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
BNZ joined the others today and cut short home loan fixed rates. We looked at what future rates would have to fall to, to make a one year rate option better than the current three year option. Details here. SBS Bank has also trimmed its one year fixed rate to 7.14%, and shifted its FirstHome Combo one year fixed rate down to 6.14%.
TERM DEPOSIT/SAVINGS RATE CHANGES
NBS/Nelson Building Society trimmed some rates today.
A COLD WINTER
REINZ figures show house prices declining in most parts of the country in April. Their HPI dropped in 10 out of 12 regions last month. The stock of properties for sale reached a new eight-year high in March and edged up further in April. Some observers think the multi-decade high in population growth and policy changes to support investor demand will put a floor under the falls. But that also assumes home loan interest rates will retreat in a way that relieves household budgets. You are on your own with that assumption.
COLD WINTER CONFIRMED
QV says average housing values have started declining, not just for those coming to market. High interest rates, a difficult economy and a surplus of listings spell trouble for the housing market over winter, they say.
RETAIL SLUMP INTENSIFIES
The retail spending slump intensified in April, with total retail spending -3.8% down on last year's figures, and that is before accounting for 4.0% inflation in the same period. The figures show that retail card spending fell for the third consecutive month on a seasonally adjusted basis in April.
'MIXED MESSAGES'
ANZ's truckometer tracking isn't showing any new risks in April. And it may be slightly more positive than you might have assumed. They say the demand indicators based on light traffic volumes are still very mildly upward sloping despite strong population growth of around 3%, and the decline in per capita terms is stabilising. Heavy traffic data (mostly trucks) tends to provide a good steer on production GDP in real time, as it captures both goods production (including agriculture) and freight associated with both wholesale and retail trade. It suggests positive GDP growth in Q1. The heavy traffic index is 3.3% higher than a year ago(using a 3-month average to smooth out volatility), while light traffic is up 2.2%.
POPULATION MIX CHANGES FAST
In the year to March, +238,964 migrants arrived in the country (Auckland's North Shore, or Wellington City ?), with -78,000 citizens leaving permanently (Rotorua ?). Overall the period saw a net migration gain of +111,000 in the year (Lower Hutt ?). (For perspective, the net annual migration gain in 2023 was just under +1 mln in the USA, a country 64 times larger than ours.)
AI IS DEVELOPING AT WARP-SPEED
OpenAI has launched an all-singing and talking, but not yet all-dancing, GPT-4o. It's a large language model featuring blindingly fast new text, audio and image capabilities.
ALLOW TEN WEEKS, PLUS DELIVERY
The Passport Office/DIA says allow ten weeks "plus delivery" to get a new passport at this time. That is because it has installed a "new system" that promised "increased efficiency". It claims the new system is improving although the transition is way more problematic than expected. They see improvement in three months. "We are targeting over 90% being issued within two weeks by the end of August." (Maybe emigration would be higher if it was easier to get a passport? Just asking for a friend.)
UP, BUT NOT BY MUCH
Japanese producer prices are shifting higher but only marginally. They were up +0.9% April from a year ago as was expected. It was their 39th straight month of increase and the highest producer inflation since last October. But that only reinforces how tame the pressure really is.
BETTER THAN EXPECTED
All eyes are on the Australian Federal Budget today where a +AU$9 bln surplus is expected to be unveiled. In last year's budget they foresaw at 2023/24 +AU$4.2 bln surplus, so this will be good improvement. (see page 7.) Future deficits forecasts keep getting reduced, so they are in an unusual period of doing better than forecast. The actual release is at 9;30pm NZT.
SWAP RATES ON HOLD
Wholesale swap rates are likely to be little-changed today. Our chart below will record the final positions. The 90 day bank bill rate is unchanged at 5.63%, a level it has hovered around for more than 70 days. The Australian 10 year bond yield is unchanged at 4.38%. The China 10 year bond rate is down -1 bp at 2.30%. The NZ Government 10 year bond rate is down -5 bps to 4.76% and the earlier RBNZ fix was at 4.71% and down -4 bps from yesterday. The UST 10yr yield is unchanged from yesterday at 4.49%. Their 2yr is now at 4.86%, so the curve is little-changed at -37 bps inverted.
EQUITY MARKETS TIMID
The NZX50 is down another -0.3% in later trade today. The ASX200 is also down -0.3% in afternoon trade. Tokyo has opened its Tuesday trade up +0.2%. Hong Kong is up +0.3% while Shanghai is down -0.2% in very early trade today. Singapore has opened unchanged. Wall Street ended its Monday session with the S&P500 also essentially unchanged from its Friday close. Markets seem to be in abeyance awaiting the US CPI data on Thursday morning (NZT) but analysts don't expect much change with the April headline rate to be 3.4% (vs 3.5% in March).
