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 has been a lot of changes in the past 24 hours, headlined by more cuts by ASB. And they again have one of the lowest cards. Bank of China also cut. All rates are here.
TERM DEPOSIT/SAVINGS RATE CHANGES
ASB also make deepish cuts to their term deposit rates at the same time. Westpac has also cut their TD rates for 6 to 12 months but raising their 4 & 5 month rates. Bank of China also cut. And now Treasury has chopped its Kiwi Bond interest rates. More here. All updated rates less than 1 year are here, for 1-5 years, they are here.
KIWIBANK REPORTS RECORD PROFIT
'Maverick' Kiwibank nets a record $202 mln profit in the year to June 2024 by growing its lending book +9.3% to $32.4 billion. It says it is up for the challenge of 'taking on' the big four banks.
'CLEARLY WEAKER'
Infometrics said weaker economic activity and falling employment are hitting regional economies, with the economic crunch deepening across the country. Provisional estimates in the June 2024 Infometrics Quarterly Economic Monitor, suggests that economic activity in the June 2024 quarter was 0.2%pa lower than a year ago, turning year-end growth negative, at -0.2%pa, too.
SAME OLD STORY; INDUSTRY EMISSIONS DOWN, HOUSEHOLD EMISSIONS UP
Stats NZ reported that regional greenhouse gas emissions estimates for the year ended 2023 compared with the year ended 2022 show total regional emissions decreased -1.8% (down -1,440 kilotonnes) to 76,809 kilotonnes of carbon dioxide equivalents (CO₂-e). The largest decrease in emissions was in Waikato, down 772 kilotonnes (-5.3%), and the largest increase was Canterbury, up +404 kilotonnes (+3.3%). Industry emissions decreased -2.2% (-1,545 kilotonnes), largely due to electricity, gas, water, and waste services in Waikato, down -20% (-541 kilotonnes), and manufacturing in Northland, down -27% (254 kilotonnes). Household emissions increased +1.3% (+105 kilotonnes).
EARNINGS SEASON UPDATES
Our NZX50 profiles have been updated today with the recent release of full year results to June 30, 2024 for Genesis, (GNE, #18), for Auckland Airport (AIA, #3) and SkyCity Entertainment (SKC, #26).. Maybe one day in the future, we will be covering Kiwibank as a listed public company too. Who knows?
STRONG RETURN OF PASSENGERS
Auckland Airport’s underlying profit rose amid strong passenger growth. They said the total number of passengers and domestic visitors that went through the country’s biggest airport was up +17% to almost 18.5 million in the 2024 June-year. But they also warned of future capacity challenges.
NZX EQUITY MARKET UPDATE
Check out our new quick update of how the NZX is faring today, as at 3pm. We welcome comments on that update story.
HARRIS PINGED $1.4 MLN
The High Court has ordered Peter Harris, the former CBL Corporation (In Liquidation) managing director, to pay a penalty of $1.4 mln for continuous disclosure and misleading conduct breaches following proceedings brought by the FMA.
DU VAL DISASTER
The Government has put the South Auckland developer Du Val companies into statutory management after a 'complex corporate failure'. Statutory management is a remedy for only the most egregious collapses.
CONFIRMED - NIMS ARE HIGH
Bank NIMs (net interest margin) came in at 2.35% in June 2024, down from 2.38% in the same quarter in 2023 but quite elevated from the ten year average for this June quarter of 2.15%. (Over all quarters for the past ten years the average has been 2.14%.) This data is for all 27 registered banks operating in New Zealand. Not all of them offer retail services.
A GOOD EXPANSION
In Japan, although it rose, its August factory PMI is still contracting, slightly. On the other had Japan's service sector is expanding at a good rate. That is the seventh consecutive expansion in their services sector.
A MODEST EXPANSION
In Australia, their August PMI's sort of mirrored Japan but at a slightly lower level. The factory PMI is up but still contracting. Their services PMI is expanding although only at a modest rate.
SWAP RATES HOLD
Wholesale swap rates are probably little-changed today although they may firm slightly from here. Our chart below will record the final positions. The 90 day bank bill rate is down -1 bps at 5.24%. The Australian 10 year bond yield is unchanged at 3.92%. The China 10 year bond rate is up +2 bps at 2.15%. The NZ Government 10 year bond rate is up +3 bps at 4.25% and the earlier RBNZ fix was at 4.17% and up +1 bp from yesterday. The UST 10yr yield is down -1 bp from yesterday at 3.81%. Their 2yr is now at 3.94%, so that curve has now tightened up, inverted by just -13 bps.
EQUITIES MIXED
The NZX50 is down another -0.4% in Thursday trade. The ASX200 is up +0.3% in afternoon trade. Tokyo has opened up +0.6%. Hong Kong is up a mere +0.1% at its open. Shanghai is down -0.1%. Singapore is also down -0.1% at its open. The S&P500 ended its Wednesday session on Wall Street up +0.4%.
