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
There are no changes to report todays. All rates are here.
TERM DEPOSIT/SAVINGS RATE CHANGES
BNZ trimmed two key TD rates today. More here. All rates less than 1 year are here, for 1-5 years, they are here.
CRYPTO SPECULATORS NEED TO PAY THEIR TAX
IRD is chasing cryptocurrency tax dodgers. They are eyeing 227,000 local customers with transactions valued over $7.8 bln. Income tax applies, even to libertarians and conspiracy theorists.
DEAD CAT?
CoreLogic says average dwelling values have been slowly declining for the last three months, and an earlier increase was a dead cat bounce
FOUR YEARS OF DEFICITS
The May 2024 Crown Accounts show that the Operating Balance was a tiny +$157 mln for the month, +$817 mln for the eleven months to May and +$3.57 bln for the twelve months to May on a full accounting basis. The more limited OBEGAL delivered a -$1.24 bln deficit in the month, and -$7.75 bln for the first eleven months. For the equivalent May in 2023, it was a -$6.5 bln deficit. The last time OBEGAL was in surplus was in the year to March 2020.
CANARY SIGNALS
Digging in to the Crown Accounts detail, you can find two interesting trends. The $5.65 bln income tax collected from individuals in the month was the most in any single month taken, ever. That is just shy of $60 bln paid by individuals for the twelve months to May, also a record high - and by some margin. But, and it is an important 'but', the GST collected by the Crown fell in May from April, and - pandemic excepted - that seems to have resulted in the first fall on an annual basis since early 2018, and prior to that, since 2011.
WEAK DEMAND
The latest NZ Government bond tender was poorly supported today. The $225 mln offered for the May 2031 bond only got bids worth $241 mln. It was a bit better for the May 2034 offer of $175 mln where 314 mln of bids were received. But the May 2041 $100 mln actually only got $94 mln in bids. It is very unusual to not to get a full tender item filled. The last time that happened was in February 2023, and before that in 2012. It is probably a significant 'failure' and will probably result in higher yields for Government funding.
KIWISAVER RAISES HOUSEHOLD WEALTH, HOUSING HURTS
Statistics New Zealand figures show household net worth rose by +$7.8 bln in the March 2024 quarter, even though house and land values dropped by -$2 bln.
WORKERS TAKE RECORD SHARE OF ECONOMIC ACTIVITY
The same Stats NZ data shows that 'compensation of employees' as a share of total economic activity in the March 2024 quarter rose to over 47%, the highest level (pandemic excepted) since this data series started in 1987.
NATIONAL SAVINGS RETREAT
And again from the same data series, the national savings level slumped to a very low +$6.2 bln in the year to March, the lowest in more than a decade. And as Stats NZ themselves point out, it is business dis-saving that is driving the retreat in national saving. Hard to save when profitability is a chronic struggle.
DIRECTOR OF SHELL COMPANY BANNED
Property developer Gregory Olliver has been prohibited from being a director or promoter of, or from being involved in the management of any company for three years from 20 October 2021 following the Court of Appeal judgment that upheld an earlier order from the High Court. Olliver, who was the sole director of BBG Holdings at the time, structured a highly speculative attempt to rescue a subdivision development. However, BBG had no assets or assurance of support to enter into a contract to start work on the subdivision which it had no legal title to. Instead, BBG had a contract to acquire part of that subdivision which was conditional upon the removal of caveats. That condition could not be fulfilled.
SWAP RATES NOT DOING MUCH
Wholesale swap rates are likely to be little-changed again today. Our chart below will record the final positions. The 90 day bank bill rate is down -2 bps at 5.61%, a level it has hovered around for 120 days now. The Australian 10 year bond yield is down -1 bp from this time yesterday at 4.46%. The China 10 year bond rate is unchanged at 2.25%. The NZ Government 10 year bond rate is up +4 bps at 4.78% and the earlier RBNZ fix was at 4.69% and up +1 bp from yesterday. The UST 10yr yield is down -6 bps from yesterday at 4.37%. Their 2yr is now at 4.71%, so the curve is a bit more inverted at -34 bps.
