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 again today.
TERM DEPOSIT/SAVINGS RATE CHANGES
None here either.
STABLE UNAFFORDABILITY
Mortgages are still unaffordable for first home buyers on average incomes, but at least it's not getting any worse. And the national average is hurt by Auckland. We are in a period of relative stability for home loan affordability. There are now five regions were the cost of a home loan is less than 40% of take-home pay for FHBs making a 10% deposit. For those able to make a 20% deposit (a tall order), every region other than Auckland is now affordable.
ALL-TIME HIGH
Early withdrawals from KiwiSaver accounts for home ownership ($149 mln) and financial hardship ($33 mln) jumped in May as members withdrew over $182 mln in the month. The May 2024 hardship withdrawal amount was an all-time high. But the first-home withdrawals in May 2024 was't a record. That was set three years ago in March 2021. Savings suspension are retreating now, down -15% in May from the same month a year ago.
RECORD EXPORTS
There was a trade surplus of +$204 mln in May and and exceeding forecasts for a +$155 mln surplus. Exports rose to $7.2 bln, a new all-time record high as shipments increased for wine (+38%), dairy products (+16%), and precious metals (+38%). Imports were little-changed, up just +0.6% from a year ago.
CHANGING OF THE GUARD?
The top export markets in order of total annual goods were China, Australia, USA, EU and Japan, while the main import sources are China, EU, Australia, USA and South Korea. But, and it could be a significant 'but', China is not longer our most valuable trading partner (if you measure that by what drives our trade surplus). The USA is. In the year to May 2023 our surplus with China was +$1.14 bln, but this shrank to +$950 mln in the year to May 2024. For the US we ran a deficit of -$420 mln in the year to May 2023. But in this past year that switched to a surplus with the US of just shy of +$1.5 bln. That is a very impressive turnaround.
GOLD A WINNER
Gold exports are unusually high. For the year to May, that probably topped $1.1 bln ("probably" because the data we looked at is in a category of exports labeled "Precious stones, metals and jewellery".) For May alone, these exports were up +38% above year-ago levels, continuing a strong run of gains that started in February. In a month when we exported $7.2 bln, perhaps the $102 mln in gold may not seem much. But if it keeps rising like this, it will quickly become important. Recall, the gold price was up a touch less than +20% in the same May year, so that means the volume increase in gold exports has been +18%.
PROFIT RECOVERY BUT FINE YET TO BE SET
TSB's annual profit jumped to $34 mln as a drop in expenses outweighed lower income levels as housing lending competition bit. They are yet to face the CCCFA court date with the Commerce Commission, and they have made a provision for that, but aren't declaring how much it was.
OUT OF FAVOUR
More users are forsaking credit card use with balances falling -0.7% in April from March, and that meant they were lower than a year ago too. May billings on these cars fell to $3.8 bln, far below the high-water mark of $4.3 bln in December 2021. A year ago in May 2023 it was $4.0 bln. Despite the obvious pressures, card holders are are not using the interest-bearing debt options any more that they have for a long time, still at 53% of the balances outstanding.
WHEN SHOULD YOU USE A VPN?
We have released an explainer on virtual private networks (VPNs). There are good reasons in some circumstance, and others that don't hold up in many common circumstances.
GROCERY PRICES TRANSITIONING LOWER?
With Infometrics reporting that Foodstuffs has costs from suppliers rising less than +3% in May, there is a sense that this part of the household inflationary pressure is easing. And it might be easing rather fast now. Our own Woolworth's monitoring has our tracking list of healthy groceries now down more than -8% from a year ago and back to levels of two years ago. But that was high back then. Still the pace of the price retreats seems to be gathering pace. If pay trends keep going up, and grocery prices keep going down, the pressure on household budgets will ease off fast (if you retain your job). (The next stress point will be grocery suppliers complaining that the prices they get are unsustainable.)
SWAP RATES ON HOLD
Wholesale swap rates are likely to be little-changed. Our chart below will record the final positions. The 90 day bank bill rate is up +1 bp at 5.62%, a level it has hovered around for 110 days now. The Australian 10 year bond yield is up +1 bp from this this morning at 4.26%. The China 10 year bond rate is staying up at 2.27%. The NZ Government 10 year bond rate is down -3 bps at 4.65% from today's open and the earlier RBNZ fix was at 4.59% and down -3 bps from Friday. The UST 10yr yield is up +1 bp from yesterday at 4.26%. Their 2yr is now at 4.74%, so the curve is a bit less inverted at -48 bps.
