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
None here either.
OCR ON HOLD, WITH DOVISH COMMENTS
The Reserve Bank has left the Official Cash Rate unchanged at 5.5% and says risks to the inflation outlook are now 'more balanced' but there is a limit to the ability to 'tolerate upside inflation surprises'. The NZD fell sharply. The swap rates fell too, immediately following the announcement.
KIWISAVER BALANCES SWELL
In a record shift higher, KiwiSaver assets reached $107.5 bln at the end of December 2023, up +$6.7 bln or +17% in the year. This is the biggest proportional rise since 2021.
A SURGE TO CASH
In contrast to KiwiSaver, life insurance assets have hardly shifted in a year. Life insurers are holding much more cash in their portfolios, in fact they almost doubled their cash holdings to 31% of assets, far and away the most since this data series started. If you know the reason, please note it in the comment section below.
REACHED THEIR LIMIT?
The latest mortgage figures from the Reserve Bank suggest first home buyers might have reached their limit in terms of market share, while investors might be showing some signs of life.
PUBLIC JOBS HOLD UP LABOUR MARKET
Updated monthly employment data showed a solid expansion in January, even despite some questions about data consistency (over education sector hiring). In fact it is strong hiring in the public education and health sectors that are keeping this data rising. Gross earnings were up a full +$1 bln in the month compared to the same month a year ago. That is a +7.7% rise, and represents a solid jump in overall spending power. Of course some will be from an expanding workforce (+2.8%) but the rest is rising pay levels.
STICKY
In Australia, their monthly CPI indicator in Australia stood at 3.4% in the year to January, unchanged from the previous month and less than market forecasts of 3.6%. Still, the latest reading pointed to the lowest since November 2021.
SWAP RATES FALL
Wholesale swap rates fell sharply (more than -10 bps) after the OCR decision. They continue to move around. Our chart below records the final positions. The 90 day bank bill rate is little-changed at 5.71%. The Australian 10 year bond yield is up +3 bps from this time yesterday at 4.18%. The China 10 year bond rate has dropped to 2.39% and up +1 bps. And the NZ Government 10 year bond rate is down -8 bps to 4.84%, while the earlier RBNZ fixing was at 4.87% and up +3 bps from yesterday. The UST 10 year yield is now at 4.29% and up +2 bps from this time yesterday. The UST 2yr is now up to just under 4.69% and so that key inversion is now -40 bps and marginally less.
EQUITY WINNERS & LOSERS
The NZX50 is up +0.3% in late trade today, rising after the OCR decision. The ASX200 is down -0.2% in early afternoon trade. Tokyo has also opened down -0.2%. Both Hong Kong is down -0.2% and Shanghai has opened up +0.3%. Singapore is down -0.5% at its open. Wall Street ended its Tuesday session up +0.2% on the S&P500 index.
OIL RISES AGAIN
Oil prices are +US$1 higher than this time yesterday, now just on US$78.50/bbl in the US while the international Brent price is now at just over US$82.50/bbl.
GOLD HOLDS
In early Asian trade, gold is now at US$2032/oz and unchanged from this time yesterday.
NZD RETREATS SHARPLY
The dovishness of the OCR decision has hit the NZD (which might make imports more expensive if it holds and sets a new trend). The Kiwi dollar has has fallen nearly -½c to 61.2 USc. Against the Aussie we are down -½c too at 93.7 AUc. Against the euro we have dipped a bit less to 56.5 euro cents. That means the TWI-5 is now at 70.3 today and down almost -50 bps.
BITCOIN RISES AGAIN
Bitcoin is still moving up. The price has risen again today, now at US$56,970 and almost a +0.9% gain from this time yesterday. Previously it has peaked at US$67,292 in November 2021. Volatility has faded to a moderate +/- 2.8% today.
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114 Comments
Adrian Orr kind of gets it. In his Q&A, he mentioned that marketing budgets are under pressure because of lower consumer spend. What he doesn't really understand is that TVC advertising spend is under pressure everywhere. Reach and frequency through TV networks is falling. So why should the likes of Nestle hand over big bucks to TV networks for TVC spend? Numbers don't make sense.
Hate to say it but it's not just the journos here. It's the ad agencies, media planners, market research agencies, suppliers, cleaners, and all the trendy cafes in Ponsonby / Grey Lynn. Suspect even a few properties on the market in the bourgeois bohemian suburbs.
