Here are the key things you need to know before you leave work today (or if you already work from home, before you shutdown your laptop).
MORTGAGE/LOAN RATE CHANGES
No changes to report today.
TERM DEPOSIT/SAVINGS RATE CHANGES
Nothing here today.
AN OPTIMISTIC BUNCH
Grant Thornton New Zealand’s latest survey of over 200 business leaders and decision makers has revealed "a significant uptick in optimism" for the coming year despite many toughing it out in current economic conditions. Asked about optimism around economic conditions over the next 12 months, survey participants cited being very optimistic (2%), and slightly optimistic (51%) compared to 4% and 32% respectively this time last year. This is despite a tough year where many businesses surveyed have struggled to grow revenue. In 2023, 50% of survey respondents had grown revenue by more than 5% during the previous 12 months, compared to just 40% this year..
RAPID DESCENT
Air NZ says that since its February profit guidance of $200-240 mlm, they have seen a fast softening in revenue conditions in April both domestically and on the North American market. They have revised their profit forecast for the full June 2024 year down to $40-50 mln
BANKS TOLD TO MANAGE CLIMATE RISKS TO PROTECT FINANCIAL SYSTEM RESILIENCE
The Reserve Bank (RBNZ) says banks should actively manage climate-related risks to protect the resilience of the financial system to other shocks. The comments come as the RBNZ issues a Bulletin article on its 2023 climate stress test results. The RBNZ says its 'Too Little Too Late' scenario didn't threaten bank solvency, as the big five banks stress tested were able to maintain their capital ratios. However, it did highlight climate-related risks have the potential to significantly reduce bank profitability, raise risk-weighted assets and reduce shareholders’ returns over the medium to long term, the RBNZ says. This means "climate related risks need to be actively managed to protect the resilience of the system to other shocks."
LEAVING MONEY IN
To get deals done, sellers of SMEs are increasingly having to finance part of the transaction themselves, according to SME business brokerage ABC Sales. They say it used to only be a component in one out of every 100 deals they did, but now it is a factor in close to 10% of their business sales, particularly those involving a younger demographic of buyer.
ON HOLD
The People's Bank of China left benchmark lending rates unchanged at the April fixing, in line with market expectations. The one-year loan prime rate (LPR), the benchmark for most corporate and household loans, was maintained at 3.45%. Meanwhile, the five-year rate, a reference for mortgages, was retained at 3.95% for the second straight month.
CHOCOLATE UPDATE
Cocoa prices leapt up through an all-time record US$5000/tonne in early February. Three weeks later they hit US$6000/tonne. Two weeks after that it was US$7000/tonne. US$8000/tonne came just a few days later. Then an accelerated surge began in earnest, hitting US$10,000 at the end of the first week of April. Today? well this price has reached US$12,218/tonne. Where to from here? As hard as it is on chocolate consumers, I hope the West African farmers are getting some long-delayed rewards.
CREDIT CARDS SUGGEST DEBT PROBLEMS MIGHT BE RETURNING
The latest data on credit card transaction and balances is very lackluster. The only two points worth noting are that transactions on credit cards issued overseas and used here are down -8.7% from March a year ago. And that the proportion of our credit card debt that incurs interest is now up to 53.9%, a one-month rise from 53.0% in January to its highest level in two years.
SWAP RATES FIRMER
Wholesale swap rates are likely to be a little higher today, perhaps +5 to +10 bps. Our chart below will record the final positions. The 90 day bank bill rate is little-changed at 5.65%, a level it has hovered around for more than 30 days. The Australian 10 year bond yield is up +2 bps at 4.37%. The China 10 year bond rate has dipped to 2.26% and a new all-time low. The NZ Government 10 year bond rate is up + bps to 4.99% and the earlier RBNZ fix was at 4.90% and actually -3 bps lower. The UST 10yr yield is up +4 bps to 4.66%. Their 2yr is firm at 5.00%, so the curve is now -34 bps and less inverted.