EQUITIES MOSTLY POSITIVE
The NZX50 is down -0.3% in late trade. But the ASX200 is up a full +1.0% in afternoon trade. Tokyo is up +0.2% at its open. Hong Kong is also up +0.2%, but Shanghai is down -0.2% to open their day's trading. Singapore is up another +0.6%. The S&P500 was up +0.5% in their Wednesday trade on Wall Street. These markets will be very quiet tomorrow because the US is on a public holiday (Independence Day) and many are likely to also take off their Friday as well.
OIL LITTLE-CHANGED
The oil price is down -50 USc at US$82.50/bbl in the US, and still at US$86.50/bbl for the international Brent price.
GOLD UP
In early Asian trade, gold is higher since this time yesterday, up +US$31 at US$2358/oz.
NZD HOLDS
The Kiwi dollar is a little firmer from this time yesterday, now at 61.1 USc. Against the Aussie we are little-changed at 91 AUc. Against the euro we still at 56.6 euro cents. This all means the TWI-5 is little-changed at 70.3.
BITCOIN FALLS
The bitcoin price has fallen -4.0% from this time yesterday, now at US$58,998. Volatility of the past 24 hours has been moderate at just over +/- 2.8%.
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46 Comments
https://www.aljazeera.com/news/2024/7/2/more-than-200-candidates-pull-o…
and Sleepy Joe
and kill the Ponzi national.....
Conspiracy realism 101.
CNBC reports that the US needs more of the critical metal tungsten, an important material in weapons, automotive and semiconductor sectors, but that 'China owns 80% of its supply chain'.
About 10-15 years ago, China apparently recognized that the US could not possibly keep the USD “as good as gold for oil & other commodities” forever, and began cutting out the middleman, buying commodity supplies instead of USTs w/their USD surpluses.
It was a too-late attempt to prolong a paradigm which has passed it's use-by date.
Rates, from here on in, will outpace inflation. House prices will fall to match ability to pay. Manty will go t--ts up, default. They won't spend. Developers won't get approval in a sinking market; Councils will be pushed by a desperate Govt. People - with short term memories and no idea (thanks to the failure of the MSM, in large part) - will vote incumbents 'out' on a rotational basis.
Until the System implodes - which I reckon to be this side of 2030.
Bishop would have been better turning the immigration tap fully 'off'.
I don’t think it’s a great idea.
If councils provide for enough density then there won’t be a strong case for sprawl. Will there?
Especially if developers have to pay for all the infrastructure. It will seldom be viable.
The changes to remove minimum floor areas and balcony requirements will really help incentivise density. Will make a big difference.
National are really showing Labour up.
I think I saw many of these places with minimum floor areas removed already existing in Wellington; there was no kitchen, the toilet was in the bedroom (the only room) with no walls or door so it was in full view of anyone else, incredibly tiny basin you could not full a cup in and the shower was a pull out from the wardrobe. Not only unsafe (esp with close carpeted floors and poor drainage) but toxic to health as well. Oh and the windows all leaked and were coated in black mould.
They called them bed sitters up until the 60’s or so. A room in an old family sized house. Communal bathroom. Penny in the slot for hot water. Furnishings, eg mattress from previous occupants. One of those little Atlas stoves. Squalid fails as an adjective. Still they came and stayed and paid for it but from what I witnessed, and fortunately didn’t have to experience, it was a pretty gross way to live.
EQUITIES MOSTLY POSITIVE.
The Warehouse at 95 cents (the lowest it's been, and a long way from its high on Day One, $8.75) looking to do a Pumpkin Patch, as is Fletcher Building ( $2.85 and looking nervous)? Throw in Air NZ at 53 cents, the rights issue level of recent times, and 'positive' is very subjective.
Fletchers will be broken up
re Air NZ
Unionised staff are not thought to be in the firing line.
Last year’s annual report showed that of 12,000 staff in total, there were 1364 management roles. Just over 200 managers were paid between $200,000 and $500,000 and 21 paid more than $500,000.
pass me a knife
re The Warehouse
The latest annual report showed significant staff costs. As well as Grayston's $2.793 million salary, four other people were earning more than $1m a year, 13 were earning more than $430,000, 47 were earning between $160,000 and $430,000 and 739 earning between $100,000 and $260,000.
https://www.rnz.co.nz/news/business/520304/what-went-wrong-for-the-warehouse
This is the root of the issue when it comes to buying from local businesses. Someone imports them, charges a distributor, retailer then sells them - everyone has staff and ground rents to deal with and inflates the price something wild because everyone is clipping the ticket.
