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Bernard Hickey talks with Marcus Lush on Radio Live at 6.50 am about Fletcher Building's profit warning and 12% share slump; House prices firm in central Auckland

Bernard Hickey talks with Marcus Lush on Radio Live at 6.50 am about Fletcher Building's profit warning and 12% share slump; House prices firm in central Auckland
12th Oct 11, 6:58pm by Bernard Hickey
<p> Bernard Hickey and Marcus Lush talk every weekday morning just after 6.50 am about business, economics, markets and personal finance.</p>

Every weekday morning just after 6.50 am I talk with Marcus Lush on Radio Live about the latest news in business, markets, economics and personal finance.

I usually send through suggestions the night before or earlier in the morning.

Sometimes we veer off into other areas or pick up on things that happen overnight.

But here's my suggestions as of 9 pm this evening. I'll update later with a link to the audio. 

Marcus,

1. Fletcher Building has warned of a 10% fall in first half profits and a stalling of full year profits because house building is very slow and the rebuild of Christchurch has been delayed. Fletcher's shares fell 12%, which was more than it fell after Lehman Brothers collapsed.

This is a bellwether for the building sector and for the Christchurch rebuild. This will make it harder for the government to reach its jobs and deficit targets. See more here in our article.

2. We're still a housing market with bits tacked on rather than a fully functioning economy, so the latest figures are interesting.

Figures from the Real Estate Institute of New Zealand and Quotable Value showed only modest sales volumes in September despite the arrival of spring, but the figures also showed prices nudged higher nationally, mainly because of strong price growth in central Auckland suburbs and in Christchurch. See more here in our article.

3. Here's a good news story. Lanzatech takes steel mill waste and turns it into ethanol. It has just won a deal with Virgin Atlantic to provide low carbon jet fuel.

It employs 50 research scientists in Auckland. See more here at Stuff.

cheers
--
Bernard

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19 Comments

by  Wolly  |  13th Oct 11, 6:24am 1318440291

 Isn't it funny how the reserve bank bosses all seem to be singing the same tune!

"Next week’s inflation figures are likely to show the cost of living has risen again, to around 5 per cent. Already, basic-rate taxpayers must earn an impossible 6.25 per cent to get a real return. Below this, their savings are essentially worth less each year.

Savers are the sacrificial lambs paying for the greed and mis-management of the past. Yet while the economy stagnates,(NZ is not much better) bankers are expected to get even bigger bonuses this year (oh yeah we know about this). To compound matters, it is not as if savers approaching retirement have large mortgages and so can benefit from historically low interest rates.

This week, figures revealed the average cost of a first-time buyer mortgage fell to its lowest level since the banking crisis began. Again borrowers prosper while savers are hammered. And soaring inflation is also good for those in debt — like the government — as rises in the cost of living help wipe out the value of what you owe."



 http://www.thisismoney.co.uk/money/news/article-2047987/JAMES-CONEY-Savers-pay-price-economic-gloom.html#ixzz1aaa502YA

Bollard is running a near zirp while allowing inflation way above 3%....if you are a saver, you are bailing out the splurgers..you are saving the bank's arse...you are being screwed.

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by  Nicholas Arrand  |  13th Oct 11, 8:24am 1318447484

There is little alternative to zirp, Wolly. Savings, after all, are to be used in times of need. On a national basis, it doesn't matter who owns them, but where they are. We, the world, is using them now. Sure it affects the return of those who individually have those savings, but the alternative is to penalise the indebted to the point of destruction. The penalty for the indebted will come after we get through this mess; it will their turn to have their 'savings' unlocked. It will come from increased taxation and penalties to keep a lid on asset price appreciation. The world has come too close to death, this time, for it ever to allowed to go there again. But it has to survive, to live on.

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by  Wolly  |  13th Oct 11, 8:58am 1318449487

Wrong NA..."little alternative"..is what you were expected to believe was the case...you have no evidence to support that claim...it was built on spin.

The unbalanced economy is being kept unbalanced to protect political arses. There is no other reason. That was understood by OllyN and explains why he remains convinced that investment in property is a sure bet.

Thieving from savers only serves to ensure there will be no saving in the future.

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by  Nicholas Arrand  |  13th Oct 11, 9:18am 1318450703

I understand why Olly Newland believes what he does, as I do you. But the reality is what we see about us. Agree with or not, it's unlikely that we will see a change, and adapting to what we have is the key. Being prepared for even lower interest rates ~ to come; and asset stabilisation ~ now; and futher falls ~ later, with  be crucial. I understand that OllyN sees this in the context of what happened 'last time', but the accummultaed debt of the last 40 years precludes a re-run. But that's another topic. Whether it's spin or not is immaterial, it's what we are getting. Because this time it truely is, different.

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by  steven  |  13th Oct 11, 9:36am 1318451814

yep....

regards

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by  Wolly  |  13th Oct 11, 9:40am 1318452031

Right...we won't see a change...but that is different to saying there was no alternative! The path we are on was determined by people out to save their political arse and those of their bosses in the banking sector.

OllyN understands this and acts accordingly. He is right to expect the RBNZ and the banks and the govt to strive to protect the property binge economy. That means you can expect a wave of new immigration regardless of which swine are in power.

"Adapting is the key" as you say but be fair NA...don't say there was no alternative.

