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. But this interest rate strategy note might be useful.
TERM DEPOSIT/SAVINGS RATE CHANGES
No changes here either.
EMPLOYMENT RISES
Total gross earnings for the March 2024 year rose by +8.6% (+$13.8 bln) compared with the previous year, according to data released by Stats NZ today. The total gross earnings for the March 2024 year reached $174 bln, up from $160 bln in the year prior. A swelling workforce is boosting these levels. Compared to Q4-2023, the March 2024 quarter there were +7346 more jobs, up +0.3% on a s.a. basis, taking the total to 2.3 mln filled jobs, +45,800 more than a year ago. (But don't forget that a net of +111,100 immigrants arrived here in that time, net of those leaving. And the labour force rose by +69,100 in the same year.)
NOW UP LESS THAN +3% PA
The annual increase in supplier costs to supermarket continues to moderate says Infometrics, but the pace of that moderation has slowed in recent months. So they are levelling out at the much higher level. Their Infometrics-Foodstuffs New Zealand Grocery Supplier Cost Index (GSCI) shows an average +2.9% increase in what suppliers charged Foodstuffs supermarkets for goods in May 2024 compared to a year earlier. That is down from the peak of a +10.6% increase in December 2022, and a small easing of the increasing rate of +3.2% in the year to March 2024.
MANY MARKETS CLOSED
It is a public holiday in Australia today (King's Birthday), and that will be affecting market volumes in this part of the world. Financial markets are also closed in Shanghai and Hong Kong for their Dragon Boat festivals. Markets are open in Singapore however
MAKING SENSE OF BUDGET 2024
We have released our summary of the Education Budget here as part of our overall summaries here and here. More of our summaries are to follow. The Treasury has also released their visualisation of the Budget 2024 which you can find here.
MILESTONE
Kernel Wealth has hit $1 billion in funds under management, and says it is targeting $6 bln by 2028.
SAGGING IN MAY
ANZ said its card activity data shows annual growth was just +2.3% in May from a year ago, despite inflation running at a considerably higher pace. Spending on durables, discretionary spending categories and clothing continue to lag they say. And now the impetus from tourism-related spending has turned into a drag on growth. The one area still expanding is "financial services".
STAYING FRESH
For the many readers who use our NZX50 resources, please note that recent updates to the profiles have been made for Fisher & Paykel Healthcare (FPH), Goodman Property Trust (GMT), Kiwi Property Group (KPG), Arvida Group (ARV), Stride Property Group (SPG), and Serko (SKO).
BIRD FLU RISK GETS REAL & CLOSE
In Australia, major supermarket Coles has imposed limits of how many eggs customers can buy after hundreds of thousands of chickens have been destroyed after bird flu was found at five large poultry farms. Prices are likely reflect these shortages.
SWAP RATES DIVERGE
Wholesale swap rates are likely to be little-changed yet again today at the short end, 2 years and less. But they probably got a kick along at the longer end on international pressures. Our chart below will record the final positions. The 90 day bank bill rate is unchanged at 5.62%, a level it has hovered around for almost 90 days. The Australian 10 year bond yield is up +10 bps from Friday at 4.33%. The China 10 year bond rate is unchanged at 2.32%. The NZ Government 10 year bond rate is up +9 bps at 4.78% from Friday and the earlier RBNZ fix was at 4.70% and up +6 bps from Friday. The UST 10yr yield is marginally firmer from this morning, up +2 bps at 4.45%. Their 2yr is now at 4.89%, so the curve is little-changed at -44 bps inverted.
EQUITIES MIXED BUT LIGHT
The NZX50 is down -0.6% in late and shallow trade today. The ASX is closed for its KB holiday. Tokyo has opened its Monday trading up +0.5%. Hong Kong and Shanghai are also closed for a holiday. Singapore is down -0.2% in early trade there. The S&P500 futures trade suggests Wall Street will open virtually unchanged tomorrow.
OIL FIRMISH
The oil price is +50 USc higher from this morning, now just on US$75.50/bbl in the US, but unchanged at US$79.50/bbl for the international Brent price.
GOLD LITTLE-CHANGED
In early Asian trade, gold is little-changed, up just +US$4 from this morning at just over US$2297/oz.
NZD HOLDS
The Kiwi dollar is little-changed this morning, still at 61 USc. Against the Aussie we are down marginally at just over 92.9 AUc. Against the euro we are marginally firmer at 56.7 euro cents. This all means the TWI-5 is still just on 70.6.
