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A review of things you need to know before you go home on Monday; no rate changes, retail sales soft in Q2, retail inventories rise, Black Friday strong, swap rates unchanged, NZD soft, & more

A review of things you need to know before you go home on Monday; no rate changes, retail sales soft in Q2, retail inventories rise, Black Friday strong, swap rates unchanged, NZD soft, & more

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.

RETAIL SALES VOLUMES WEAK
Retail sales were uninspiring in the September quarter, and it was primarily much higher petrol prices that helped drive the value of retail higher. Values were up a bit less than +4.0% year-on-year with fuel up +18.4%. Hardware and building supplies were up +6.3%, department store sales up +9.3% (distorted because of the way the Warehouse reports), and liquor sales were up +9.4%. But these same sectors showed different volume rises, with the overall up just +2.7%, the lowest year-on-year gain since 2012. Fuel volumes were lower by -1.3%, hardware was up +5.7%, and liquor up +7.5%. Electronic goods were up +12.1% in volume, even though sales values only rose +2.5%.

RETAIL SALES:INVENTORY MISMATCH
While retail sales growth was low, of more of a worry is that retail inventories are rising much faster. This buildup - up +5.2% - now takes retail stocks to over $8 bln, a worry if the selling values and selling volumes are not rising as fast. In fact, this is the first time in six quarters that this mismatch has happened.

A NEW RETAIL EVENT EMERGES
Perhaps saving the situation, the weekend retail activity was very strong however. "Black Friday" is emerging as a powerhouse retail event and this year it achieved as high a sales level as Boxing Day did in 2017. Over the two days Friday and Saturday, Paymark is reporting that spending was +14.5% higher than last year. They say spending growth was very strong in some of the provincial centres, including Whanganui (+17.0%) and Gisborne (+16.7%), although not so strong further south at South Canterbury (+7.0%) and Southland (+7.0%). Black Friday and Boxing Day are now of the same order of magnitude - and both are growing in popularity. Black Friday is now a 'thing' in New Zealand.

MARKING TIME TODAY
After falling very sharply on Friday, down -2.5%, the Shanghai stock exchange has opened without a large movement either way. The ASX200 is down -0.6% as bank stocks take a hit, and the NZX50 is little changed. It seems like these markets are waiting for signals from Wall Street. However, we should note that the iron ore price fell sharply today, down -2.1% in one session.

DASHBOARD NOTES
The RBNZ dashboard data was out today and we are now looking through it in detail. As a first observation, it appears there is very little change to net interest margins at any of the main retail banks, although TSB did manage to improve slightly. The average of all the main retail banks is 2.15% and that is unchanged. TSB improved from 1.8% to 1.9% NIM. Another item we noted is that Heartland Bank's total assets now exceed those of SBS Bank. And BNZ has how grown to have total assets of $100 bln (or just a fraction below). That makes it still the second largest bank, after ANZ at $159 bln. Our bank metric tool is here, with the same data.

LAST CALL ?
In Australia, their central bank is declaring a turning point in the place for cash in their payments system. They now regard banknotes and coins as 'niche' and say cheques will be phased out. Contactless payments are now more than 60% of all their electronic transactions. Still, they are careful to say that banknotes may be around a while yet.

DID YOU KNOW ?
Could you save $23 per day? If you could, and do it every day, relentlessly (and just put the money in an account earning just 3.5%) you would have $100,510 in ten years. Just saying. Yes, $23 per day. Only catch is you have to do that every day, with no skipping.

SWAP RATES SOFT
Wholesale swap rates are essentially unchanged today, although the ten year is down -1 bp. The UST 10yr is still at 3.05%. The 2-10 curve is still at +23 bps. The Aussie Govt 10yr is at 2.65% and up +1 bp, the China Govt 10yr is down -1 bp at 3.41%, while the NZ Govt 10 yr is at 2.68% and that is down -2 bps. The 90 day bank bill rate is unchanged at 2.00%.

BITCOIN FLAILS
The bitcoin price is now at US$3,955 which is a rise from this morning where it opened at US$3,668. It got down to US$3,494 before popping up over US$4,000, and now dipping to US$3,955. It has the feeling of a market that is lost.

NZD MARGINALLY SOFTER
The NZD is softer today at 67.7 USc. On the cross rates we at 93.6 AUc and at 59.8 euro cents. That puts the TWI-5 down to 72.3.

This chart is animated here. For previous users, the animation process has been updated and works better now.

Daily exchange rates

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Daily benchmark rate
Source: RBNZ
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End of day UTC
Source: CoinDesk

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7 Comments

A no brainer; if I had Bitcoin I would be getting out asap.
There again, getting into Bitcoin was a no brainer as previously posted. Those who have done well out of Bitcoin have long gone and can be found on the French Riveria.

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Even then they would have had to punt over half a decade ago to get something decent out of the bubble, it would also require them to put in quite a bit back in the day considering the limitations at the time. However those getting the most out of it were the large scale miners & exchanges, (even our group were finding small scale mining not worth it when bigger players came in).

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Will the NZ market follow Sydney's off a cliff? ASB economists advise the bad news is historic correlations do indeed exist. https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12…

ASB suggest there are a few variables which suggest it (might) be tempered this time. I'd say, let's conclude in say 18 months time just how tempered it was.

"Typically the New Zealand market responds to Australian house price movements, with a peak impact after about six months. On that basis the big slump in the Sydney market in the past six months doesn't bode well for Auckland. Smith says "lower Australian house prices look set to dampen those in New Zealand".

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Does becoming an Interest.co supporter remove ads? I don’t personally mind ads on a website but these pop up in your face ads are getting ridiculous.

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Yikes. We don't want to be doing that. Can you please screenshot the offending ads and send to me at david dot chaston @ interest.co.nz

Also, any details of device, browser (incl version), and anything else you think relevant.

We want to sort this out quick.

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Thanks David. Have sent an email.

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No it doesn't (I'm a supporter) but it helps Interest : )

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