Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
No changes today.
TERM DEPOSIT RATE CHANGES
The NZ Firefighters Credit Union has trimmed some selected term deposit rates.
ANZ LAUNCHES GOOGLE PAY
ANZ NZ Visa credit and debit card customers with compatible android smartphones can now use Google Pay to make contactless payments. Google Pay replaces ANZ’s goMoney Wallet, ANZ’s current Android mobile wallet, which will be phased out from October.
NEVER ENDING FUEL TAX INCREASES
ACC is proposing a +12.1% hike in the average motor vehicle levy for road users, including a +1.9c per litre increase for petrol.
ON LINE RETAIL STILL OUT-PERFORMING
New Zealand’s total online retail spending in August was +8% higher than in August last year. Spending at local online sites was up +9% on the same basis. This is +4% higher growth rate than for spending at traditional stores. Food was again a strong category, with a solid showing from Grocery stores offsetting a softening in online sales in the “Other Specialised Food” category. Online spending at international merchants was up +7%. But some of that is because the NZD continues to track softer than a year ago making overseas goods more expensive for Kiwi’s.
A SUCCESSFUL COOPERATIVE
The Tatua Co-operative Dairy Company today reported its 2017/18 financial results, and declared a cash payout of $8.10/kgMS to farmer suppliers/shareholders after retaining $0.56. Sales were $357 mln in the year to July. Profits were $105 mln after tax and the retention is probably about $8 mln. Their gearing is $37%. The cash payout is up from the prior year of $7.10. There are 114 supplying farms to Tatua. The comparisons with Fonterra (payout = $6.69 and zero retentions) and Westland ($6.07 after a 5c retention) are stark.
LESS CONFIDENT
Farmer confidence is sliding, mainly on the back of poor results for the two large dairy cooperatives.
UP OR DOWN
The RBNZ reviewed the OCR today and it will remain at 1.75% 'through 2019 and into 2020'. It is being kept at an 'expansionary level for a considerable period', with the RBNZ Governor sticking to his line that the next move could be 'up or down'. This happened after the US Fed hiked its official rate again, opening up a +50 bps gap between them. The US Fed is likely to hike one more time in 2018.
INSURANCE DATA
New data about the insurance industry was published today by the RBNZ showing net premium growth to June up only +2.1% pa, which is far lower than the previous year's growth of more than +14%. The industry also reported healthy investment income growth.
TURNERS RAISES NEW FUNDS
Turners Automotive Group (previously Dorchester Finance) has raised $25 mln as secured subordinated fixed rate bonds. more than 80% is from new investors. These bonds are for three years and pay 5.5%, similar to the rates offered by some finance companies.
NOT STARS
The latest Times Higher Education university rankings is a big comedown for New Zealand universities. Auckland and Otago are in their 200-250 group, the AUT and Canterbury are in their 250-300 group, Victoria and Waikato are in the 400-500 group, and Lincoln and Massey are in the 500-600 group. No-one is starring. Apart from the obvious bias of putting the two top UK universities at the top (this is the only one of these types of rankings that does that), the big movers are the top Chinese universities. American universities hold most of the top spots.
SWAP RATES DOWN
Swap rates are down -2 bps for terms 2-5 years, and down -3 bps for longer terms. The UST 10yr is softer at just under 3.06%, a -4 bps drop, with the UST 2-10 curve down under +24 bps. The Aussie Govt 10yr is at 2.71% (also down -4 bps), the China Govt 10yr is at 3.67% (down -3 bps), while the NZ Govt 10 yr is at 2.68%, and down -4 bps as well. The 90 day bank bill rate is down -1 bp at 1.90%.
BITCOIN STABLE
The bitcoin price is a little firmer at US$6,492, a gain of +1.6% on the day.
NZD MARGINALLY SOFTER
The NZD is marginally softer at 66.5 USc after working its way though the US Fed and RBNZ rate reviews. On the cross rates we are little changed at 91.6 AUc, and 56.6 euro cents. That puts the TWI-5 at 70.1.
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22 Comments
The country's eight universities are at risk of a financial shock and should consider forming a single University of New Zealand, says former Massey University chancellor Russ Ballard...rnz.6 th sept....
Surely if the eight became one administered structure, then the collectively counted research and other inputs would push it back into the top 100??
Apart from administrative savings and gaining more pulling weight internationally for Academic staff quality and international students.
One university. Multitude of campuses, locations, disciplines and courses. Real clout.
https://www.radionz.co.nz/news/national/365831/former-chancellor-propos…
Try Albany not CBD. Public transport runs in two directions - into city full and empty returning to the outskirts.
A city centre permits an efficient interaction between businesses one to another and to the services they need: lawyers, accountants, media, advertising, etc. So how do students fit in? They should be interacting with one another but not lawyers, accountants, etc. They are only in locations very near to the centre because of historical reasons.