SOME EQUITIES HOT, SOME NOT
The NZX50 is finding it tough to muster any enthusiasm today but at least prices are firmish, up +0.2% in late trade. Air NZ is actually up +0.9%. The ASX200 however is up a full +1.0% in afternoon trade. Tokyo has opened its Monday trade up +0.7%. Hong Kong is up a very impressive +2.4%. Shanghai is unchanged at their open however. Singapore is impressing, up +1.6%. The S&P500 futures are signaling that Wall Street will open tomorrow up just a modest +0.3%.
OIL SLIPS FURTHER
Easing Middle East tensions have seen the oil price ease lower in early trade this week. They have slipped -50 USc to just US$81.50/bbl in the US, to US$86/bbl for the international Brent price.
GOLD SLIPS BACK
In early Asian trade, gold is down -US$16 from this morning, now at US$2375/oz.
NZD SORT OF RECOVERS
The Kiwi dollar has risen from this morning, now at 59.2 USc and up +40 bps. Against the Aussie we are up very slightly at 91.9 AUc. Against the euro we are firmish at 55.5 euro cents. This all means the TWI-5 is now at 69.1 and up +30 bps to where it was Thursday..
BITCOIN ON HOLD
The bitcoin price has meandered today from this morning, now at US$64,743 and slipping a minor -0.2% since then. Volatility of the past 24 hours has been a very modest +/-1.1%.
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87 Comments
And that the proportion of our credit card debt that incurs interest is now up to 53.9%, a one-month rise from 53.0% in January to its highest level in two years.
Well at least the Government saw that coming and allowed loan sharks back out of the pen..
On the right track..finally
Caption says “suggests debt problems might be returning.” Not sure if they ever went away, or if they did they didn’t go far. Along with the crash dive of the OCR on the commencement of the pandemic lockdown there was simultaneously a scarcely muted message from the then government and financial officialdom that people needed to borrow to spend to save the economy. Would be surprised if the aftermath of that had by now dissipated, and one would hardly think rekindling any such motivations would have positive outcomes in general.
BANKS TOLD TO MANAGE CLIMATE RISKS
This means understanding your lending book and CLIMATE risks to that lending.....
Think mapping your loan book to physical locations and running a sea level rise or 1:100 flood event across the book etc...
Its not fantasy , some have this already.
As insurance backs away from insuring some risks bank who have lent to that space suddenly have that risk sitting with them via default.
We are talking billions of dollars of high value coastal property that banks will back away from lending too, think Omaha or Papamoa sea side bachs etc...
And entire areas like Petone... its massive and the RBNZ know it. banks will have to report on the risk in their books going forward
"We are talking billions of dollars of high value coastal property that banks will back away from lending too, think Omaha or Papamoa sea side bachs etc..."
Does John key still own a Bach in Omaha? No, he sold in 2019, always one step ahead of the game.
https://natlib.govt.nz/records/23222411
Very strange. US Mortgages are structured so as the Insurance Premiums are annually paid by the Bank holding the Mortgage, as are the rates. Thus an American's monthly payments cover PITI ( principal, interest,property taxes, insurance ). When you change Insurance carriers they notify the bank.
They probably know borrowers are still on the hook for the loan even if the place is wiped out, so ensuring a borrower has insurance is just a "be seen to be pragmatic".
I also wonder if "jingle mail" in America might have something to do with the banks over there wanting to ensure insurance premiums are paid. "Oops, house burnt down. Here's the keys".
that was certainly true in the past, but I believe less likely in the future.
what happens if you have a mortgage, but as a result of flood risk (low lying land)or EQ (unreinforced masonry)or fire (surrounded by trees)or a similar hazard that insurance is cancelled, what does the bank do now.
'to protect the resilience of the financial system to other shocks.'
Can't be done, at this level.
