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
SBS Bank has cut its 18 month fixed rate by -10 bps to 6.89%, its two year rate by -20 bps to 6.49%, and ended its unique three year 5.99% rate, raising it to 6.35%. That new three year rate is still market-leading but it now shares that with Heartland Bank.
TERM DEPOSIT/SAVINGS RATE CHANGES
SBS Bank has also added +15 bps to its six month TD rate taking it to 6.10%. And it has chopped its outstanding 9 month 6.40% rate back to 6.15%. But both remain 'good' rates compared to the main banks.
COPING BY NOT INVESTING
In the March quarter, wholesale trade shrank -1.1% from a year ago, the third consecutive quarter of shrinkage. The sector hardest hit is machinery & equipment (-10.3%). The sector still growing faster than inflation is the grocery sector (+5.9%).
ALSO TOUGH FOR MAKERS OF THINGS
It was also tough in the manufacturing sector where sales were down -2.2% in inflation-adjusted terms in Q1-2024 from Q1-2023. Manufacturers are coping by running down inventories (down -4.2%).
CONTROLLED SHRINKAGE
But managers in both sectors are being 'proactive' and making adjustments as their revenues shrink. The StatsNZ "business financial data" shows that profitability isn't being hurt as hard as the activity-sag, in fact it is being maintained. It is not easy to do that, and takes resolute skill. Responsive managers in downturns are ideally placed to benefit when the upturn comes. These sorts on businesses are surviving with enough resources to be ready on the upswing.
NATIONAL MP REFERRED TO POLICE
The Electoral Commission says it has referred National's New Plymouth MP David MacLeod to Police over the failure to report $178,394 of candidate donations. McLeod’s original candidate return for the 2023 General Election was filed on 13 February this year, with the total donations disclosed being $29,268 from seven donors. However, on May 20, the Commission received an amended return showing $207,662 from 24 donors. The Commission says it won't be commenting further because the issue's now with the Police.
SPENDING GROWTH FAR ABOVE INFLATION
We are still adding the gritty budget spending detail to our easy-lookup resources. We now have both the Welfare (or its euphemistic label "Social Development") (+6.1%) and Health budget (+6.3%) 'votes' covered, and the rest will be released next week. Looking at where the money actually goes can be an eye-opener. Those who benefit want 'more' of course; those who pay into the system aren't always so sure.
UNABLE TO COVER INFLATION
The large Worldline (ex-Paymark) payment network said spending through the Core Retail merchants on its system rose over May from April but the situation remains challenging overall for retailers with spending continuing to track below year-ago levels for most sectors. The year-on-year rise was less than +1%, so far less than inflation's effect.
BUTTER ATH
The news regarding some dairy products may be better than what we see via the GlobalDairyTrade auctions. The latest USDA review of "Oceania" butter prices has them now at US$7200/tonne. That is +5% higher than the last GDT auction price of US$6864. It is alos a new all-time high, eclipsing the last ATH in March 2022. And in NZD it is easily a new ATH, and +13% higher than that 2022 peak. The GDT platform is an important one, but it is far from a dominant part of the dairy trade marketplace. Our charts cover both the USDA published pricing, and the GDT.
WHINING
Federated Farmers are informally campaigning for a formal banking inquiry on the basis that banks charge 'farmers' higher risk premiums than average. The advocacy email releases from some regions are filling news inboxes. But it is just bluster. Their leaders know full well how the banking regulators apply risk requirements for capital (which directly affects loan rates). Riling up their membership on the issue may make good politics, but the facts that won't go away are that rural lending is risky, and bank depositors need to be protected from undue risks, especially when times get tough.
GUILTY OF BRIBERY
The SFO is noting that a roading subcontractor who admitted giving bribes in exchange for being awarded road maintenance work has today been sentenced to 12 months home detention, and will make a reparation payment of $300,000. They are the fourth person involved in the case to plead guilty and receive a sentence without going to trial.
CONFIRMED
The Australian Federal courts have confirmed the penalty imposed by AUSTRAC and SkyCity Entertainment of AU$73 mln for AML/CFT breaches we reports a few weeks ago. SKC will be pleased to have that issue behind it. That have many others to grapple with. SKC bounced back up +2% today in share market trading, although it remains more than -16% lower that where it started the year.