OIL MOVES UP
The oil price is +US$1 higher that at this time yesterday, at just over US$78.50/bbl in the US, while now at just on US$83/bbl for the international Brent price.
GOLD DROOPS
In early Asian trade, gold is down -US$17 from this time yesterday at US$2343/oz.
NZD HOLDS
The Kiwi dollar has hardly changed from this time yesterday, still at just at 60.1 USc. Against the Aussie we are holding at 91.1 AUc. Against the euro we are also unchanged at 55.8 euro cents. This all means the TWI-5 is still about 69.4, and of course unchanged as well.
BITCOIN RISES
The bitcoin price has risen to US$62,583 and up +2.0% from this time yesterday. Volatility of the past 24 hours has been moderate at on +/- 2.2%.
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34 Comments
The Passport Office/DIA says allow ten weeks "plus delivery" to get a new passport at this time. That is because it has installed a "new system" that promised "increased efficiency".
So sad. Last passport renewal I was overseas. Processed all online. Took approx 5-6 working days, including delivery. No extra fee for such fast renewal. Best ever experience with NZ govt services.
This is unacceptable for those who must travel for business. I'm betting that there will be some kind of fee to get a passport processed in a reasonable time frame.
Typical of public service jobsworth monopolies who entirely lack the focus & incentive that depending directly on your customers for your income provides.
Extorting an extra $206 forcing people to use an "urgent" service because DIA failed to do their jobs.
https://www.nzherald.co.nz/travel/how-long-does-it-take-to-get-a-new-nz…
Typical of public service jobsworth monopolies who entirely lack the focus & incentive that depending directly on your customers for your income provides.
The digitization efforts of their previous passport issuance system (just before Team Dame Jacinda Kate Laurell Ardern GNZM arrived) was the best thing to ever happen in their history.
After that achievement, they must have just gone back to their slippers and cups of hot tea without continuing to improve and prepare for contingencies like infrastructure change.
I see Team Jacinda’s Christchurch call has effectively been cancelled, shortly after one of its biggest partners pulled out after it achieved “nothing”. So no more tax payer dollars for that farce. Maybe she applied the same operational excellence model to the Cancelled call as she did to the passport office….
They had a restructure 2020 and a lot of passport officers lost their jobs resultingly due to low demand for passports from lockdown. I used to work there so I have ex-colleagues who were caught up in it. Takes time to rehire and retrain for the role and get efficiency, plus if theres a surge in demand there’s only so much capacity.
The clear downturn in consumer spending started Christmas 2022 as inflation chewed through peoples' disposable incomes. Higher mortgage rates then accelerated the decline. Card spending per capita in real terms is now a full 10% below pre-COVID levels. How much further down do we need to go before the Saudis stop fixing the oil price, insurance companies decide that climate change was a hoax after all, and local Govt decide they don't need to increase rates because our streets can double as toilets?
by Jfoe | 12th Jun 23, 2:46pm
... if you look at the retail sales data (2010 deflated prices per capita - Table RTT015AA) you will see that 2023Q1 was pretty similar to 2018 figures... I think it is important that people see that despite the 'queues at the Briscoes car park' nonsense - consumer demand is collapsing and the people still shouting for further rate hikes to 'tame inflation' have an austerity fetish.
How much further down do we need to go?
It really depends on just how fast the global consumption pie is shrinking.
Growth is dead so the small nothing periphery countries must take the maximum pain of smaller servings first.
Either way we will import inflation to squeeze disposable incomes further.
Saudi (and others) will never stop trying to fix/manage the oil price because their whole economy literally depends on it. The best we can do is to work as aggressively as possible to reduce our dependence. Fortunately the alternative energy sources are locally sourced and renewable, so economically very beneficial- if only the government could see this and stop pandering to oil lobby (and tobacco, and…).
climate change is not a hoax and insurance companies are seeing increases in claims, so don’t expect property related insurance to ever get cheaper either. As for local government, who knows!
That’s already happening. Insurance companies are changing to a calculation on an individual property basis rather than an area basis. So, if you are elevated, with a modern house on stable land, your premiums will be cheaper than an old house with less structural elements in let’s say a flood prone area. So, those in higher risk situations will pay a lot more. Risk used to be assessed on an area basis, and that is now changing.
So Gamestop up 113% last night (+21% in after hours trading). Here's the thesis I think is possibly playing out.
The GME degenerates have a hardcore element who never sold. But also, the institutional short positions never closed. The data suggests that has been net buying of GME since 2021 - yet the share price has continued to fall. How does that happen when there is net buying? Game of chess (with the media on the institutional side) and the degens won last night.