Re cocoa - can I suggest we are facing ultimate scarcity here too? It was always going to happen. Maybe the extra gets to the farmers, but I'd bet not. Farmers the world over are price-takers, and the Third-World is less able to fight back than the First. It'll be speculators and middle-men who pocket anything - but it's a matter of not enough land. Even if we've ripped out all the rainforest, there's still not enough land.
From the people over at Inside FMCG. They do note that the cocoa farmers are shafted by the likes of Mondelez.
An increase of US$5,000 per tonne means an increase of 50 US cents per 100 grams.
A typical chocolate snack weighing 45 grams includes about 15 per cent cocoa, so it contains seven grams. This means an increase in the cocoa price of US$5,000 per tonne is only capable of increasing the cost of a typical chocolate snack by about four US cents, which is six Australian cents.
https://insidefmcg.com.au/2024/04/05/cocoa-prices-have-soared-but-it-sh…
Jfoe downthread, makes sense.
The trend is for too many wo do nothing productive, to try and parasite on those who do. There are orders-of-magnitude more financial 'transactions' than real ones, every day.
Of course they will amplify real shortages, and of course we can expect oscillations thereafter, as they do their ignorant thing.
But if absolute scarcity is the real, base-line driver?
You sure as hell won't ascertain that; you're pushing on a piece of limp spaghetti and expecting to get signals through it. Makes it worse when you conflate, linguistically.
In early Asian trade, gold is down -US$16 from this morning, now at US$2375/oz.
Was expecting possible strong buying today out of Asia after the US House of Representatives approved a bill allowing the transfer of frozen Russian assets to Ukraine. However, things have been relatively sober and the bill must be approved by the US Senate.
Anyway, the Global South has been warned about who wears the trousers and should be positive for gold going forward.
Paris is officially a cycle city
A recent survey has found that cyclists now outnumber motorists for trips from the outskirts of Paris to the city centre, a huge change from just five years ago. The revolution is thanks to an increase in cycleways and numerous anti-motoring measures, including the closure of some major roads to motorists.
I wonder if we could fly Simeon there for Mothers day (with his Mum) to have a look?
Fantastic - I had a lovely time cycling along the river in Paris a few years ago. Very easy to get around. Imagine the hundreds or thousands of lives that will be saved from improved air quality, too.
I'd imagine this could happen fairly easily in a city like Christchurch with pretty decent cycling infrastructure now, and being a fairly small flat city.
Those huge chunks of metal are popular because you can write them off as a tax expense. They look like they should be useful, although most never see a scratch let alone mud, and you can chuck in the wife and kids + the dog and surf board on the back, while enjoying your GST refund and taxpayer subsidised depreciation. What's not to like?
I'd imagine this could happen fairly easily in a city like Christchurch with pretty decent cycling infrastructure now, and being a fairly small flat city.
For sure. By the way, there are 'non-virtue signaling' cyclists who do not pretend they're saving the planet from certain destruction and are also partial to petrol head culture. Some of us despise people like the Greens member who turns cycling into propaganda opportunities and photo shoots.
The term has all but lost its meaning these days, after years of being coopted to scare older folk with the new "reds under the bed",
The woke would last 5 mins in communist countries like China, Russia, Cuba, or Vietnam.
But the reality is as Maher points out, one can be liberal or progressive but not be woke.
Sure, there's loads of reasons to cycle. Mine come from natural frugality and a Scientific mind for optimising - half a tonne of metal is clearly the wrong tool for the job of moving myself and a bag of shopping around the place. The background level of exercise is very helpful too.
half a tonne of metal is clearly the wrong tool for the job of moving myself and a bag of shopping around the place.
Nothing wrong with trucks and cars. They serve a purpose. You can't expect teams of South Asians on bicycles to get your milk, coffee, and bread to the supermarket.
Libertarians opposing bike lanes have got it all wrong.