That's right sammnz, but it also employs a lot of people. If we by pass everything between the manufacturer and consumer I guess only the distributer gets anything.
Over the ages society has worked on trading. This has enabled several families to survive by passing produce on. It is about commerce. Sure simplify everything and it is cheaper but who will be left to buy?
Up to 140,000 homes sitting empty in Aussie apparently. If I were king for a day, I'd implement a plan to make as many of them as a livable as possible. On the public purse.
During an apparent housing shortage, when record low rental vacancy rates are pushing rents through the roof, experimental figures released by the Australian Bureau of Statistics last year estimate that at least 100,000 residential dwellings were uninhabited.
"Both electricity [usage] data and the government [administrative] records seem to suggest that about 1.3 per cent of all residential dwellings in Australia are inactive," says Duncan Young, who manages the census and population statistics for the ABS.
"That's between 100,000 to 140,000 dwellings."
The rate of vacant dwellings is, probably unsurprisingly, generally higher in rural and remote areas of Australia.
However, there is also a surprisingly high proportion of vacant dwellings in Australia's city centres and immediate surrounds, at 3.1 per cent for the City of Sydney and 5 per cent in the City of Melbourne.
https://www.abc.net.au/news/2024-07-04/derelict-homes-part-of-the-answe…
Mr Young warns some caution must be exercised interpreting the data, which was taken over the few months leading up to the census in August 2021.
Yeah, its amazing how there are empty homes when you close your borders and lock visa holders and citizens out of your country.
Not surprising about the savings retreat, company's in recievership on the rise, maybe another reason to drop the OCR soon. The pain in the economy is evident.
And as Stats NZ themselves point out, it is business dis-saving that is driving the retreat in national saving.
I was previously 80% out of crypto. Now 90%. I'm not inclined to sell the rest (might actually buy more if it continues to fall).
Its pretty funny IRD are chasing people for crypto taxes. Imagine the massive tax losses people will be applying against their personal income this year.
British Columbia tenancy laws getting even stricter. From July 18th landlords are required to give 4 months notice for all evictions instead of 2.
This will make tenanted properties even harder to sell.
https://news.gov.bc.ca/releases/2024HOUS0115-001044#:~:text=Starting%20….
Yes, businesses are slipping further into deficit ('dis-saving') as the economic contraction bites harder. Households and Govt are also racking up debts for the same reason. So who is going into credit? The answer is banks and offshore investors who are running big surpluses and amassing ever more NZ financial assets. You can see this clearly in this graph.
The global economy has shifted post-COVID and our reliance on relatively expensive imports is blowing our current account deficit out. We can only continue to import expensive tech, digital services, oil, machinery and cars if our domestic sector (Govt, households, and businesses) collectively run big deficits...... or we suddenly find a huge pile of high-value exportables!
Yep, we sold our big banks to Australia and then all took out massive mortgages with said banks. Now interest rates have risen, more and more local money is flowing overseas to Australia which then draws in many Kiwi workers due to open movement. And they have more money from NZ flowing over there to spend etc.
I suppose one somewhat silver lining to this situation is that tanking the housing market will mean Australian banks would be the ones to eat the worst of the damage. Although obviously lots of caveats to that, it is interesting to think about.
Might be a hint as to why RBA has been so reluctant to hike interest rates.
Hard to really overstate what an utter clusterf**k the last 3-4 decades of NZ economic management has been. Just staggering displays of ineptitude by NZ governments on both sides of the aisle.
Amen to that last paragraph. We have juiced our economy with bank credit flowing through our housing ponzi for the last 35 years. Mind you, plenty of other countries made the same mistake - liberate finance... the market is best placed to allocate credit... derivatives for the win... yaaaaayyyy!
Yeah 800 for rent for a townhouse and around 800k to 900k to buy a actual 3 bedroom one. You think we improve housing ownership rates with that market. Even as rent those costs are insane for most townhouses. These are not 6 bedroom properties. Checking most for rent and sale on trademe they are barely 3 bedroom, (but I suppose you could fit more then a couple per room and in the shared spaces).
You see I checked the estimated effects of an 800 rent to even start saving for the amount required to save & eventually buy a home the similar facilities & functionality (e.g. similar distance/rooms/no major remedial work needed that would prevent insurance or cause sudden failures etc). It is not good. It is not affordable and geez 800 to rent does not leave much to savings if you have a family on a median income.
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