EYES ON THE RBI
The Reserve Bank of India (RBI) is having its second full monetary policy meeting today and many eyes will be on the rate signals they give when they report at about 4:30pm. This is a post-election meeting. Most analysts expect them to hold their policy rate at 6.5%. India's rapidly expanding economy is 'demanding' more attention and 'respect' in the global economy.
SWAP RATES HOLD
Wholesale swap rates are likely to be little-changed yet again today. Our chart below will record the final positions. The 90 day bank bill rate is down -1 bp at 5.62%, a level it has hovered around for almost 90 days. The Australian 10 year bond yield is up +3 bps from yesterday at 4.23%. The China 10 year bond rate is unchanged at 2.32%. The NZ Government 10 year bond rate is unchanged at 4.69% from this morning and the earlier RBNZ fix was at 4.69% and up +1 bp from yesterday. The UST 10yr yield is little-changed from yesterday, up +1 bp at 4.30%. Their 2yr is now at 4.74%, so the curve is little-changed at -46 bps inverted.
EQUITIES MIXED
The NZX50 is down -0.4% in late Friday trade. But if that holds the NZX50 will end up +3.2% for the week, a very good result for them. The ASX200 is up +0.4% in afternoon trade. Tokyo has opened its Friday trade down a mere -0.1% but Hong Kong is down -0.5% and Shanghai is down -0.3% at its open, while Singapore is up +0.3%. Earlier, Wall Street closed with the S&P500 essentially unchanged on the day.
OIL UP +US$1
The oil price is +US$1 higher from this time yesterday, now just on US$75.50/bbl in the US, and up a bit less at just under US$79.50/bbl for the international Brent price.
GOLD HOLDS HIGH
In early Asian trade, gold is little-changed from this time yesterday, still just over a high US$2370/oz.
NZD HOLDS
The Kiwi dollar is little-changed this time yesterday, still at 62 USc although its highest since mid-January. Against the Aussie we are down marginally at just over 92.9 AUc. Against the euro we are also down marginally at 56.9 euro cents. This all means the TWI-5 is still just on 71.2.
BITCOIN LITTLE-CHANGED
The bitcoin price is little-changed again today, now at US$70,828 and down -0.5% this time yesterday. Volatility of the past 24 hours has been modest at just +/- 1.1%.
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76 Comments
AFR The buyers jumping into Australia’s housing market
Even with 16 straight months of gains and repeated records for house prices, buyers appear willing to take their chances. The question is why.
One could ask the same question about the Chiefs vs Reds tonight
Shane Oliver gives a hint as to what might be behind the strong appreciation of home values despite 13 interest rate hikes from the Reserve Bank of Australia (RBA): record numbers of cash buyers.
“Access to ‘the bank of mum and dad’ and savings buffers built up through the pandemic appear to have protected the property market from high rates over the last two years”, noted Oliver.
“Anecdotes suggest that all cash purchases and access to ‘the bank of mum and dad’ reached a record last year”.
Who else purchases with cash? Foreign buyers. Record numbers of international students buying using their Bank of Mum & Dad. Ran into one at an open home on the Gold Coast this week - a single young lady looking at a $1.3M apartment while she is doing her "work placement", paid for by Daddy (I was eavesdropping on her conversation with the realtor).
And since I was there too , I guess there is a third category - cashed up New Zealanders fleeing the economic and social disaster that is NZ.
https://www.trademe.co.nz/property/residential-property-to-rent/auction…
4 to a section, $2880 per week in otahu ... oh-tar-who-who. Maybe its like ponsonby, car parking on the street
675sqm sold for 900k October 2023
McLeod MP for New Plymouth forgets to disclose near to $180k of donations.Only $148k more than what was actually declared. Ridiculous folly and if a bloke can’t run his own damn office, what the heck qualifies him to be in parliament? MPs are lawmakers. It is a solemn and vital responsibility entrusted by the people. Yet for years and years they pass legislation to control and monitor political donations and then they immediately set about trying to defeat their own legislation. It sucks & it won’t change at all until offenders start to be exited out of parliament
Look its an easy mistake to make with piles of used 20s sitting around, I believe WP has had issues around donations, memory to report these, and what the donations where used for in the past.
The rest was squandered.
Even the Don may have used funds to procure hush
That’s another one and from the smell of it, according to Hamlet, there’s something rotten in the state of Denmark and from the same play with apologies to the playwright, methinks some do protest too much. Sir Ashley Bloomfield’s reservations and concerns, at the time, might well be found out to be fully justified. Let’s just hope the smoke is not allowed to hide the fire.
