A review of things you need to know before you go home on Wednesday; Heartland changes a rate, letting fee now illegal, successful LGFA tender, what cash is used for, swaps firm, NZD up, & more

A review of things you need to know before you go home on Wednesday; Heartland changes a rate, letting fee now illegal, successful LGFA tender, what cash is used for, swaps firm, NZD up, & more

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

MORTGAGE RATE CHANGES
No changes to mortgage rates today either. It is in a holiday season lull.

TERM DEPOSIT RATE CHANGES
Heartland Bank has launched a new 'special, 3.25% for 4 months. This is a +15 bps rise from their under-$20,000 minimum deposit rate, and a +5 bps rise from their prior over-$20,000 rate. The minimum for this new Heartland Bank offer is $1000.

NOW AN ILLEGAL FEE
Letting fees are prohibited from today after new legislation came into effect. However the Government says in the long term the real solution "is to increase the supply of housing, and end the shortage that is driving rents up". It’s now unlawful for any person to charge a tenant a letting fee, or any other fee relating to the tenancy. If someone does charge a letting fee, the Tenancy Tribunal may order exemplary damages of up to $1,000. The new unlawful act is comparable with the charging of key money for which there is also a penalty of up to $1,000.

LGFA BOND TENDER SUCCESSFUL
Today the LGFA offered four separate maturities in a $190 mln tender. The resulting weighted average accepted yield was 2.73% and the coverage ratio was 2.2x. Today's yields were a little lower than for the equivalents in the last tender by about -15 bps but to be fair this just brought them back to levels in the tender prior to that. For today's offer of $30 mln for the 15-May-2021 tranche, one bidder alone picked up the whole parcel. Since 2012 the LGFA has tendered $9.8 bln on local authority debt.

IGNORING WALL STREET
Overnight European markets were all up strongly, mostly more than +1%. Wall Street started its session overnight optimistically but ended unchanged. However markets on this side of the Pacific didn't take their signals from the US. The NZX is up +0.8%, the ASX is up +0.6%, Tokyo is up +1.5% and Hong Kong is up +1.5%. Shanghai is also up +0.3% but slipping. Wall Street was reacting to its capricious President, fearful of his latest outburst.

PHEW!
Japanese machine tool orders in October were up +4.5% above the same month a year ago. This is worth noting because the September order level was down -7.0% on the same basis, and fears were that that signaled a sharp drop in trade orders. But it didn't persist.

UNWANTED DIVISION SHINES
ANZ's unwanted finance company UDC Finance has posted a record net profit after-tax of $65.3 mln for the full year to 30 September 2018, a +6% rise on the prior financial year. Lending growth was up +11% taking its loan book to $3.2 bln. Lending for vehicles rose +18% to $217 mln, commercial lending grew by $50 mln, a +4% rise, and equipment dealer lending was up $12 mln, a +6%. ANZ was unable to find a buyer for this business and has since put the divestment project on hold. The $65.3 mln profit represents just 3.4% of ANZ NZ's $1.9 bln tax paid profit in the past year. With a loan book of $3.2 bln, that makes UDC smaller than both Heartland Bank or SBS Bank.

WHO USES CASH THESE DAYS, AND WHY?
The RBA has been investigating how banknotes are being used. It has AU$76 bln in this anonymous 'paper' in circulation. It found that 15–35% are used to facilitate legitimate transactions; roughly half to three-quarters are hoarded as a store of wealth or for "other purposes", of which they see 10–20% hoarded domestically and up to 15% is hoarded internationally. They reckon between 4% to 8% are used in the "shadow economy" and between 5% to 10% are lost. (The RBNZ has NZ$6.1 bln of notes in circulation.)

SWAP RATES FIRMER, FLATTER
Wholesale swap rates are a little firmer today again with the two year up about +2 bps, the five and ten year durations up +1 bp. The UST 10yr is up +4 bps to 2.89% but their 2-10 curve has slipped to +11 bps. The Aussie Govt 10yr is at 2.46% and unchanged, the China Govt 10yr is down -2 bps at 3.31%, while the NZ Govt 10 yr is at 2.51%, up +4 bps today. The 90 day bank bill rate is unchanged at 1.98%.

BITCOIN EASES SLIGHTLY
The bitcoin price is now at US$3,335 and little changed from this time yesterday.

NZD STAYS HIGH
The Kiwi dollar is a little higher at 68.9 USc. On the cross rates we are still at 95.4 AUc and at 60.8 euro cents. That puts the TWI-5 at 73.7.