OIL EASES AGAIN
The oil price is down -US$1.50 from yesterday at just over US$71.50/bbl in the US, and at just over US$75.50/bbl for the international Brent price.
CARBON PRICE STAYS UP
Today the carbon price is unchanged at $60/NZU today. See our new daily chart tracker of the NZU price for carbon, courtesy of emsTradepoint.
GOLD SLIPS FROM HIGH
In early Asian trade, gold is down -US$17 from yesterday, now at US$2501/oz and a new high.
NZD MARGINALLY FIRMER
The Kiwi dollar is unchanged from this time yesterday, now at 61.5 USc. Against the Aussie we are up +20 bps at 91.4 AUc. Against the euro we are also down -10 bps at 55.2 euro cents. This all means the TWI-5 is up +10 bps from yesterday at 69.5.
BITCOIN FIRMISH
The bitcoin price has risen +0.9% from this time yesterday, now at US$59,950. Volatility of the past 24 hours has been moderate at just on +/- 2.6%.
USE OF AI
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74 Comments
US 2/10 is normalising from its inversion while the 3 month/10 year is still deeply inverted - suggesting up to 5 rate cuts might be need to normalise this part of the curve. This risks inflation potential taking off once more unless the US economy weakens significantly in the near future. Interesting 6-12 months ahead of us.
https://x.com/tavicosta/status/1826329545688903987?s=46&t=MUwQeKa7MkEJ7…
https://x.com/dgsommersmkts/status/1826331094641508833?s=46&t=MUwQeKa7M…
Yes the Wilkinsons Sword, cuts the DuV to the ground, about to slash at the remaining dead men walking: Wills and Wolfs ?
Its just a matter of time......tic, toc.....
Where the hell is the FMA??? Those taking the 10% "promised returns" (haha) are fools and will soon be parted with their funds, like an executer to the victims head.
WHERE IS THE BIG FMA WARNING, WORK?? HERE?
However, any investors in the developers deposit funds, must take the bad haircuts that come with this risky as lending!!
You really shouldn't be relying on the NZFMA to protect you, their track record is not ideal in this area.
This is why I invest in property, it means I am not reliant on a Wellington jobsworth bureaucrat promoted beyond their natural ability to filter out the shysters.
The FMA has been warning about DuVal since October 2021. They were public warnings. They took court action. All publicly discoverable with a simple search. It is not the FMA's job it insulate either investors or contractors from their own bad decisions. It is their job to ensure institutions act honestly and disclose. And to take action when they don't. They did. They deserve credit for how they handled this. Those same simple searches easily revealed the backgrounds and earlier failures of some of Du Val's principals. It wasn't hard, but you do have to use common sense. Greed shouldn't be rewarded. Greed has consequences. Du Val may not be the only risk in the current wobbling property market.
It is not the FMA's job it insulate either investors or contractors from their own bad decisions
I'm not so sure. If they genuinely had concerns about Du Val, which they did, they could have tightened up the definition of Wholesale Investor. Tightening that criteria may well have prevented some of the more predatory behaviour by Du Val who had been trading insolvent for who knows how long.
It's the same old hustle being repeated over and over and if it's not the FMA's job to clean it up, whose is it?
I can argue both sides of this, it's easy to cite greed and caveat emptor - but I can guarantee you 90% of the investors did not understand the legal structure of what they were getting into.
https://legislation.govt.nz/act/public/2013/0069/latest/DLM4702332.html
"...a financial adviser, a qualified statutory accountant, or a lawyer signs a written confirmation of the certification in accordance with clause 43."
https://legislation.govt.nz/act/public/2013/0069/latest/DLM4092483.html…
That's not exactly correct: to be validated, A has to also obtain a 3rd party confirmation from professional authorities.
How far should the State interfere with an individual's willingness to risk their own money? For their own potential reward
Disclosure: while I would qualify, I am not & have never sought formal certification as a Wholesale investor. I had looked into it seriously some years ago.
Refer back to David Chastons original comment above explaining the previous warning signals; there's a line to be drawn where protecting people from themselves creates a moral hazard (cf. SCF).
The point of the wholesale investor regime is that these people are backing their own investment abilities & also certifying their ability to withstand significant losses. If their egos compromise their honest assessment of their own talent then that will be an important lesson & learning experience.
And I refer you back to my and KH post, that regime was being abused in open sight yet allowed to continue. I have been rather critical of investors here but am gradually changing my mind on it.
Why do we need a deposit protection scheme for retail investors then, there is a risk free alternative that pays a lower rate?
"Why do we need a deposit protection scheme for retail investors then, there is a risk free alternative that pays a lower rate? "
Exactly. Currently 4.5% ~ a 0.5% discount vs ~5% 1yr TDs
https://debtmanagement.treasury.govt.nz/individual-investors/kiwi-bonds…
A cynic could suggest that the main aim of the Deposit Insurance scheme (which depositors will ultimately fund themselves) is to distract retail depositors from looking more closely into the OBR
We can't save people from themselves. Why is it today that so many feel that they can't be held accountable for their on poor decisions (no specifying you TK). It seems to be a generalised trend over the last decade or so where accountability has dropped lower and lower, reliance on the state and expectation of the state is at an all time high. Heads need to roll and sadly, people do need to learn the lessons of their investment choices, and that lesson being that nothing is ever guaranteed, and that risk comes with a potential downside that can't simply be avoided if it happens by simply yelping to the govt for help.
