taxes wisely and everyone will benefit. The causes of the housing shortage and housing pricing crises will be correctly identified and addressed. The difficult issues around immigration will also be faced up to, identified, analysed and addressed.
The recent post-study work visa changes will not help much in reducing migrant numbers. These changes might, on the contrary, boost numbers as a 3-year "no strings attached" post-study work visa after one year of study for $24k is a great offering.
Education providers around the country have found a way to minimize the hit from these changes and have introduced Level 8 courses, which in design look no different from the non-degree level 7 courses. Have a look at the example links below from similar courses at Unitec and tell me if you can spot any difference because I cannot.
https://www.unitec.ac.nz/career-and-study-options/management/graduate-d…
https://www.unitec.ac.nz/career-and-study-options/management/postgradua…
RogerW. What's not to be posidive about? We now have an energy minister possessing such a supreme intellect and knowledge on energy matters that she can dismiss official advice as nonsense. These expensive advisers should be sacked and the Megan one person superwoman think tank concept extended to all ministries. Think of the savings and how much quicker decision would be made.
Haha. I understand but there's always something to look forward to. Take for example the promise of modern infrastructure builds; the lack of expertise, long-term thinking, skilled workforce, public approval and financial resources to get something of that sort up and running should not be a big problem because our PM believes in it enough to go through the trouble of coming up a catchphrase.
Oh Roger , you are naive , where on the planet does any Government spend the taxpayers money as wisely and carefully and prudently as the taxpayer does himself ?
The many causes is the housing "shortage" are well known , but the biggest is that we are allowing too many people to come and live here , and not planning for it correctly .
And , is there a housing shortage in the absolute sense ?
Its more like an affordability problem than a physical shortage of houses .
Always exceptions but massive numbers are perfectly capable of biking, walking, car sharing and the balance can go public. The traffic congestion is a result of laziness...we need big petrol rises to affect a change in behavior.
........and it will, a question of time, that's all.
This is the future of seniors transport: https://www.mitsubishi-motors.com/en/showroom/i-miev/
When I turn my head as I cycle past queues of traffic, most occupants are not over 65, let alone 75 or 85. In Amsterdam, 60% of inner city trips and 40% of greater city trips are taken by bike, and the percentage of people able to do this will only increase as e-bikes become more affordable and popular.
Of course bikes aren't going to work for all the people all of the time, but they can make a huge contribution if we want them to. Think of all that petrol we as a country wouldn't have to import, and imagine what we could spend that money on instead. Great for local businesses (except petrol stations)
I'll give you that, you may need slightly higher fitness or an e-bike in Auckland. However, I hear the same complaints about cycling even here in Christchurch where we are also flat as a pancake and have a far better climate than Amsterdam (~82 days with precipitation vs 132, 600mm annual rain vs 840mm, 2070 annual hours of sunshine vs 1660).
It comes down to the layout though. You can get around all the main areas in Amsterdam in 30 minutes on a bike, with little to no strenuous effort. Plus if it rains they have ample trams, trains, and buses that can all take a bike. Not that they need to, because most of them are home in 15 minutes.
Auckland is the very definition of an urban sprawl and has little to no other transport options. Most people would be a 90 minute slog to get to and from work. Then you need showers, get changed, etc...
The issue you have is that cities here are designed around cars, or just poorly planned in general.
We need an entire redo of all our major cities. Similar to what Europe experienced in WW2. Although given Christchurch's attempt. I simply don't think we have the collective brain power to do it.
No need to walk:
I clicked on that, but was expecting this https://www.youtube.com/watch?v=h1BQPV-iCkU
To address your concern of lazy people driving cars instead of biking and walking is to ban private cars. Plain and simple. Why be so sneaky about it and make cars a luxury for the rich?
Also, fuel costs does not only affect people who drive to work in big cities. It affect the cost of every item that is moved around. And there is a rippling effect to these costs that amplifies the additional cost as the items change hands.
Trademe has now broken under the weight of New listings hitting the market. A request for some assistance from the interest.co.nz readership.
The search facility for New Zealand now reads and is stuck at 'over 32,000 listings' - apparently it will show no more detail on the exact number!