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31 Comments

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"....and between 5% to 10% are lost."
So I assume that that means that this Oz cash is permanently lost. ie Not just stolen.
This would include house fires, boats sinking, someone stashing it somewhere and forgetting where it was or passing away.
I can't really think of any other circumstances.

eaten by leprechauns

Down the back of the couch....

$10k wrapped tightly in gladwrap and never opened. Called bricks, used by the underworld. That'll account for a chunk of it...

"Wall Street was reacting to its capricious President, fearful of his latest outburst."
Trouble is that I don't think Donald has ever been accountable to anyone as sole owner of Trump Organisation. He has never had to put a case to anyone to win them over, could be totally autocratic, totally competitive for his own agenda, considerate of no one else, savagely buried anyone who opposed him, and accountable to one. Therefore it is not surprising that he is "capricious" - but that is just a very mild description.

In Trump's latest missive he seems to think people would revolt if he was impeached. I'm sure other tyrants and narcissists have believed this only to find they are not as popular as they thought they were. There may be a party instead...

II Duce springs to mind....

Cohen said at his sentencing, "time and time again, I felt it was my duty to cover up his dirty deeds."
So one can add "lack of integrity".

I don't think Cohen, convicted of lying to Congress, who once said he’d take a bullet for the president, has any credibility.

Mr Sulu, turn on the deflector shields..

Zachary,

I have been in bed for the last 6 days with a bad back and it’s no fun. However,you can still cheer me up with your posts. Have you ever,even once,considered the possibility that the person without credibility is your hero
Trump.
You are the perfect example of confirmation bias at work,

With a % of state Governors also right wing extremists you have to wonder.

In any event Congress can impeach him as many times as they want, the Republican Senate will not vote for it, at the moment anyway. Especially as some of the more moderate Republicans would might have voted yes have retired.

What it will come down to is Trump will be un-electable in 2020 as he'll be "hung" by the court of public opinion as will the GOP. Assuming of course he has done anything significantly wrong, as bad as is suggested, ie high treason worse than Nixon really and the Republican Senate then almost didnt turn on Nixon.

https://www.ampcapital.com/au/en/insights-hub/articles/2018/December/The... by Dr Shane Oliver Head of Investment Strategy and Economics and Chief Economist, AMP Capital

Key points:
Australian growth has slowed again. The housing cycle downturn and its impact on the economy will likely see growth constrained to around 2.5-3%.
As a result, spare capacity is likely to remain significant, keeping wages growth and inflation low.
The RBA is likely to cut rates in 2019 and the housing downturn will likely see Australian shares continue to underperform global shares.

Trump is just trying to do what he promised to do and what the voters wanted him to do. The opposite of capricious.

But a majority of people didn't vote for him......

Nevertheless it is noble of him to pursue his campaign promises. He could just shrug his shoulders and say "oh well" like most politicians do.

"Noble" and Trump should not be used in the same sentence.

He should just lie and say the wall has been built...save a fortune and most supporters would believe him.

Shoot some flyby footage of the border area, flick that and a few hundred thousand bucks to weta workshop and get a new-fangled digital virtual wall? the spud farmers in Idaho will sleep easy at night in the knowledge their great leader has secured the borders...

Nothing Noble about this man, it comes down to survival for himself, nothing more nothing less.

And the majority of people in the US wanted their government to borrow loads of money to give their companies tax cuts? If so they are even more stupid than I suspected.

Nevertheless it is not capricious to be exasperated by the idiots that surround you.

So its not the Chief idiots fault that he surrounds himself with lesser idiots?

So you admit the Trump administration is full of idiots.

Actually the Whitehouse is seriously under-staffed, ie not that many idiots in the country willing to work there.

Yet a) Trump didnt get the biggest % of voters and b) only something like 29% of voters want a wall mainly it seems the ignorant, redneck racist % and that is not enough to get him re-elected.

He also I think promised to bring back coal jobs, that isnt going to well either.

"optimists did no better or worse than pessimists. Only one pattern emerged consistently.
How you think matters more than what you think.”

Thx! That made my evening....

Could be goodbye to Theresa May tomorrow morning; no confidence vote called.

https://www.rte.ie/news/brexit/2018/1212/1016666-brexit-uk/

Nope, shes survived, and now doesn't have to worry about another no-confidence vote for 12 months due to the party rules. Might have even been staged to acheive that outcome.

I had that sneaky thought also;possibly a subtle way of determining support for the upcoming Brexit vote,which they will have to pass to avoid an early trip to the dole queue or early retirement.
Or a trip to the Tower.

This should give TTP a conniption.. Joe Wilkes (Nic Johnson) talks about Palmy North property.
https://www.youtube.com/watch?v=NA2-hwxsiic