BITCOIN ON HOLD
The bitcoin price is little-changed again today, now at US$69,766 and up a minor +0.2% this morning's open. Volatility of the past 24 hours has been very low at just under +/- 0.5%.
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65 Comments
For the many readers who use our NZX50 resources, please note that recent updates to the profiles
how often are those profiles updated?
USD continues to lose share of global reserves to gold. A major mean reversion trade is still in an early innings.
2014: USD share of global reserves = 59%; gold share of global reserves = 10%
2023: USD share of global reserves = 49%; gold share of global reserves = 19%
Now, here's some interesting insight. RUBJPY (that's Russian rube) ratio is 1.75. This is the same as in Jan 2015 and well correlated.
Russia and Japan have converged in GDP PPP. Both have to dedollarize: Russia due to sanctions, Japan to support currency due to debt.
A test of G7 vs BRICS.
https://www.gainesvillecoins.com/blog/gold-overtakes-euro-in-global-int…
The pronounced shift from USTs to gold began in 2014 [my benchmark date for start of a gold bull market]. This has accelerated after the US communicated in March 2022 that USTs are only risk free if you accept the geopolitical policies of the US.
Audaxes will understand this.
The problem is the weak yen. I believe Bad Gurl Yellen stopped the rate hike Kabuki theatre performance. It is time to get down to the business of preserving the Pax Americana-led global financial system. If the yen isn’t strengthened, the big bad pinko commie Chinamen will unleash the dragon of a devalued yuan to match their chief export competitor Japan’s super-duper cheap yen. In the process, US Treasuries will get sold, and that will be game, set, and match for Pax Americana if it occurs.
- Arthur Hayes, co-founder and former CEO of cryptocurrency exchange BitMEX
Approx doubled since 2014.
This will run
- Ōtaki MP Tim Costley, who lives just 58km from Parliament, is claiming a $36,400 housing allowance for a Wellington apartment that he owns.
hard to get good tenants now
It's not hard to believe that another National MP could be that tone deaf, the surprising thing is that Luxon hasn't dealt with them after his own issue a couple of months ago.
IIRC at the time there was a published list of ~20 Opposition MPs using similar entitlements (including W. Jackson): nothing mentioned further in the MSM since of course.
In the 19th century the rural squattocracy provided MPs who could afford to support themselves when Parliament was sitting. Payment for MP was changed in the late 19th century to reflect the need "sufficient to enable working men to consider standing for Parliament, replaced the honorarium from 1892"
"Parliament's hours were changed in 1929 to recognise the travel difficulties MPs faced. To let politicians get away for the weekend, the House sat on Friday mornings. Flying grew more popular after the war, but some older MPs who were not keen to take their chances in the air still took the train or ferry. Regular air travel eventually changed sessions by enabling MPs to go home each week or return to Wellington during the recess."
So, the massive increase in MPs incomes & entitlement rorts since is simply icing on the cake.
https://nzhistory.govt.nz/politics/parliaments-people/pay-and-travel
Yes, he should stay in a hotel instead. That would be $300 five nights per week, let's say 50 weeks per year, that comes to around $75,000 per year on the taxpayer.
Or maybe commute. That's 116km per day, which is 580km per week, for 50 weeks makes it around 29,000km per year, paid at $1 per km, gives us $29,000 per year. Yes, make him drive, and save the taxpayer $5,000 per year.
Perhaps, perhaps not. Foreign Minister Winston has been in the kitchen long enough by now to know how to operate a pressure cooker. Be interesting though to observe the level of both political & public protest that might be organised concerning known human rights violations, threats to the security of Taiwan and more topically the massive emissions, coal burning pollution mostly, that China produces. In which case will be of interest too, as to what sort of security measures are provided.
I think its more theater about influence in the pacific... China has vast amounts of money it can use to buy influence or votes etc.
There is no way in hell they have the ability to project power towards NZ without having to cross people who will grind them to a halt. Secondly any war would be won or lost in the Indian ocean not the southern china sea.
Cut off china from this supply route and its game over .....
We need to stay friends with China until they do something dumb... then we have no choice but to team up with Aussie and USA.
The great fleets used by the Allies for Pacific Island invasions will be impossible today certainly. The danger though conceptually, is what Japan resorted to in a relatively minor form, with submarines in attacks on say Sydney harbour and the west coast of the USA. China is developing nuclear powered long range deep water subs with nuclear strike capability. Four nuke missiles of todays potency would virtually do NZ in. That is why Australia is enlisting the same and probably, Japan soon too. The USA & western allies can muster over 100 of these vessels. That sits as a very big deterrence in terms of counterstrikes.