I think you are a bit out of touch here J.C...all of the above are steady as she goes from updates today...what are your sources..ah that bloody water cooler again?
It's just my reckon really. But TVC spend is being slashed globally. Money is being spent, but on specific markets where business is scalable. NZ is not scalable. You can only sell so much Nescafe.
I tend to agree. It is quite hard to quantatively assess advertising. Most orgs advertise for brand recognition rather than direct income, as they need to remain visible in a competitive market.
Given the complete lack of competition in NZ, the return is pretty small.
An old company I worked for pulled all advertising after doing some trials. SEO was the more important driver. That was 5 or so years ago, I suspect SEO is an even bigger driver now.
Advertising has moved to "influencers" they will also wear out as people realise they are just corporate mascots rather than the "individual" they claim to be.
I'd agree. Family member involved in Soc Media bangs her head with upper mngt. She can create a marketing tik tok for a few dollars that reaches millions. Yet they spend silly money on traditional add stuff that only reaches granny herald types.
The 'influencers' are the smart ones. They have cut out agents, middlemen, production costs (and exploitation by creeps), run their own lives and if successful, make huge money. MSM make them out as dumb bimbos. They are very smart.
I think there are seismic shifts in the creation and distribution of content and those >35 are the last to see it.
There are plenty of Youtube creators with larger audiences and higher production values than terrestrial TV. There are literally thousands of tik tok and instagram "influencers" earning many multiples of traditional white collar career vocations. Check out 4wd 24/7 on youtube, a million subscribers, massive merchandise range, 20+ staff, absolutely killing it. You don't get lectured to about net zero or diversity either.
You get it. Also, retail media is where all the investment is heading in the US. And it's not just FMCG.
https://www.insiderintelligence.com/insights/definition-retail-media-ne…
In fairness it does seem like the world has lost its way.
Then you remember that humans can and do act kinda dumb - that's why we've developed mystic frameworks for how to live, time and time again, only to forget them.
But that's all something you need to recognize once, not live it.
Meaningful, or effective and well focused?
Not saying National can deliver that, but resources and capacity is always limited, so you start at the bottom and work your way up.
If you needed a plumber, would you pick the one that does what you need, and nothing more, or would you be happy with triple the bill at a lower standard, so long as he represented your values?
Yvil/Jimbo That is where you, and your ideology - are dead wrong.
Not the only point you're dead wrong about; your grasp of energy and entropy is a bit shaky too.
But the whole point of governments, was to do the stuff which - either because of size, or lack of revenue-opportunity - was judged socially beneficial. That is how NZ got built, how our society and culture became what they are - and presumably what we want. We all understood that maybe we didn't use the library as much as others, or use the local public toilets - but we use others when travelling, and a community with a library is a richer community than one without.
Sadly, as that society evolved, the small-minded mantra - economic growth, the market - took hold amongst those who had finagled they way into higher proxy-streams (often the less empathetic, which compounds the problem). They though they could afford anything they wanted, and didn't see why they should 'support' others. It was a shonky argument - many of them live off the taxpayer, via accommodation supplements supporting their RE ponzi-contribution activities.
Something to think about, perchance?
No, he doesn't. Peters, oddly enough, does. The problem is in the word 'consume'. Luxon is of a style which thinks in terms of selling stuff - including news and, more pertinently, facts. The problem is that convenient posits sell more that inconvenient posits, so left to 'the market', falsehood wins.
We need information - real, investigated, journalistically-delivered. My heroes are the likes of Fisk, Hersh, Pilger; folk of intellectual and moral courage. Where we're headed, we'll just get the Musks of this world, controlling what we get streamed. And Luxon will pontificate that is a GOOD THING.
Which it won't be.
True certainly. But also in a cynical vein, some of that talent was not all that talented in so much that the individual too often saw themselves, their opinion and image, as being of more importance than the subject news. Not isolated to this crowd though by all means. Ever since the arrival of Paul Holmes and he became famous, it has become increasingly concerning that what once were announcers in NZ’s media now see their ego justification as being more the influencer.
True DGMs do not get pleasure out of other peoples misery. A DGMer who got out at the top of a market or shorted if equities, is the buyer at the bottom, when all the loser spruikers die... someone has to have the cash to buy at the bottom.