Now either,
a) it has temporarily broken because of the speed in growth of available stock
b) they need to change their coding to allow for all the listings that are flooding the market to give an honest portrayal of what's happening. (I find this quite strange because David mentioned that he had figures from history that showed much higher numbers in the 2008/2009 downturn, so it seems unusual to me that the numbers are not showed now)
c) They have taken the decision to hide the reality of what's happening from the general public and possibly me.
Now I am sure that it is one of the former and that Mr Jeffries will have it sorted by the end of the day when everyone else in the Country starts asking, 'How come it's got stuck at 32,000 Mr Jeffries are you trying to hide something from us?
Very interesting. I took a look, and a real number is still displayed for each region. I added up the number of listings in each individual region, which came to 32,028. A bit more roundabout, but gets the number you are looking for, and might be more meaningful if you were to track the listings by region to get a more granular view of the changes.
I could write a quick script that picks up these values daily if you'd like...
33488 on realestate.co.nz is likely a better site for that indication (as it is owned by the RE agencies, and so they all list on it, whereas not all list on TradeMe).
Although on realestate.co.nz you don't get any private (owner-direct) listings.
https://www.realestate.co.nz/residential/sale?by=featured&ql=20
160 for sale in Palmy - not much more than a months worth of sales.
Was 750 in 2008-2010 - And this corresponded to around a 10% drop in prices as people on fixed rates of 9% came unstuck during rising unemployment and liquidity crisis due to GFC.
Prices in Palmy now up around 40% from then - not too much out of step with what HH incomes are up over that period - yet unemployment below NZ average (and around half peak due to GFC) - Kiwisaver is also new since then - meaning 40k deposit for a 10% up to 400k for any couple who has been contributing minimum to kiwisaver since inception - Hence the current 10% annual price gains still being seen in Palmy -
I have a 150sqm house that has insurance for 400k just to rebuild - land 600sqm+ - 200k worth - So 600k replacement value - still can be sold for 400k today - over 100k up on what I paid - but still below replacement value (which is one of Martin Norths -the bear of all bears- favourite metrics to assess under/over value of second hand housing stock)
400k just to live in a provincial town with a huge drug and violence problem, and a severe lack of police.
What a bargain! What a future for the next generation - getting assaulted and threatened up by scumbags as they walk home.
Why not recommend Whangarei while you're at it.
Amazing - Big Real Estate has apparently conspired to affect Trade Me to confuse the public but not the site they actually own.
mfd
I think you may be giving them too much credit for being that organised. it's far more likely to be the banks than the real estate companies, although both will be major contributors to most of the press through their advertisements.
A bit like these TV adds. Who has the most to lose from a falling market? it's not the real estate companies, their not holding the debt.
https://www.youtube.com/watch?v=9khstFJD3R8
https://www.youtube.com/watch?v=tsAO5yVeEO8
Nic
I dunno, I still haven't seen any knock-out data showing that prices are actually falling, other than small real-terms falls in Auckland and Christchurch and minor variations which could be seasonal. No skin in the game but I'm watching keenly. I'm not sure why a conspiracy would have kicked into action to fight against something that isn't happening just yet (or at least which hasn't shown up in the data yet)
https://www.interest.co.nz/charts/real-estate/barfoot-auckland
https://www.interest.co.nz/charts/real-estate/median-price-reinz
https://www.interest.co.nz/charts/real-estate/qv-house-price-index
Nic, as a coder from way back when, the answer may be as simple as their use of an integer datatype which maxes out at 32,768 or thereabouts. One of those cases where the original coding crew looked at the data environment and thought - 'Nah, they'll Nevah Evah get past x', and then in effect constrained their code to 'x'.
Or it may be one of those cascade issues, where the original query is fine but the intermediate or UX layers choke after x.
It will take a paid-for Discovery session, a few weeks of work at $250/hr, and a good sandpit to test it all out in. BTW, I'm not volunteering - too many moving parts....