Nothing, not even a petrol car, represents freedom better than a bicycle - park it anywhere, drive it on the street, no need to register it, pay nothing to ride one in taxes (except the GST paid on purchase).
Libertarians opposing bike lanes have got it all wrong.
By law, you pay registration fees for bicycles in Japan. Police will check to see if bikes are registered and if the rider is the rightful owner. Those fees are used for infrastructure.
I guess all the virtue signaling NZers who think they're saving the planet because they ride a bike will be willing to pay annual registration fees, right?
I guess all the virtue signaling NZers who think they're saving the planet because they ride a bike
In your tinfoil-wrapped head, does a bike emit the same amount of carbon as a car or ute? Is that what the geniuses at Briebart news are saying about simple old bicycles these days?
Is that suggesting that Japanese should not pay registration for their bicycles because they emit less than an ICE vehicle? The purpose for the registration is to collect revenues for cycle infrastructure and to prove ownership. Has nothing to do with politics.
NZ does not seen mature enough for a proper cycling culture if the virtue signal is more important than the practicalities.
The vast majority of my colleagues bike, because it's much more practical in our situation. Most people do it for convenience, cost, exercise. What makes you think everyone is virtue signalling? We all pay rates and taxes to contribute to cycling infrastructure as that is the mechanism NZ uses at the moment
What makes you think everyone is virtue signalling?
I ride bikes and don't virtue signal so not everyone is 'virtue signaling'. F'more, there will be many people who aren't deluded into believing they are saving the planet by riding a bicycle. And using Japan as an example, I very much doubt they feel 'righteous' by riding a bicycle.
I ride my bike to work because it is significantly less of a pain in the ass than driving in. Previously when I was living slightly further out I caught the bus because that was also less of a pain in the ass than driving in. I am almost certain the vast majority of people make their transport choices based on what is most convenient to them rather than the bizarre reasons you are claiming above.
Fuck of JC you're talking shit
"The purpose for the registration is to collect revenues for cycle infrastructure and to prove ownership. Has nothing to do with politics."
Registering your bike in Japan costs $7 NZ dollars and last 10 years. It has nothing to do with paying for bike infrastructure, it's to do with reducing theft, so they can track you bike if it gets nicked.
We spend a bit of time in Europe these days, mostly France. Our wee collapsible e-bikes are great. Even in the big cities like Paris and Lyon its easy to get around with sensible things like cycleways into oncoming traffic so we can see each other
Europe s flat... Wellington isn't. The debacle that was "Lets get Wellington Moving" proves that.
But Christchurch is another story.
What we can learn from Europe is that you don't take away from the many to give to the few (sorry NACT). Parallel infrastructure works best. It takes time and investment.
Hard to ride a bike without use of the legs and arms.
Imagine if you were denied access to most education, denied access to employment, denied access to GPs and hospitals and denied access to community spaces and parks. Then get back to me and talk about how cycling infrastructure is more important then essential living needs access for the disabled.
NZTA, WK research states in decades transport access for the disabled has not improved and in many ways gotten worse. With most of it defunded so it costs more then 20x the equivalent cost charged to an able bodied person. How Kind
All the arrogant ableist morons seem to forget not everyone is able bodied and vehicle access is needed for disabled people who should have equal rights to access the community. Or you can just do what Europe does, kill most disabled people in a genocide spanning countries, then imprison most of those left. Thanks for the reminder of yet why it is advisable to avoid the same attitudes in NZ. We already tried genocide of disabled people with forced sterilizations, imprisonment and torture to death, yet some of those pesky disabled kids survived and started demanding rights to access the community on an equal basis. Wanting accessible transport modes and removal of physical barriers between roads and footpaths. Hence Paris is a pretty discriminatory and inaccessible place for disabled people.
I know how dare disabled people want to exist and retain access to the community such as low cost diesel and petrol vans with hoists and ample parking everywhere. Including multiple car and van parks in every public space to the amount of at least 10% of the population visiting the space and park they should have equal rights of access to visit. So a venue with 200 people should have 20 mobility parks. Don't see that yet. But do see that more then 50% of disabled people cannot access work and around 50% of disabled youth cannot access education and training.