The market needs people who have alternate views. Like a blackcap that bats and bowls
Every downturn, there's a willing cadre who somehow thinks things the system is going to change in their favour.
- it's not going to change in your favour unless you make it
- we're a long way from a credible political alternative that can improve the status quo
So what we're faced with is this boom bust cycle, which usually ends in fiscal stimulus, and those with the resources picking through the ashes of those who were on shaky ground.
Unless someone's actually going to back up the talk with action, it's really farting at thunder. In the time being, people need to be really aware of the dynamics at play, and come up with a measurable strategy to make themselves as least beholden to this giant meat grinder as possible.
Daily "hurr durr, spruikers gonna fail", is none of the above.
I don't think there's many people arguing houses are affordable, this should be self evident.
It's the thinking this is somehow going to be a strategic strike making homes more affordable, whilst not adversely effecting anything else which is la-la land.
A market will boom and bust.
If houses fall, and stay fallen, then we got big problems.
I feel many people are going to get pretty bashed, that's not something a reasonable person should anticipate, let alone seek glee in.
No one's really needed to move up for a year or more.
We're seeing the same recession creation, paralleled globally, at varying speeds and intensity. It was never about tackling inflation.
Sadly, there really isn't much public discourse about what's going on, why, and what should change.
Some of it was, but most of it was supply side related, and human psychology.
Hence we saw inflation occur almost everywhere, irrespective of interest rates.
If you use monetary policy to combat something that occured largely independently from monetary policy, you're going to do some serious damage.
Is the "dovish" sentiment that it is slightly less hawkish than last time, but still projecting holding steady in an economy which is stuttering? IMO a further 12-18 months at this level is fairly hawkish given the layoffs and business closures are in the headlines, wom, and conversations with your mates.
Today is big day for me.
After 2 years of being in cash (gradually dipping in) I am now fully deployed into crypto and equities (and of course of my nemesis, property investment)
Just for fun, my current returns from 1 Jan to date this year:
1) Property - no idea, up 1-2% maybe? (less costs)
2) Funds - +4.7% (This now includes bitcoin ETFs which will help)
3) Stocks - +11.4% - pretty amazing for a 2 month return
4) Crypto - +32% (speaks for itself)
Financially, my position is now finally well above my Nov 21 high, but only if I exclude property (I think I am still down 600k nzd from the top, and that is not inflation adjusted)
Cash is important IMO but becoming less so as stablecoins become more commonplace. I would prefer to be able to be in USD and spend digitally in NZ and other countries.
Of course, the banks and RBNZ wouldn't be happy about that.
Best returns so far in 2024 is Iris Energy (BTC mining and AI application) = +78% since Feb 1.
In contrast to KiwiSaver, life insurance assets have hardly shifted in a year. Life insurers are holding much more cash in their portfolios, in fact they almost doubled their cash holdings to 31% of assets, far and away the most since this data series started.
NZ Government Treasury Bills offer a risk free 5.5%+ return handle for the 3mth, 6mth & 12mth investment horizons.
Given the Near Term Forward Spread Data inversion, I say why not. Moreover:
NVIDIA is not worth more than Canadian GDP or the entire Chinese stock market. We are simply witnessing people willing to pay crazy prices for NVIDIA. As Buffett once said: “Price is what you pay. Value is what you get.” Link
Lower than what, higher than what? Longer than what, faster than what?
All very much TA economythsts with HFL, LMF, FOMO, FOOP, GTFO, ATL acronyms.
Lower than current levels in 2 years, high probability.
Sooner than previously expressed, probable.
As soon as economy needs, unlikely.
At a faster rate? Maybe, maybe not.
Back to 0.25? No.
Life insurers are holding much more cash in their portfolios, in fact they almost doubled their cash holdings to 31% of assets, far and away the most since this data series started.
Note that in the link above Net Asset Derivatives is positive for the first time.
Life Insurance Companies (LICs) hold net asset derivatives as a way to hedge against lower interest rates. When interest rates and yields rose, these derivatives incurred losses and LICs now need to post margin calls. This has forced them to sell some of their assets and increase liquidity. They need to do this because of regulation.
Liquidity pressure has also risen due to policy surrenders which have risen significantly.
There is great BIS paper explaining this.
https://www.bis.org/publ/qtrpdf/r_qt2312x.htm
Hope this helps!