Why Chris Hedges Thinks The American Empire Has Lost Control... And Its Failure Is Imminent
https://www.zerohedge.com/news/2018-09-24/why-chris-hedges-thinks-ameri…
That's a really interesting interview. I don't normally enjoy Hedges (have found some of his speeches and writing a tiresome word salad at times) but I can't really dispute much of what he says here (although haven't read Gladwell's book, so don't about that part).
He''s definitely right about the Democrats. As Michelle Wolf put it at the White House correspondence dinner, "It's kind of crazy that Trump was in touch with Russia when Hillary wasn't even in touch with Michigan."
Cool link there Andrew, thanks for that. The gloom is a bit too much for me, but I particularly liked these bits:
Let’s be clear. The Democratic Party under Bill Clinton transformed itself into the traditional Republican Party, and the Republican Party moved, was pushed, so far to the right it became insane. The Democratic Party is a creation of the better-educated, more enlightened wing of the billionaire class, those who don’t want to be identified as racist, misogynist, homophobic Islamophobes. But fundamentally, the economic structures and imperial structures remain untouched because the Democratic Party, like the Republican Party, depends on corporate money to exist. So figures like [Nancy] Pelosi or [Chuck] Schumer have power within the party because they control the money and which candidates get the money. They’re the bag people, and they are acutely aware that should they institute real electoral reform—purging corporate money from the system—they wouldn’t hold political power. However decayed the ship of state is, they are not going to give up their first-class cabins. The Democrats’ entire electoral strategy is to hope that Trump implodes.
The Democratic Party has long abandoned working-class America. And the sense of betrayal on the part of the Democrats was deeper because traditionally the Democrats had been at least open to the interests of labour. That was all abolished under Bill Clinton, who—like Hillary—understood astutely that if they did corporate bidding they would get corporate money. The political spectrum in the United States across the two major parties is now so narrow as to be almost irrelevant. What they argue about are cultural or social issues. But that’s a form of anti-politics. They don’t actually argue about anything of substance in terms of the economy or foreign policy. That’s why you see complete continuity between Republican and Democratic administrations. So the rage is quite legitimate. That was fascinating for me when I was in Anderson, Ind., which is—was—one of GM’s epicentres. After NAFTA, carmakers could move to Mexico and pay workers $3 an hour without benefits. According to the old UAW officials, their members voted for Sanders in the primary but then voted for Trump in the general, because they weren’t going to vote for Clinton. They were fully aware that their city, their lives, their families, their ability to make an income that could sustain them, was taken away from them by the Democratic Party machine. Oh, and when I say complete continuity, one caveat—Barack Obama’s assault on civil liberties and levels of deportations of undocumented workers were actually worse than Bush’s.
Yes, thanks for the link - can't disagree with any of that. It is amazing how little policy discussion there is in MSM USA - the people have become rather stunned mullets - consuming their unique brand of sordid reality-TV theatre with Trump hosting the show and Ellen playing the other side of prime time.
But, Trump isn't the "elite" - Ellen is!
interesting doco on the UK banking industry, sorry forgot link
https://www.youtube.com/watch?v=np_ylvc8Zj8&feature=youtu.be
Philippines is an interesting one to watch. Dirty Harry's not seeming particularly effective at managing the economy.
https://www.rappler.com/thought-leaders/211285-analysis-reasons-philipp…
Interesting within this analysis is the role of a fuel tax in a country that imports all its oil. One would think such a tax will have an inflationary effect here in NZ too. As I've always maintained, putting in a fuel tax to avoid increasing rates on folk who have received hundreds of thousands to millions in betterment from the surrounding city is very poor option.
The overnight HIBOR rate, the cost of borrowing Hong Kong dollars unsecured by collateral, spiked higher nearly two weeks ago – right on schedule. On September 13, it was almost 2% and remained at that elevated level through yesterday. Today, the overnight rate fixed at nearly double that, 3.85%.
The Hong Kong Monetary Authority, the city’s currency board, which has acted as a de facto central bank this year given what’s happened with HKD, refused to comment publicly. They would only note privately, in emails obtained by several local media outlets, that “market participants” were watching “elevated interbank rates.”
They would have to given what’s happened to the currency:
http://www.alhambrapartners.com/2018/09/25/your-semi-annual-golden-week…
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