EQUITIES MOSTLY LOWER
The NZX50 is down -0.4% today in late trade. The ASX200 is down -0.7% in afternoon trade. But Tokyo has opened up +0.2%. Hong Kong has fallen another -1.2% at its open, Shanghai is also down -1.2% which is a sharp retreat for them. Singapore is down -0.1%. But Wall Street is eyeing a strong opening to Monday trade later tonight. The S&P500 futures point to a full +1.0% rise.
OIL ON HOLD
The oil price is still just under US$80.50/bbl in the US, and just over US$84/bbl for the international Brent price, both little-changed from this morning's open.
GOLD FIRMISH
In early Asian trade, gold is slightly firmer, up +US$4 from this morning at just on US$2324/oz.
NZD LITTLE-CHANGED
The Kiwi dollar is only marginally softer from this morning, at 61.1 USc. Against the Aussie we are unchanged at 92.1 AUc. Against the euro we are also unchanged at 57.2 euro cents. This all means the TWI-5 is also little-changed at 70.9.
BITCOIN SOFTER
The bitcoin price is down -1.4% from this morning's open, now at US$63,193. Volatility of the past 24 hours has been modest at just on +/- 1.3%.
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97 Comments
Power Pylon - what moron though it would be ok to take the bolts off THREE legs....
like I think one at a time would be enough.......
2nd point - we export so much gold, why not have a Kiwisaver gold option where you can put a % of your Kiwisaver, be very low management fees (storage plus insurance...).
In the modern world of privatisation,contracting,then sub contracting out of maintenance etc can lead to these things.Human factors training show the Swiss cheese model,latent organisational failures could all lead to some 'moron' making an error.
https://cdn.wildapricot.com/55065/Resources/Documents/standdown-byrd.pd…
it does make you wonder on the training and leadership of the crew involved, it was not policy and has never been done that way so why did this crew think it was ok. have we replaced the skilled workers that headed to aussie with unskilled? where they not trained? there is a lot to unpack in this inquiry
Check out Omexom Facebook page. Their latest crew looks like they’re straight off the plane. A quick 5 week course and they’re ready to go. I’m not saying this was the crew but you’ve got to wonder..
https://www.facebook.com/share/FqdhDT7t6V9aZykN/?mibextid=WC7FNe
A whole lot of comments from people who probably work in an office and have little to none experience on the tools.
people make mistakes, you can't have policies and procedures for everything.
That is how we learn as people, not by having people baby every decision you make.
That is what liability insurance is for.
Re power pylon. Manager redefines the meaning of the word 'competent'.
The maintenance work was carried out by Omexom, and their managing director Morenz Green said the competency of the people involved was not an issue.
“They are competent in what they do. We can’t allow anyone who is incompetent to work on the network.”
Source: https://www.stuff.co.nz/nz-news/350321433/cause-transpower-pylon-collap…
For compensation for Northlanders who were without power, Andrew said people can make a claim through the Consumer Guarantees Act and go through their electricity provider
Seems a bit crap that only those in the know get a refund. Couldn’t this be an automatic process?
RBNZ are so powerful that they control global food prices, knowing that our food prices will follow global trends with a 9 months delay. You've got to hand it to them.
Countries that have effectively done very little with monetary policy (eg japan, switzerland, denmark) tend to be net exporters. Our current account deficit makes it much more difficult to deviate from the herd. However, we did not need to move as aggressively up, and we could have started to inch down when it was clear that the wheels were coming off.
So we should temper our approach to inflation.
It peaked in the 7's here, and 10+ in some countries, you think we should have gone easier. Was 7%+ not enough? Or you think we could have gone slower and kept CPI to less than 8?
I think all the signs were there to go faster (especially considering their over aggressive approach to targeting unders)
In 1989, workers were paid for 38 million hours of work per year on electricity, gas, water and waste services. This dropped steadily as companies sought to reduce costs and increase profits. By 2009, workers were paid for 15 million hours. We finally woke up to our infrastructure maintenance crisis in the late 2010s and in 2023 we hit 46 million paid hours. I am guessing that some of the thousands of new people working in this industry are not that experienced or well-trained yet?
Yeah back in the days where workers houses looked to be painted in railway green, you could park you car next to ships and fish off the wharf, and workers on the roads had shovels that looked like armchairs.... Houses cost 3 times incomes.... Those where the days....
Then we went bankrupt and Roger Douglas had to clean up
Ice creams where 5p....
