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 RATE CHANGES
HSBC raised fixed home loan rates today. And late yesterday ANZ matched ASB (who had earlier matched Westpac).
TERM DEPOSIT RATE CHANGES
Nelson Building Society raised term deposit rates today.
NOT DIRE AT ALL
ANZ's monthly Truckometer metrics for August shows that the Light Traffic Index (car activity) bounced +5.4% in August, while the Heavy Traffic Index (trucks and commercial) jumped +7%. But ANZ says it’s likely that illness and weather are currently bigger factors in the monthly ups and downs than macroeconomics. They also observe the the trucking index suggests it’s touch and go whether GDP even grew at all in Q2. They are picking it did at is +0.4%. And they say with two months of data in, Q3 is currently looking more positive.
BETTER NOW, BUT NOT SO GOOD LATER
Retail activity revealed via electronic card transactions actually came in better in August than some analysts were expecting. And certainly better than in July. But as Stats NZ points out, it is far more difficult to assess these results because the usual seasonal patter isn't normal. The year-ago base was also distorted. But households have become increasingly concerned about the economic outlook, and increases in consumer prices and mortgage rates are squeezing their purchasing power. They have become increasingly cautious about their discretionary spending. And analysts like Westpac say they expect to see spending softening through the back part of 2022 and into the new year.
BETTER EARNINGS PROSPECTS
Fonterra signaled that its 2022 earnings will be at the top of the range it had earlier indicated (30-45c/share). And it said they expect the 2023 earnings to be much higher at 45-60c/share. Higher prices up the product portfolio is driving the improvement. Yesterday, before the announcement the Fonterra share was worth $2.62. After the announcement today it is worth $2.70 and a +3% rise.
NO MORE CHINESE CPI INFLATION
The inflation impetus has leaked away almost completely in China. The annualised CPI rate over the past 4 months is just +0.6%, even though they are reporting annual CPI inflation of 2.5% to August and down from 2.7% to July. Most of those gains happened in the early part of those years. Food prices are stable now. But lamb prices are rising again in August even though they fell in the last 12 months. Beef prices are hardly rising.
DEFLATING PRODUCER PRICES IN CHINA
Producer price inflation has vanished in China, replaced by deflation now. Its been a sharp retreat and prices are falling at a rate exceed -14% pa now. For the full year to August they are up +2.3%, and that is far below the annual +9.5% in August 2021. Current rates are 18 month lows. This sort of data makes sense of the sinking yuan exchange rate.
ANOTHER HUGE (EFFECTIVE) LOCKDOWN?
This weekend is Moon Festival (Mid-Autumn Festival) in China, usually a time of much travel including return to home villages (or a late holiday break). But this year Authorities have issued warnings about unnecessary travel as pandemic cases grow relentlessly, across many provinces.
SWAP RATES RECOVER
Wholesale swap rates are probably firmer today across the curve. Our chart will record the final positions. The 90 day bank bill rate is up +1 bp at 3.54%. That is now its highest since May 2015. The Australian 10 year bond yield is now at 3.65% and up +9 bps from this time yesterday. The China 10 year bond rate is unchanged at 2.65%. The NZ Government 10 year bond rate is now at 4.01% and up +5 bps from this time yesterday and now the same as the earlier RBNZ fix for this bond which was unchanged at 4.01%. The UST 10 year is now at 3.31% and back up +8 bps.
EQUITIES MAKE FURTHER RECOVERIES
Wall Street ended up +0.7% on the S&P500 in their Thursday session. Tokyo has opened up another +0.4% and heading for a weekly gain of +2.2%. Hong Kong is up a very strong +2.2% but even that wont be enough to book a weekly gain. But Shanghai is up +0.7% in early trade and their weekly gain is heading for +2.3%. The ASX is up +0.5% today and heading for a +0.8% weekly rise. And the NZX50 is flat today, tracking for a +0.5% weekly gain.
GOLD HOLDS
In early Asian trade, gold is up +US$3 from this time yesterday to US$1,718/oz.
NZD RECOVERS FURTHER
The Kiwi dollar is now up another +½c to just under 61 USc. Against the AUD we have slipped almost -½c to 89.5 AUc. Against the euro we are still at 60.5 euro cents. That all means our TWI-5 is up at 70.5 and up +20 bps from yesterday. But it is still down -20 bps from a week ago.
BITCOIN RECOVERY EXTENDS
Bitcoin has recovered some more but it is minor, now at US$19,440 and up slightly less than +1% from this time yesterday. Volatility over the past 24 hours has been modest at +/- 1.1%.
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32 Comments
What kind of bullshit it this...600%??? Energy companies Meridian, Mercury & Genesis have shown a combined increase in net profit of $1.3 billion. Meridian is up 55%, Mercury 42% & Genesis is up from a $31 million profit to $221 million, a near 600% increase. Link
Your recall is terrible. Maybe you were thinking of the Labour Chinese sounding names policy?
"The government has guaranteed that New Zealanders will own 85 percent of Genesis when it floats on the NZX on April 17, including the 51 percent it will continue to own, although there is no prohibition on private shareholders selling shares to foreign investors following the float."
"
The Crown will receive total dividends of $440 million from the three electricity generators for the year to June, when they are all 51 per cent owned by the Government, compared with $485.8 million two years ago when they were all 100 per cent tax-payer-owned.
Thus the Crown has received $4308 million from the partial sale of these companies yet its dividend income has fallen by only $45.8 million. This is a remarkably positive outcome for taxpayers.
...
Mostly to do with record rainfall causing lakes to be at maximum operating limit. The evening peak (6-9pm) is normally the most expensive part of the day - yesterday wholesale prices during this period were about 7-12c/kWh. Overnight rates fell as low as 1.4c/kWh.
Dead right. It was supposed to lead to lowered kWhr prices for those on high usage tarrifs. Can you imagine that happening????
Megan Wood needs her head read.
My response was going to be: scrap my wood burner (my power bill is identical summer to winter), and get a heat pump. I will now do no such thing.
Genesis's profit increase was entirely due to change in fair value of their electricity swaps and options.
Derivatives were a negative $87 million last year, positive $139 million this year. They have to buy a lot of renewable power because their thermal generation is so damned expensive now thanks to carbon credits - I guess this means they have to update the fair value of all those contracts adding volatility to the NPAT without affecting anything else immediately.
Meridian's profit was boosted by gain on sale of the Australian business.
Mercury were boosted by buying Tilt and part of Trustpower.
Meaningless headline.
Producer price inflation has vanished in China, replaced by deflation now.
China CPI 2.5% y/y in Aug versus expected 2.8% and prev 2.7% China's PPI 2.3% y/y in Aug versus expected 3.2% and prev 4.2% Predictably there will be claims this is a lie, only those saying so still don't grasp that China is in receipt of very cheap energy relative to West Link
This lot is done: European metals industry warns of ‘existential threat’
A Japanese onsen (hot spring) resort that cost JPY4.17 billion to develop during Japan’s bubble years sold last year for just 11,000 Yen (approx. USD100).
https://japanpropertycentral.com/2022/09/resort-that-sells-for-11000-ye…
Is that where we are headed? The demise of land banking.
Remember Steve Bradbury, the Aussie ice skater who won a gold medal when everyone fell over? He was part of a consortium that bought a beautiful hotel in a Japan ski resort for <USD100K. You can walk to the lifts. Gorgeous place that I think belonged to Mita Industries.
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