Oh dear. What are you protesting now, that you are uneducated and it’s not fair you didn’t listen at school, or you don’t like Israel and prefer terrorists or you just beleive your failure is everyone else’s fault and you want to off some steam, or you want some more free money; Which is it this time ?
His constant negativity and need to drag everyone in society down as woke, weak or stupid suggests maybe he's got some huge insecurities he's battling with.
A lot of the time it's barely coherent, which I guess comes with the mental gymnastics he goes through to try frame every comment in such a way. The topic could be about a new born litter of kittens, and he'd still derail it into someone being Pro-Palestinian.
There are a lot of people who are woke, weak and stupid. That’s plainly obvious. I did not know there was a protest against getting things done today, but I would assume now you point it out that there most probably will be a lot of woke, weak and stupid people there. And support the fast track bill, because we have become a stupid country that does lot get anything done, and that needs to change, and it will.
Quite a while ago one of the most respected QCs in Christchurch, a barrister from the 1950s, said to two things to me I have never forgotten. Firstly there is much in law that is legal but immoral and much that is illegal, but moral. Secondly when acting in the criminal court he found, the defendant who has little to say is invariably more likely to be found not guilty than the defendant who has quite a lot to say.
I'm loving it as I have been buying the dips for the last two years. I've learnt so much along the way. Everything is aligning - GME holding almost $2bn in cash, earnings next week, but more importantly DFV exercising his options (REAL shares will be hard to come by).
He never seems to lose
Wolfie is my idol. Goes deep and is fearless.
Anyway, the story of the moment is dark horse miners like Iris Energy. Probably too late for a near-term 10 bagger but 5x in 2024 easily doable. Roared 13% last night. Best purchase of H1 for me.
Like Rod Stewart said, "some guys have all the luck".
I can respect the hustle.
I just don't have the time to spend all day trying to research crypto moon shots etc. Used to, and did ok from it, but these days I'd have to sacrifice hours I'm able to work and invoice, and I guess I'll have to content myself with a boring, steady game of "get rich slowly".
I'd have to sacrifice hours I'm able to work and invoice, and I guess I'll have to content myself with a boring, steady game of "get rich slowly".
I understand this. But times change. Expecting the 60/40 portfolio to work for millennials is not necessarily relevant anymore.
Check out this action.
https://www.sportsbet.com.au/betting/politics/us-politics/us-presidenti…
A note on welfare spending.
Whilst it is great to have ''made it'' to become a recipient of NZ govt super after 47 years in the workforce, it does not come any where near to covering our living costs. Why don't we trade down our lifestyle you may ask? Well, this is easier said than done. For the last working decade of our lives [55-65] it has taken $100K gross to run Mr & Mrs WJ. We don't travel much or eat out much, & are mortgage free, so this is possible. Since the calamity that is covid, sticking to these numbers has become difficult, as you can imagine.
For those who have not been able to contribute to their own well being between the ages of 16-65, life must be tough. I realise there is bits & bobs to the basic welfare cheque, but rent alone can swallow up most of a benefit, so you are in a unenvious position for sure. My advice to these folk is to keep learning, keep growing up & keep off the booze & the drugs. If you think your lives are bad today, then I've got some more bad news for you - your tomorrows are going to get even worse.
You can teach yourself anything you want to online these days & whilst not everything you can see & hear about is good, if you chose wisely you can teach yourself to build, like one of my sons is doing at the moment. Totally from watching online videos. There is no excuse today for not continuously growing & learning. You can do it on your phone. You can do it in bed. And you can do it on the loo if you want to. I wish you well.
That's approx $5.8k net cash a month, and if you are not spending it on a mortgage, travelling, or eating out where on earth is it going? I know I b*tch and moan about rates and insurance, but after those are paid I'd still struggle to spend $4k a month on general amusements.
"...it has taken $100K gross to run Mr & Mrs WJ. We don't travel much or eat out much, & are mortgage free, so this is possible..."
I retired/redundant at 60 (8+ years ago) & my wife worked part time, we'd been mge free for a decade by then. We budgeted for living costs couples NZSuper, ignoring our substantial savings & investments. IE approx half your quoted necessary income.
Since my wife passed away in 2021 my budget is single NZSuper. Its enough.
