
Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
No changes have been advised today - yet.
TERM DEPOSIT RATE CHANGES
None here either.
A NEW LEASE OF LIFE?
Residential sales volumes came in substantially higher in October than the same month a year ago, but that was an unusually low benchmark. In fact, October 2018 volumes sold were almost exactly the average for an October over the past seven years. In Auckland, they were -13.5% lower than that seven year average even if they were +15% higher than October 2017. Despite the rising level of unsold properties listed on the various property portals, median prices are still growing at over +6% nationally, although there is virtually no growth in Auckland over the past year. In Christchurch the growth is a minimal +3%, while in Wellington it is +14% where it has been up more than +10% pa for all of 2018. In addition to Wellington, seven regions - and they are worth identifying here; Northland, Bay of Plenty, Hawkes Bay, Manawatu, Tasman, Nelson and Otago - all have recorded median price gains of +10% or more. And we are not tending to see longer 'days-to-sell' data but remember this metric should always for read as 'days-to-sell-at-the-final-agent'. (And because the better data was primarily away from Auckland, it seems unlikely that the impending foreign buyer ban is having much impact.)
YOUNG & STRUGGLING
Stats NZ published estimates for the Māori population in 2018 today which shows this ethnicity makes up 15% of the resident population as at June, up from 14% 25 years ago but down slightly over the past three years when it reached 15.6%. The median age of this population is very young at 25 years and far below the overall population median age of 37 years. But the Māori median is up from 21 years 25 years ago while the overall median is up from 31 years. Given that there likely were about 100,000 Māori when British sailor James Cook arrived here, it is sadly clear that the original inhabitants haven't exactly flourished over the intervening centuries.
VALE JOHN ANDERSON
Sir John Anderson, the chief executive of the National Bank from 1990 until its takeover by ANZ in 2003, has died aged 73. He was a well respected business leader, going on to other important roles in business, government and sports after banking.
PRIVATISING THE BENEFITS, SOCIALISING THE LOSSES
Nice idea, but ... In Australia, the Federal Government signaled it will establish an Australian Business Securitisation Fund, which will invest up to AU$2 bln in packaged small business loans from smaller banks and non-bank lenders. The funding will come from Commonwealth bonds and the investments will be treated as assets on the Federal accounts, which means the scheme will not increase net debt but will expose their taxpayers to the resulting bad debts.
AUSSIE WAGES RISE FASTER THAN INFLATION
And staying in Australia, hourly pay rates across rose +2.3% in the year to September, and right on market expectations. That's its fastest rise in three years. Public sector wages rose faster at the rate of +2.5%, private sector wages rose +2.1% pa. (The overall New Zealand equivalent (QES) data has ours rising +2.1% pa but with our private sector rising faster.)
AUSSIE EARNINGS WORRIES
Nothing special to report on equity indexes on Wall Street or Shanghai, but the ASX is down more than -1.2% today on a series of poor earnings reports. And the NZX50 is slipping too, but not so much.
DIRTY DATA
And in other data out today, Chinese industrial production actually rose in October, which wasn't expected. However, retail sales came in surprisingly weak and even below weak expectations. One closely-watch piece of data shows only a +4.8% rise in electricity production. Sadly, Chinese coal production rose +8% and coal imports were up slightly more.
SWAP RATES SOFTER, FLATTER AGAIN
Swap rates are unchanged for two years, down -1 bp for five years, and down -2 bps for ten years. That repeats the softening and flattening we saw yesterday. The UST 10yr is holding at 3.15% today but the 2-10 curve has slipped to under +25 bps. The Aussie Govt 10yr is at 2.73%, down -1 bp, the China Govt 10yr is at 3.50% and unchanged, while the NZ Govt 10 yr is at 2.81% and that is down another -1 bps today. The 90 day bank bill rate is up again to 2.01% and that is a +10 bps rise in ten business days and the largest such rise since 2015.
BITCOIN DIPS AGAIN
The bitcoin price has slipped further today to just on US$6,262, a dip of less than -1%.
NZD HOLDS HIGH
The NZD has actually risen slightly from this morning to 67.7 USc. But on the cross rates we are holding at 93.6 AU, and at 59.9 euro cent. That puts the TWI-5 at just on 72.3 and a five month high.