Nek Minnit
Just had the lines company putting a Fibre optic cable across my land. I was nearly ready to offer to put the cable in for them, then around 10 management came to have their photo taken in front of a power pole. Bit different from the stories me old power board mate used to tell me of going out to fix a line on his own and staying the night in the farmers shearing quarters, working for the power board.
I have worked across the public and private sector over decades. I don't see much difference in the quality of management in each sector - but I do think that the profit motive undermines effective public services - particularly when those services have an effective monopoly.
I think it is also important to recognise that the initial success of the new pseduo-private services (1990 - 2008), at least in terms of productivity, was enabled by two critical factors:
- The new companies just laid off loads of staff and reduced building and maintainance - and carried on collecting revenue - thus turning a profit. This had the impact of increasing productivity, which is basically surplus generated divided by total hours worked.
- 1990 to 2009 saw private debt levels in NZ grow from around 50% to 150% of GDP. All of that juicy new bank credit money flowing into the economy enabled companies to generate a decent profit during that period (and enabled the Clark Govt to run a budget surplus). Voila the 1990 to 2008 productivity boom!
Commentators saw GDP (surplus) increasing, productivity going up (see above), and Govt debt reducing during this period, and they thought they had found the magic formula. The fools were using economic models that ignored growing private debt and the ability of banks to print billions of dollars of credit money to help kiwis bid up the price of land and housing.
Fools indeed.
But then, they had been told that money was a store of wealth, by an echelon who hadn't been taught about entropy.
The pylon, and the ferry steering, and Wellington leaks (water kind) are all entropy; usually physical but of societal complexity too. Local Authorities were told, back in my time on one, to 'fund for depreciation'. Firstly, nobody could afford to, secondly ratepayers would have regarded it as theft (they think very short-term) and as surplus energy has dwindled and decay has increased, can't pay anyway.
An unsustainable system, built wide but shallow, predicated on endless supply. What could possibly go wrong?
No. Occams razor.
"It is unprecedented and inconceivable that all the nuts were removed at once,” Andrew said.
“Our view is that the specifications and procedures [for the maintenance] were not followed”.
https://www.nzherald.co.nz/nz/northland-power-outage-pylon-collapse-tra…
So why did the separate company's workers believe that doing it was an okay thing to do?
- Because they weren't trained properly? => management issue
- Because they were under performance pressure and were cutting corners? => management issue
- Because they wanted to see what would happen? => management issue
(I could go on and on.)
No. I don't think Occam's razor applies in situations of absolute incompetence like this.
It might. But I think we'll find that's not going to be the case.
I spent decades listening to those BS excuses for wilful serious misconduct from Union reps.
I still sacked many people who deliberately failed to follow procedures, compromised safety & quality & put themselves & their co workers at risk.
"To encourage the others". Eventually I didn't have to formally discipline any more for many years & our safety record was one of the best in NZ & world class.
Food for thought.
"We think buying long term US treasuries at negative term premiums while global Central Banks buy record amounts of gold may come to be seen as buying AAA-rated subprime mortgage bonds in 2006, even as home prices were already falling nationally: Something that should have been obvious at the time, but was only obvious in hindsight for many."
- Luke Gromen
The government is forcing thousands of consented social housing developments through a review process to check value for money. I guess the terms of reference might include not building state houses in "expensive locations", so it doesn't bother Nat-ACT's rich donors.
Fears construction jobs could go as Kāinga Ora pauses thousands of homes | Newshub
Much of the methodology is pretty flawed. Build 4-6 dwellings all of different design and construction on the same site, using a tender process that has different teams of builders on each job. To get value, you want a unified design, and the same people knocking out one after the other, thousands of times.
Agree with all that, haha. Great library too, and good Chinese veges store
But have a look at the delivery record there over the 15+ years the redevelopment programme has been running. Very Underwhelming in terms of net increase in homes
And the reliance on private development to part-fund the public housing is fine until…….
Then have a look at the social housing that was ‘state of the art’ around 2006. Looks awful now and there are CCTV cameras everywhere.
Not really sure housing needy people in high density housing is the way to go
Mentioned above. And also done in NZ in the 50s and 60s to resolve our housing shortage then.
- standardized design and materials
- nominate competent building contractors, define a rate
- make many houses
Fairly basic production line stuff. Currently it's done ad hoc. Slow and expensive.
As an added bonus, the maintenance also becomes significantly more expensive.