Protip disabled people who literally physically cannot get jobs are not on "booze & the drugs" but lazy retired people who could work but decide to stay on the couch are our worst problem drinkers & addicts who often cause their own liver failure. Here is a clue people don't choose to be Born disabled, but you choose to be retired while able bodied and do nothing.
Get a job if your benefit is low. Your benefits are actually more then twice that of actual disabled people so you are showing extreme entitlement and lazy greed.
What's worse is we have 50,000 "retirees" not only still in work, but being paid in excess of $100k p.a. These people collectively receive $1b per year in welfare payments just for being over the age of 65.
I wonder what $1b per year would do for many disabled people who are unable to get to work (let alone earn over $100k p.a.) and receive a pittance to live on.
I'm sure someone will remind me shortly how much income tax is paid on a $100k+ salary, and that NZ super is not welfare but a loyalty rebates scheme.
Japan’s holdings of foreign securities dropped sharply in May - down USD50 billion - suggesting its recent currency market intervention was achieved by selling Treasuries and other foreign securities. Japan still has "ample firepower to step into markets again."
Now this won't raise eyebrows at the water cooler, but the reality is that JPY must strengthen to prevent a UST apocalypse. It's an important issue.
https://www.bloomberg.com/news/articles/2024-06-06/japan-likely-sold-tr…
If not to shore up their own weakened currency, then what?
Correct. But you're suggesting that somehow because there is no demand for JPY and CNY, Japan and China need to hold US treasuries.
F,more, in the case of Japan, the Plaza Accord has much to do with their current situation. At that time, JPYUSD was closer to 180/200, not 150. So it's all relative. But no doubt the US has screwed Japan.
But you're suggesting that somehow because there is no demand for JPY and CNY, Japan and China need to hold US treasuries.
You tend to gravitate towards binary positions. There's demand for any currency, but the demand for USD>demand for yen and yuan (and likely not reversing anytime soon).
Few if any economies and currencies currently have fantastic outlooks. But there's also degrees of health and prospects.
Your words, not mine. Japan and China have held UST partly to maintain competitive trade advantages, not because of the demand for their own currencies. What's more, Japan is a net creditor to the world. What do you think would happen if they repatriated financial assets to Japan. We've seen it before, particularly in the GFC.
StatsNZ "business financial data" shows that profitability isn't being hurt as hard as the activity-sag, in fact it is being maintained. It is not easy to do that, and takes resolute skill.
As a few of us have been saying for months, companies compromise on volume not margin. So, remind me again why we're crashing demand in the hope that this will persuade businesses to reduce prices (compromise margin)?
The mighty Chris Joye on the Aussie zombie corporate apocalypse (must be some infant formula players here). Golden DGM.
For years, this column has been warning about the coming zombie corporate apocalypse – that is, the collapse of sub-prime business borrowers as interest rates surged care of a demand-side induced inflation crisis, which remains unresolved.
We repeatedly warned that Australia would experience the worst default cycle since the 1991 recession. And as one opens the newspaper each day, you read about this playing out before our eyes as residential developers, builders, commercial property investors, airlines such as Bonza and entertainment venues such as Public Hospitality Group drop like flies. And it is only going to get much worse as rates stay high.
https://www.afr.com/wealth/personal-finance/the-zombie-corporate-apocal…
Interesting: https://www.oneroof.co.nz/news/plaster-home-advertised-with-1-auction-r…
The bank not allowing the owner to sell at market value.
$1 is not market value. When you borrow money the lender will ensure that their security is maintained.
Also, from your link: “He has to sell all of them because he’s already gone unconditional on the property that he’s buying ..."
So, the vendor's an idiot and the bank is justifiably intervening to protect their interests, as any mortgagee would.
It wasn't going to sell at $1.
Whatever it sold at would have been market value.
The bank has no business telling him he can't sell at $1 reserve, who owns the house the bank or the owner? I've been repeatedly told that the bank does not own your property when you have remaining mortgage on it. Looks like the bank does it fact still own your property.
The bank will not let him sell because it will show how devalued the rest of the bank book assets are.
Semler Scientific now holds 828 Bitcoin and has $150M plan to buy more
Nasdaq-listed medical manufacturer Semler Scientific — which made headlines last month for adding Bitcoin to its treasury — has bought another $17 million worth of the asset and may raise up to $150 million to buy more.
"[It underscores] our view that bitcoin is a compelling investment and can serve as a reliable store of value. We will continue to pursue our strategy of purchasing bitcoins with cash."
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