If you assume my basic thesis is right (I always assume that I'm wrong) and GME short positions from 2021 were never really closed, then things could get really wild this time around.
In my day young people saved money for a house. Now there’s no point so they throw it into crap like this (and crypto etc). If enough people do it you can turn nothing into something apparently. All the while us older generations shake our head (but still expect our crappy house to be worth millions).
So was Blockbuster. Crypto is a great investment - as long as you get out at the right time. Maybe one of the currencies will become useful, but which one is just a gamble. Houses suck too. There are some genuine profitable businesses out there to invest in - although they too are probably over valued. Too much money sloshing around thanks to nutters running reserve banks trying experiments on us that always seemed crazy (0% rates, quantitative easing, funding for lending, etc).
In my day young people saved money for a house. Now there’s no point so they throw it into crap like this (and crypto etc). If enough people do it you can turn nothing into something apparently. All the while us older generations shake our head (but still expect our crappy house to be worth millions).
If the institutions do anything similar to their advantage, the boomers think they're financial geniuses.
I wonder if its worth another gamble to stick it to those hedge funds if you're correct about short positions not closed out. I joined the anti-hedge fund mob a bought gamestop a few years ago. Was prepared to lose some money but turned out it was about even stevens.
I wonder if its worth another gamble to stick it to those hedge funds if you're correct about short positions not closed out. I joined the anti-hedge fund mob a bought gamestop a few years ago. Was prepared to lose some money but turned out it was about even stevens.
Going to be interesting. Dave Portnoy tried to buy USD500K of GME but couldn't fill the order.
https://podcasts.apple.com/nz/podcast/the-rebel-capitalist-show/id14925…
Reasonable theory
Here we go - the National way
Consultants needed for education system changes - Christopher Luxon
The ministry has proposed cutting a total of 755 positions, of which 316 are currently vacant, to meet government cost-cutting targets.
The ministry has told consultancies it will have contracts for training and advising teachers on NCEA changes, and on the qualification's literacy and numeracy requirements.
RNZ understands both areas are currently covered by ministry staff, who are losing their jobs.
RNZ has also been told consulting firms are now asking some of the staff being made redundant to work for them, essentially doing the same work but at double the price the ministry would have paid.
As predicted. Sounds like NACTNZF need the bureaucratic jobsworth to actually implement their policies. Who would have thought 🤣🤣🤣🤣
https://www.rnz.co.nz/news/political/516736/consultants-needed-for-educ…
"In a statement, the ministry's curriculum centre leader Ellen MacGregor-Reid said it was still considering proposed job cuts.
"No decisions about impacted jobs in the curriculum centre have been made. Consultation documents are being considered. To report that people have lost their jobs is premature and inaccurate."
She said the ministry's professional learning panel would today brief providers on upcoming requests for propsals (RFPs) for professional learning and development (PLD) in structured literacy.
"This PLD provision is not work done by NCEA staff nor NCEA implementation facilitators and is not related to the ministry's cost savings programme or proposed restructure. As we said in our statement yesterday the two should not be conflated," she said."
Same RNZ so it seem like one RNZ journalist is getting knickers in a twist (and completely clueless about different ministry job roles) while the other is interviewing the ministry itself.
Congrats for proving you did not read the article to the end, where they are not consulting old staff and these other orgs would have been engaged anyway, not related at all to job cuts but the shifting work from design to delivery of ncea changes. e.g. like the education hub work for upskilling teachers, doing research etc.
I read the article and I have been through a few of these public sector cuts rodeos. It's the same people being made redundant that will be doing similar work for more money as consultants. NZ is small and we don't have a massive skilled workforce to choose from. Of course the organisation will say it isn't the same people because they have to protect the minister.
I recently consulted back into a big public sector organisations I used to work for. The old guard are all still there, some are consultants quite a lot of the juniors are now promoted because they were the only ones left. Headcount higher than before the 3 rounds of restructuring that occured since I left which makes sense as the work hasn't gone away, population has increased and all the restructures mean there was a loss of productivity and now they have to catch up. Consultant levels flex based on how many roles are vacant at any given time but it's the same people doing the same work just in a massively inefficient way because of all the head count restructures.
they would have no credibility (not much left now) if they don't signal to the markets their intentions...
rate cuts are still some time away unless they clearly signal its a possibility next week
I think they will hold the line they have to date.....
IMHO the pain to come is typical of the recession necessary to flush out inflation... we could find ourselves in NZ ahead of the cure as inflation fails to roll over in USA and Aussie.... we may well be cutting as they raise.
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