Everytime someone posts something about cycling on here you pipe up with some anti-cycling rant based on the fact some disabled people can't cycle. What's the deal here?
There are disabled people who NEED bicycles to get around because they can't drive, PT doesn't work for them and walking is not an option.
Also what the actual fuck?????
"Or you can just do what Europe does, kill most disabled people in a genocide spanning countries, then imprison most of those left"
More disabled access is removed by cycleways and in case you have no clue when you remove disabled access you remove their ONLY access. It is not like people can suddenly grow wings and fly over barriers or create parking by parking on footpath spaces as they do in many parts of europe. You can still walk instead of cycle yet you are too lazy. Who should we prioritize funding for: those who are literally denied access and denied participation in the community or those too lazy to walk with multiple forms of transport already available to them. Seems like we are spending hundreds of millions on the later with no real return increases as they 1. already had access available and multiple forms of transport and 2. by these developments we are removing often the ONLY access and transport for a group already vulnerable and with no other options.
By discriminating and removing the only access you are literally removing their jobs, access to medical services and housing. Lets do the same for you and see how you feel one you have been denied these things for over a decade.
Also protip learn basic history. It is well known European countries actually has massive state sanctioned genocides and imprisonment of disabled people, alongside medical experimentation. It is also well known that many of these practices continue today. Hence much of Europe was designed only for able bodied people with a little access still available to fit elderly people. It is also well known this happened in NZ up past the 80's with mass unmarked graves. Rape of disabled children was common practice they started sterilizing the girls as frequently there would be unwanted pregnancies (rape of the boys, including with tools and objects that could also break and cause infections inside was less of an issue, if the kid died, they died end of story). It was just a done thing. Hence how pissed off many of the survivors still are in NZ. You may think it was just Nazis but actually these practices transcended political and generation boundaries. Ignorance of history just means you are literally likely to repeat it and given the removal of access to the community many more disabled people are being pressured into institutionalization again.
Known common features of current institutionalization & group housing: neglect, food deprivation, medical neglect, wounds from being left in feces and urine, physical abuse, sexual assault and rape, isolation and limited contact with outside communities, financial abuse etc. etc. Do you need more issues with current disability services that frequently occur or is that list enough for starters. If the following experience of care facilities for disabled people were not so common you too might consider forgoing all your access to daily transport in your community as well eh https://www.youtube.com/watch?v=lb_14RWfj-I <- 60minutes where family broke law to illegally record treatment of daughter in group housing (also against the law to record and collect evidence of abuse in NZ, & most deaths in NZ of disabled people are recorded as natural regardless of what lead to them). Even though severe cases of assault and sexual assault occurred no convictions were held and those involved can continue to work in the industry in future around other vulnerable people. Because assaulting disabled people who cannot fight back was just a fun "joke". Hence for years of fighting no major action or punishment or redress occurred. It is even worse in NZ where we do not even have the right to sue and ACC denies coverage to many disabled people for physical accidental injury or that sustained during assault.
Hence transport and access to the community might be more important to disabled people who are likely to lose access to their jobs, homes, and only source of outside contact for medical and social connections then for you who could stay home for three months, with a non means tested 80% wage benefit, and thought that was the worst thing. Lockdown levels would actually represent an increase in access for disabled people (and it did if only remotely), even though many could not access essential services or public parks. Jobs, education and GPs became more accessible only for after lockdown that was stripped away again.
I hope the West African farmers are getting some long-delayed rewards.
Nope, sorry. What is going on here is the classic amplified price spike. Say what now? What happens is this:
- The price of a commodity goes up because of a normal demand > supply event (bad disease year).
- Big commodity markets make significant use of hedging instruments to protect themselves from just this scenario. So, they start to call those in. This sends hedging costs up higher.