In a broad sense you are correct and it harks back to what in history, particularly post Napoleon, was described as the balance of power. Hence the race for naval superiority between Britain and Germany prior to WW1 and the treaties after that to restrict another one emerging. That in itself in reality, is an example of deterrence and it gave the impetus of course to the nuclear arms race.There is little to physically stop a nuclear submarine, without even surfacing, 300kms off NZ’s or any other nations coast letting loose precision guided missiles. What prevents that largely is the fact that like retaliation will soon follow. I am sane enough to be scared senseless by the thought of any more global conflicts but the point is if Mr Putin was not aware of the counterattack consequences he may have seen fit to go nuclear by now. There is another danger too unfortunately. Remember another dictator in 1945 who tipped into insanity and would have been happy to see the world go down with him and just imagine that today with a red button at the fingertips.
So you don't think Winston should ask the Premier if they should desist from buying oil etc from a certain M Putin, who is responsible for possibly 250000 soldiers murdering each other, and civilians, and property destruction pollution, radicalization and polarization; hatred that will last for generations xc xc.??
Should not ask M Putin to stop interfering in Ukraine's internal affairs, as well as the rest of Europe?
Russia and China have signed an accord. It is hardly unusual. For example back in 1939 there was the Molotov and Ribbentrop treaty, or if you like, The Non Aggression Pact. The signatories will take it seriously enough, so long as it may suit and are not likely to be receptive to small nations at the south east end of the line telling them to break it. That is the reality, like it or lump it.
Well said. And of course the Soviets made hay while the sun shone supplying the Nazi war machine and facilitating rail freight from the east, with raw material, energy all that could be had and don’t forget, acquiring half of Poland without firing a shot.Until that is 1941, Operation Barbarossa, the Germans happily commenced firing it all back. Only in Russia, its great systems of great suppression, could Stalin have survived that stark level of foolhardiness and that same element is what Putin is surviving on so far.
NZs tall poppy syndrome pot gets another stir
https://www.newshub.co.nz/home/money/2024/06/aotearoa-s-rich-list-shows…
Kinda true though.
Much of the complaints are about the government doing something to make companies more productive so they can pay their workers more.
There's a much quicker, easier track for someone to have productivity improve their income - make more productive use of your time.
Few issues:
- An overall slowdown was obvious, but as we're all finding out from so many, many inaccurate predictions around the timing and magnitude (so far), accurately lining up the timing is quite the thing.
- Much of the industry is really only getting back to "normal" operating conditions, in terms of supply and workload.
- ongoing natural disasters means some parts of the sector have such ongoing demand they're not getting much more available (or cheaper). And are likely going to be busy going into the future also. And they're not compatible with the parts of the sector that are getting quiet, bricklayers and tilers don't port over to civil infrastructure.
- as much as some people don't want to see, the approach to public construction needs a serious overhaul if it wants to deliver value. The existing figures don't stack up. And it's a big beast to stop, modify and redeploy.
The roofer is early in the building process, electricians and plumbers follow, then gib placers, plasters and painters, kitchens and bathrooms and floor coverings, driveways and landscaping Roofers have been struggling since Christmas, I dont think there is any such thing as a canary in the coal mine for building, but one by one, expect the chickens will come home to roost, so to speak.
Question..
"+111,100 immigrants arrived here in that time, net of those leaving. And the labour force rose by +69,100 in the same year"
Apologies for the ignorance but does this mean we have imported 69,100 workers, and 42,00 kids, students, and senior citizens?
If so, that seems live a below average trade on behalf of NZ?
Some of the allegations about the TPM census debacle are not making sense. One that got my attention was the photocopying of forms claim. What form would they photocopy, and what info on a census form would be of any use? And photocopying, what could be a more time consuming process , writing it out by hand???
That is a pretty long bow your drawing. That someone had the census data on a PC in the first place, and that they were concerned that forensic computer investigations might occur into their illegal activities, so made the choice to use a photocopier instead.
As an aside, photocopied pages can leave a trail back to the printer. https://en.m.wikipedia.org/wiki/Machine_Identification_Code
The Treasury has also released their visualisation of the Budget 2024 which you can find here.
Big kudos to TSY - always find the visualisation a quick and easy tool to get answers to budget expenditure questions - and great to see a facility to provide feedback in this version as well.
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