If you think that you have not been reading any of them. They are vastly different and source their articles from different parties as well. Try keeping up to date with at least 10 news sources, (not blogs but different independent news sources that are not re-distributions of each other) then you really start to notice the difference.
An upcoming read for me, perhaps: https://www.amazon.com.au/You-Always-Hurt-One-Love/dp/1911397419
Looks like an appropriate time for such a book.
Interesting most Uni economics students are being told to read Al Jazeera & the Guardian for NZ financial news... by their lecturers. It really is the blind leading the blinded. An education system that teaches limited history and enforces media bubbles in their lectures so students are rarely looking at financial news, or even basic financial history in finance and economics courses. Quite frightening really. Had one staff member (student working a late afternoon shift) today say that Auschwitz was like a hostel in Queenstown where employees stay the night, and that Jews in Israel control most economics in the world... all from their economics lecturers in NZ (checked notes, it is really absent of any real world). No wonder NZ economics profession is in the toilet and feels like reaching through diarrhea for a dropped dead phone.
That was not even the worst mistakes they made!
I really wish NZ economics and finance lecturers had even a passing knowledge of NZ financial news or indeed any business news relevant to economics at all. It sounds more like they are creating lectures from really bad blog site links from 4chan.
I actually decided to give them a suggestion of reading Interest (for an additional news source a sort of try it and see the difference in focus). But I also suggested they read Make Room Make Room; it was not going to be any worse then the garbage they are getting from Uni and it touches on why the need for constant population growth to fuel an economy has an inevitable end when resource and housing crisis hits and the health services for those elderly drop to less staffing, & no funded front line workers capable of affording the cost of living by themselves. You know the Soylent Green movie that is so far out there sci fi that when food & housing crisis hits and there is a mass of population that regularly riots for lack of food supply the next step is one that is also used in the popular media show The Expanse.
Nobody in the MSM - left, right, woke or otherwise - is telling the truth about the human trajectory, and how far along it we are.
I suspect, deep down, RNZ types know something is amiss, but they're lightweights now (Hill and Laidlaw were the last rounded intellects, the others are variously flawed and/or ignorant) and have latched oto Climate and Race as their conscience-salves. Both are legitimate topics - we are indeed heating the planet, and we do shaft other races - but the former is a mere part of the overshoot problem (scientists call it the 'polycrisis') and the latter wouldn't have to happen if the free-marketeers had been right about unlimited growth (they weren't; we compete and will compete more and more from here on in).
Looked at in another light, RNZ used to worry about the ratings - on your own, that doesn't matter so much..... But they essentially peddle bullshit (Mulligan Monday lauding Hamilton sprawl, for a classic instance) in that none of them have a clue about the Limits to Growth. And - when challenged, they run a mile, cover ass fiercely, and continue with the c--p.
Now thats a joke, but it would be interesting to know who funds them in an about us page somewhere... I do hope they also have ties to Warner (not even major ones but indirect links would be funny and worrying enough for any branch of journalism with a clue to the Warner business model).
Once upon a time NZ had credible, trusted newsreaders who delivered facts & didn't constantly impart their personal opinions and snide personal prejudices, while expecting NZdrs to be intelligent enough to make up their own minds.
Philip Sherry, Bill Toft...& a few others
https://www.nzonscreen.com/title/nzbc-network-news-1963/series/credits
Like the ticks on twitter... yeah tell me how many of the green ticks are not trolls. Because I have a bitcoin investment scam to show you repeated over 100 tick accounts. It would be better to advertise something other then your ability for mass approval to online subscription models not financially affordable for over 70% of the populace. Perhaps another serving of Amazon prime and your free trial special service with happy ending of debt to go with that.
Westpac's selling it's Australian home loan broker unit, if there was ever a Kiwi bank(s) that really wanted to take it to the major Australian banks this is that opportunity. It might be decades before a similar opportunity emerges again to buy a turn-key money making machine.
For years Kiwi banks have been moaning that banks that operate in both countries have lower funding costs because they are more credible to investors. Well, time to step up or shut up.
Lets have a minute of silence for those truly suffering the tragedy of redundancy and a true loss to this nation... those poor Newshub staff. They did not have an entire election cycle of notice, had no prior warnings. The only sign that something could be amiss was that they were being funded by Warner for the past few years...
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