- Higher hedging costs push wholesalers to put their prices up.
- Futures markets get excited about higher prices - and start gambling on that
- Everything spirals for a bit before crashing and the only people that win are the ones that got the trade right
Meanwhile, cocoa farmers just keep cranking cocoa out from their small holdings, and paying off the debts they have racked up during bad times.
The demand curve for cocoa looks fairly solid.
They shouldn't end up like some discretionary products where the high price causes demand to collapse and either never recover or take a very long time to recover. Unless of course someone comes up with a substitute ...
Looks like the IMF has thrown in the towel on the ol' rat poison. They now claim Bitcoin has become a necessary financial tool for preserving wealth amid financial instability. According to their latest report, residents of countries with restrictive financial regulations are turning to Bitcoin to move capital across borders more freely.
So the IMF and Blackrock have changed positions dramatically, but sentiment still pretty frosty at my water cooler and at the BBQs.
https://www.imf.org/en/Publications/WP/Issues/2024/04/05/A-Primer-on-Bi….
Citi sounds the alarm bells on Aussie banks. This reads like paid media designed to spook the politicians to me. No need for the Boomers to be rattled. Franking credits are safe.
Investors should sell their shares in the country’s major banks because antagonistic politicians campaigning against higher profits will force large lenders to pass on more of the Reserve Bank of Australia’s expected interest-rate cuts, hurting earnings.
That’s the view of brokers, including Citi’s Brendan Sproules, who has advised clients that they should sell out of the banks.
He downgraded Westpac and ANZ, bringing it in line with the “sell” ratings it has on Commonwealth Bank and National Australia Bank.
https://www.afr.com/companies/financial-services/we-downgrade-all-banks…
so Macquarie are getting out of vehicle lending (5 BIL book) and I think WPAC exited last week, got to think Heartland benefits ??????
M Bank to focus on mortgages
if banks start falling you can always kick em in the guts and say they have sector exposure to pooperty
Coffee is cheap as chips. Just don’t buy it in a cafe. A good quality coffee costs 30c beans plus milk (maybe 40 cents) + labour and overheads works out to 6 bucks. That’s a ripoff. Just make it yourself. Coffee could go up 10-20% and still be cheap. You are paying the overheads only and most can’t make a proper coffee anyway.
"I hope the West African farmers are getting some long-delayed rewards."
Actually it is the massive outbreak affecting whole plantations so the cocoa supply is being strangled as the only way to beat the virus outbreak is to kill the orchard plants and any plants connected to them. Following that the massive illegal mining that will strip the orchards.
African farmers are not getting rewards they are losing their entire livelihoods built up around generations. The prices rising are not a good sign for them, it is a sign many more families are going without their income with the loss of their farms and land.
Given this is more then a decimation of cocoa supply it is a significant shock to the market. But the only ones benefiting from the price rises are those in the middle, not those losing their orchards & land, not those with remaining orchards. The loss of supply is not as bad outside of Africa but like all plant viruses in locations with poor biosecurity it spreads quickly.
The cacao swollen shoot virus disease (CSSVD) is among the most economically damaging diseases of cacao trees and accounts for almost 15–50% of harvest losses in Ghana. This virus is transmitted by several species of mealybugs (Pseudococcidae, Homoptera) when they feed on cacao plants. Other plant species also act as reservoirs for the virus, so even eliminating the infected cocoa plants may not prevent transmission unless all infected neighbouring plants and forest are removed as well. Hence the scale and the difficultly tackling the issue. It is not just mealy bugs that transmit it but contact with other plants as well as transmission via seeds.
https://www.aljazeera.com/gallery/2024/3/30/chocolate-prices-to-keep-ri…
https://www.intechopen.com/chapters/68225 <- Management of the Cacao Swollen Shoot Virus (CSSV) Menace in Ghana: The Past, Present and the Future
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