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11 Comments
"It’s one of those “nothing to see here” moments for Economists trying not to appreciate what’s really going on in China therefore the global economy."
https://www.alhambrapartners.com/2018/11/13/chinas-pooh-lesson/
"It’s not an unimportant qualification, yet it is never one given out by the mainstream media. Who do you think it is that is pressuring WTI futures, or buying up UST’s and German bunds like they are in short supply (they’re not)? I don’t know for sure what either Societe Generale or Morgan Stanley is actually doing, obviously, but it isn’t an unreasonable guess to think both banks’ wide-ranging trading operations are in sync with everyone else’s on the deflation side of things."
https://www.alhambrapartners.com/2018/11/13/disproportionate-representa…
"At the end of June, the crude curve really got out of hand. WTI futures had returned to backwardation many months before, and then the eurodollar/collateral explosion May 29 sapped some crude strength. Over the following month, curve backwardation would become extreme as the benchmark price seemed ready to skyrocket."
"After getting up near $80 a barrel, the price reversed. During the several weeks of weakness, the futures curve remained in steep backwardation – the expectation that the recovery (narrative) would continue whatever any short-term profit taking.https://www.alhambrapartners.com/2018/11/13/approaching-the-point-of-no…"
which comes back to this
https://sputniknews.com/radio_double_down/201811131069763807-brent-crud…
Mauldin: A Worldwide Debt-Default Is A Real Possibility
https://www.zerohedge.com/news/2018-11-13/mauldin-worldwide-debt-defaul…
Andrewj, an interesting read. For all those naive skeptics who say "NZ is not USA" or alike, think again. Look at the bigger picture or risk unthinkable yet totally avoidable personal loss.
"Again, the only way to produce bubbles like 1929, 2000 and today is for speculation to continue despite lesser extremes. That doesn’t mean that valuations have failed. It means that speculation has persisted for longer than usual, and that the devastating consequences of hypervaluation are still ahead. Someone has to remain willing to say that out loud. The financial markets are in a bubble. It will end badly.
Given current valuations, even a return to average run-of-the-mill historical norms would result in a loss of about two-thirds of U.S. stock market capitalization. Meanwhile, any significant recession will likely be accompanied by a wave of corporate bankruptcies in a system where corporate debt is easily at the highest percentage of corporate gross value-added in history, and the median corporate credit rating is already just one notch above junk."
"It was Great to have New Zealand Market analysis, Media here in NZ is influenced a lot by Real Estate Industry, the narrative is that "the property market will always go up, you can never go wrong with property.""
https://www.youtube.com/watch?v=a-fgQ_RaySM
Discussion of the 2008 Property Crash in the UK with Joseph Wilks who was on the front line then. Some interesting observations, and he also discusses more recent events in New Zealand.
"In that context, we saw a spike in September in the interest rate on U.S. dollar loans between foreign banks (“Eurodollars”), relative to Treasury bill yields. After a brief retreat, that spread is widening again. While many observers dismiss this as the result of changes in U.S. money market fund regulations, we observe the same widening of interbank spreads in other currencies (relative to the yields on government bills of the same maturity). A key difference between the two claims is bank default risk, because those interbank loans are essentially funded by uninsured deposits (for example, “Euroyen” are created when investors deposit Japanese yen at non-Japanese banks, and those deposits are uninsured). So we’re seeing some combination of increased demand for interbank funding at foreign banks, and increased reluctance to investors to make uninsured deposits at those banks. This is a concern worth monitoring.
A few quick notes - we’re hearing the perennial arguments about “cash on the sidelines” waiting to gush into stocks. As always, one should remember that every security that is issued in the financial markets has to be held by someone, in precisely the form it was issued as (currency, Treasury bills, commercial paper, stocks, bonds) until that security is retired. What people observe as “cash on the sidelines” is nothing other than a mountain securities that have been issued in the form of short-term money market instruments, and those instruments will remain “on the sidelines” until they are retired. In the meantime, every single one of them will have to be held by someone. They do not “flow” anywhere. They simply change hands, and changing hands doesn’t affect their quantity."
https://www.hussmanfunds.com/wmc/wmc161031.htm
'Tenancy fees' aimed at landlords to replace banned letting fees"
The best of British luck if Landlords think they can pass this cost on to tenants when already charging what they can get away with now.
https://www.stuff.co.nz/business/108595008/tenancy-fees-for-landlords-r…
Landlords, you can either wear it or sell it.
Or find a better property manager, one who provides the advertised property management service (of which managing the tenancy is surely a part) for the usual commission. Letting fees weren't always a thing.
Brexit: UK and EU 'agree text' of draft withdrawal agreement
hey david you have to factor in how much of the population was wiped out early on after Europeans arrived with their many diseases that maori had no immunity for,
Early 19th century
From around 100,000 in 1769, the Māori population had declined by 10–30% by 1840. This was largely due to introduced diseases, and the effects, direct and indirect,
https://teara.govt.nz/en/te-hauora-maori-i-mua-history-of-maori-health/…
Estimates vary, but the Maori population declined further still to 42000 in 1896 census due initially to disease, then also muskets used in intertribal warfare and the land wars.
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