Only a handful of countries have reserve bank policies aimed at truely encouraging saving and it is these economies that we borrow from. They are living off us. Good luck to them I say. But why the bloody hell cannot we be in their camp!

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by  Nicholas Arrand  |  13th Oct 11, 9:46am 1318452364

Little alternative, sir, little...but point taken :)

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by  Wolly  |  13th Oct 11, 9:51am 1318452715

You and I have alternatives NA....and we exercise them...we shift our capital offshore...we earn from lending out our savings...we have no financial stress other than to decide where to park the millions...we even move ourselves to better places...just ask Gummy!

It's a sad conclusion to come to but this country is buggered. All the peasants have is the endless flow of spin spewing from wgtn, with nothing but promises from liars to hold on to...and every three years they get a super dose of the shite.

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by  Nicholas Arrand  |  13th Oct 11, 10:04am 1318453467

Quite. Which is why we are 'off' on 25/11. The Government is caught in that nasty void between what-they-know and what-they-can-say; there is no poitical milege in saying' we are doomed" etc. That may be spin, but it's always been that way, and whoever is 'in' or whatever political system we have, it's unlikely to change. It's for that very reason that I try to focus on' what's going to happen"; as I am sure you do. And to me, the situations I saw playing out from mid 2007 onwards, haven't changed, except for the worse! New Zealand is indeed going to have a very tough time, and probably most don't know it. And maybe I'm 'running away'. But that is part of the strategy that I have adopted to 'see me through'. You, as you say, have that same choice, but have decided to 'stay put' and have bought back into property. That may be the right thing for you, or Olly or a million other households here - but not for me.

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by  Kate  |  13th Oct 11, 10:11am 1318453914

And the sad thing, NA, is - if you and Wolly are representative of the statistics - it's the young NAs going and the older Wolly's staying.

If I got your actual ages/stages in life wrong - apologies!

 

 

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by  Nicholas Arrand  |  13th Oct 11, 10:20am 1318454428

Wolly and I are similar in ages, I'd guess, Kate. But at 58, and having chosen come to the greatest country on earth when I was 40, I am sadly following the majority of my new wider, and younger, family. Almost exclusively to....Aussie! The young are going with their hopes and talents; the older are following with their money.

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by  goNZ  |  13th Oct 11, 12:41pm 1318462862

good luck in Oz but if the Greens continue to get their way with  Gillard and introduce  anti-mining,anti-coal  policies,you name it -  it will kneecap their economy.  Same here of course- Rena hardly on the rocks and greens are trying to ban offshore drilling

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by  skudiv  |  13th Oct 11, 9:19am 1318450748

Banks only make money from the debt of others, so to keep profits rolling in for the banks they must protect the borrowers.  Why would they give a stuff about depositors when they have a reserve bank that will lend them deposits at 2.5%? 

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by  steven  |  13th Oct 11, 9:36am 1318451763

Olly is wrong....he see's inflation as I know you do....the odds however are severly stacked for a mega Depression not seen since the 1870s....ie 20 or 30 years, way worse and longer than the GD.

In this scenario property is worth 50% less than it is today, maybe as much as 90%.....holders of cash on the other hand, ie savers (asuming banks dont all default) will ne "laughing" if having some $s while there is no economy to speak of and huge un-employment can be considered a laughing matter....I wouldnt say so myself.

Savers save for a rainy day....thats if you are sensible....interest is a bonus, its the utility of having cash that a saver should consider paramount....and not interest by itself.

"alternative", there is no alternative, this is how our economy works.

regards

 

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by  David George  |  13th Oct 11, 9:39am 1318451970

"Thieving from savers only serves to ensure there will be no saving in the future".

Sounds reasonable Wolly but there is a strong counter trend going on; the Boomer cohort, seeing low returns on their financial assets and slim prospects of a liveable Government Super., are inclined to save even more and pay down debt. It's a real catch 22, instead of the zirp encouraging spending it's encouraging saving!

I think Olly is highly irresponsible encouraging folk to get into property at this time. After forty years of debt growing at twice the growth in the economy the chances of another burst of high octane credit growth are remote and super dangerous if it did occur.

 

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by  steven  |  13th Oct 11, 9:30am 1318451446

"The world has come too close to death, this time, for it ever to allowed to go there again."

I wish.....I see no real evidence that this will happen....it took the actual Great Depression for the voter to insiston sufficient bank regulation to be put in place......until we collapse into the 2nd Long Depression I dont see that being done....it will be avoided because there are no other games to paly when there isnt the resources to expolit to make real wealth.....so the financial gambling will just carry on.

regards

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by  Wolly  |  13th Oct 11, 9:46am 1318452395

Economies are like households. There are fools deeply in debt, unable and unwilling to save, ignorant on financial matters, wasteful in every way. Then there are the few that have no debts, that saved by not splurging, that lend money to the local fools. The fools are constantly boosting the savings of the few but are too stupid to see it.

The few that saved have access to free capital to invest in education and in areas that generate even more capital. Needless to say, they sleep easy at night and enjoy a much higher quality of life.

Guess which group NZ is in?

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by  David George  |  13th Oct 11, 10:10am 1318453837

You've got to wonder about Fletchers. They buy US formica right at the peak of the housing constuction boom, then an Aussie outfit as they're entering a tail spin and now a plant in China where there's millions upon millions of unoccupied housing units.

The Fletcher "kiss of death"

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by  Bernard Hickey  |  13th Oct 11, 1:23pm 1318465423
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