Oh, so only 2 hours each way from Manurewa or Bucklands beach, a mere hour and a half from Henderson. That is going to be helpful to any bright stars from Aucklands poor in south Auckland. God help the Pukekohe potato farmer's son that wants to move up in the world.
How about a big fat no.
Two campuses: Albany & Manurewa - the public transport system will adapt to meet the new demand. I have travelled from Takanini to the CBD - it is not an ideal journey for anyone and that includes students. Having campuses in areas where land prices are lower would encourage cheaper student accommodation being built. OK fewer Auckland students living with their parents but an advantage for all the out f town students - cheaper rents and walking not paying for travel.
Note 35% of students do not use public transport - they use cars. https://www.greaterauckland.org.nz/2018/09/26/ats-student-travel-survey/
To be candid, I think they are scared. After all, why make the first adjustment? The answer is any rebellion in federal funds. If EFF continues to behave independent of policy levers, corridors, and all moral suasion, then that sends the same chaotic signal as chaotic money markets have been sending since the initial breakdown in August 2007. In other words, if the Fed can’t control federal funds, what can it?
Nothing.
https://www.alhambrapartners.com/2018/09/26/chicken-hawks/
- "The RBNZ reviewed the OCR today and it will remain at 1.75% 'through 2019 and into 2020'."
- "The NZ Firefighters Credit Union has trimmed some selected term deposit rates."
No joy or positive outlook with historic low interest rates for those pensioners who put a little cash nest egg away to afford a couple of simple extras in their old age.
And sadly, not expecting any sympathy nor likely to hear similar laments to those of FHB sufferings. Nor from mortgage holders with historically low mortgage interest rates.
P.S. Before you fire off with a rant about boomers; it is a little tongue-in-cheek. However, do give it some consideration as it is not only FHB suffering; not all pensioners are (ex-)fat-cat landlords, it is just that we don't hear much about this issue.
Princes of the Yen
Thanks.
For anyone that has an interest in credit expansion, it's effects on markets and the outcome this is a fantastic watch that Andrewj has understated as a suggestion. If you want a snap shot of the history of bubbles and have an attention span that is longer than a goldfish you will find the hour and a half invested worth it.
No it doesn't give the answers to what the Australasian future holds but it will make you question influence. It may make you question $100 billion increase in housing debt over the last 7-8 years. it may make you question American interest rate policy. It may make you question Chinese credit creation and it's impact around the world. It may make you question over $5 billion of lending to housholds every month in NZ.. (annually a 20% rate to GDP - appreciating that there are redemptions and its not net lending - but it is a high turnover to GDP) - If you don't even get anything at all from it, hopefully it will just make people start asking some questions, which is sadly missing in NZ mainstream media. Show your friends see what they think.
Nic
Don't cry for me Argentina. Inflation fears and a collapsing currency prompt a deal with the IMF to the tune of $57 billion.
https://www.telegraph.co.uk/business/2018/09/26/argentina-announces-571…
London's bunged up housing market, total value of sales 20% down on 2016 peak and 4% lower than total value in 2007.
Nationally the number of home purchase mortgages fell to 42,581 in August, a drop of 4.2pc on the year according to industry data from UK Finance. It compares with a peak of more than 70,000 in August 2007.
https://www.telegraph.co.uk/business/2018/09/26/bunged-housing-market-s…
Looks like the buyers strike is hitting a few major cities across the world - or is it a credit issue?
Tax changes coming into effect for residential leasors
https://www.which.co.uk/money/tax/income-tax/tax-on-property-and-rental…
https://www.gov.uk/government/publications/restricting-finance-cost-rel…
https://www.theguardian.com/money/2017/apr/01/mortgage-tax-relief-cut-d…
Imagine the impact in NZ on residential leasors (and the attractiveness of property as an investment) if they introduced this ...
Don't forget that the average UK house price, even given their proximity to Europe, diverse range of businesses, cheap cost of living in terms of food and commodities and 5th - probably 7th largest economy in the world has a national average house price of (Halifax figures for April 2018) £227,000..... NZ$448,600 .(at our weakened current exchange rate) today.
Are we looking a bit overpriced on that international metric?
Andrewj
Appreciate the recommendation, just finished watching and it is a review that anyone with a questioning mind should take a look at. Attention spans will be the issue for some I think. I hadn't heard of Richard Werner until a couple of weeks ago on interest.co.nz, I think following another recommendation of yours, but he is obviously a man who has had a great deal of practical experience of bubbleconomics and banking.
Many thanks
Nic
Nic, don't miss 'the siders web'
https://www.youtube.com/watch?v=np_ylvc8Zj8&feature=youtu.be
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