I dont think I need to rework the research you've done. You say you're much smarter than others yet you concluded "I went ahead (they call it early adopting) thinking someone had better. Thus energy efficiency, thus off-grid, thus near self-sufficiency in food. Then I realised that this was no more sustainable than the fossil-powered collection of stuff we've built up." All that learning for nothing huh. Most other people knew this all along and told you so, yet you wouldn't listen to them
You need better listening skills
"Most other people knew this all along and told you so, yet you wouldn't listen to them'
No, wrong. That is twisted spin. Most people just wanted to continue what they were doing. That included using fossil fuels at rates like 100 million barrels (plus 100 million BOE) a day. Which was clearly unsustainable, period.
The major echelon which asked 'what next' (totally disparaged by you-types) was the GND folk - who went down the renewable energy pathway. They - like you - assumed the permanence of something very temporary.
I have gone past that - as have a growing cohort of others. The trajectory of Professor Tom Murphy, from astrophysicist to warner, is a classic.
Oddly enough, you will get there; your thinking capacity is too much to keep choosing to be conveniently fooled.
Go well
Homes built now, will endure the bottleneck - the Limits to Growth inflection (the best World3 run, fit-wise, seems to the BAU2).
That means they need to be useful - indeed useable - beyond that.
Best guess is that the less energy-demanding, the better. The closer to food-production, the better (back yards; allotments, farms).
Chances are we'll need to be multi-generational again - several living close.
Those are the basics - does this/that proposal measure up? Also, our best efforts are probably put into raising the energy efficiency of EXISTING housing, before the event.
There's some basics we've totally lost sight of, hard not to agree with the above.
BUT
We have a world where people are allowed their own agency, and they're on a whole not interested in making pragmatic choices.
The best way to flight inflation isn't gold or Bitcoin. It's to take ownership of most of the basics you need to survive. Anything else is window dressing.
That's also easier done in groups, but instead we'll outsource it to the government, to give us a really watered down, impersonal, inefficient and substandard version instead.
When you stop and think about it you'll most likely realise that such an approach wouldn't work well. (Unless you think Soviet buildings are good?)
Is our goal
a) provide enough housing so that everyone's got somewhere warm and dry to live
b) provide bespoke style designs, trickle fed to a few lucky punters
As housemouse said, there could be a handful of designs, and just keep doing them. Not how it's happening now - it's been working really badly. A masterclass in exactly what not to do.
If the government can't get the basics of something like mass housing right, what other sectors are they commissioning projects/policy for using the same approach?
At some point government handed design and project management to the schools to sort out (with lump sums to do it). Now every other school has a bespoke new wing, that's not even in keeping with the rest of the school.
Whereas historically schools were built and commissioned by a central entity (hence so many of them looked the same).
yeah seems like new stuff in expensive locations is out for now, if they allow foreign buyers in, the NIMBYs can sell up, then when Labour get in they can build them and the Neighbourhood can turn to shite on their watch... big hint from National, if you are living next to a conscented but not built KO site, get out now!!!!
The Ministry of Housing and Urban Development was also asked about Kāinga Ora's future pipeline of construction.
It said, "Budget 2024 decisions did not provide for growth in the Kāinga Ora portfolio at this time. This does not mean that there will not be a build programme for Kāinga Ora but the focus will be on renewing the ageing stock where the need is the greatest.
Japan says it is ready "24 hours a day" to intervene in forex markets to support the JPY. USD/JPY is hovering around 160.
The US put Japan on a currency manipulator watch list on Friday.
The U.S. Treasury Department said Thursday it has once again put Japan on a list of major trading partners that it monitors for potentially unfair foreign exchange practices.
It is the first time since June last year for Japan to be on the "monitoring" list. In its biannual report to Congress, the department also placed six other economies on the list -- China, Germany, Malaysia, Singapore, Taiwan and Vietnam.
https://english.kyodonews.net/news/2024/06/0791e4862c0a-update1-us-puts…
GameStop. How does this stuff keep happening? If you want to gamble, the casino is probably less rigged...
https://www.stuff.co.nz/money/350320119/gamestop-back-will-it-be-meme-s…
Stuff is not qualified to discuss such matters.
If punters at the casino have a system that enables them to win, casinos typically ban those people from playing.
Similarly, the SEC works to protect the hedgies and Wall Street when the WSB communities play the system at its own game. Trading halts, etc. The SEC was established to protect the little guy and ensure markets were clean. They don't give a rats about the little guy. The SEC has been leading the jihad against the crypto community.
Stuff should never write about crypto. It would be embarrassing.
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