In this case, there are laws to save these people from themselves, and they were ignored. Dont put it on the naive and gullible who got sucked in to the "10% interest on your money" promises. Thats why we have laws. Those people at least deserve to have those laws enforced.
And you do need to exhibit certain financial knowledge or experience that would prove you knew what you were doing, so the third party can confirm it without breaching their ethical obligations to the "client" (supposed to be the investor, but in this case it is clearly the developer). An elderly pensioner who has never owned a share or investment property, who sells their family home and buys a pensioner flat, then hands over the balance of the house sale funds to DuVal and Williams Corp in return for 10% interest, believing that its just like a term deposit with a bank like the Facebook Advert infers, IS NOT a wholesale investor in any ones book.
The FMA knew that was what was happening, and did absolutely nothing except issue a "warning", leaving those naive investors at risk of losing their life savings. The FMA should have ordered that all existing retail investors be immediately repaid, then overseen all subsequent new investors to ensure the law was being complied with. The Regulator needed to do some actual Regulating.
It IS the FMA's job to enforce the law. And it is against the law to take money from retail investors for investments that the law says must only be offered to wholesale investors. The FMA knew they did this, did nothing but send a letter to the developers, then effectively turned a blind eye to them continuing to take money from retail investors (which they are still doing, to this day). No effort was made to force developers to return those illegally obtained funds to the investors who should never have been anywhere near these types of investments. The FMA is hugely at fault here, and its too late for those investors who will lose their life savings with the full knowledge and enablement of the FMA in their demise.
What is the point of having Securities Laws if nobody is going to enforce them, and we leave the people who those laws are supposed to protect hung out to dry with the full knowledge and support of the Regulator? It makes NZ look like a banana republic.
No updates on Lord Key and the insider trading allegations at Palo Alto Networks. He sold a batch of shares in June 2024.
But this is interesting. Palo Alto Networks earnings were announced yday.
- Revenue of $2.2 billion (+12% YoY) + Next-Generation Security ARR of $4.2 billion (+43% YoY)
It gets wilder. Nancy Pelosi is up 100% on her PANW calls making over $1.5 million on the calls. She bought the dip on PANW's worst day.
Honestly, you couldn't make this sh*t up. What the hell is going on?
https://finance.yahoo.com/news/nancy-pelosi-takes-position-palo-1400093…
Update on the Dems' capital gains tax plans. I've summarized the key points as short as possible:
• 44.6% long term cap gains tax on those earning >$1M
• 25% unrealized tax on those w/ net worth >$100M
Summary of Sleepy Joe's proposal - https://www.kiplinger.com/taxes/biden-calls-for-doubling-capital-gains-…
Kamala's backing of Bidenomics - https://www.wsj.com/livecoverage/dnc-election-2024-harris-walz/card/har…
The sooner all gains are taxed consistently, be they on 'income' or 'capital' the better. The distinction is artificial. And the sooner that tax avoiders/evaders are taxed like everyone else, the 'rich' and libertarians are treated like everyone else, the better. It is hard to get to the right spot in one jump. It will take many small steps. But at least Biden and Harris are trying and they deserve credit for that (as opposed to the charlatans trying to grift off the both ordinary people and 'basement dwellers').
And the sooner that tax avoiders/evaders are taxed like everyone else, the 'rich' and libertarians are treated like everyone else, the better.
Yes David. But I'm not sure how the donors will feel about that. Without the elite pulling the strings, the Dems don't really exist as a political force.
Republicans received about 55% of corporate political action committee (PAC) contributions, totaling approximately $189 million, while Democrats received 45%, amounting to around $154 million in the 2022 midterm elections. This indicates that while Republicans generally attract more corporate donations, the gap is not as wide as one might expect.
There are some companies and associations that clearly favor one party or the other when they give to candidates. For example, some organizations support Republicans more strongly, including the National Auto Dealers Association (73% to Republicans), the American Bankers Association (69%), the National Association of Home Builders (77.5%), and United Parcel Service (62%).
Others favor Democrats, including The American Hospital Association (56% to Democrats), the National Multifamily Housing Council (59%) and the American Association for Justice favor Democrats.
That's overall corporate donation split (which shows Republican's get more which sort of undermines your argument). But you actually said Wall Street prefers Dems, and when you look at which corporations are funding which party you would struggle to make a case that Wall Street favours Republicans, e.g. see the American Bankers Association which donates 69% to Republicans.
So maybe it isn't the wokesters who see what they want to see. First spreading Kamala misinformation rumours and now this. Are you down the rabbit hole?
And the sooner that tax avoiders/evaders are taxed like everyone else, the 'rich' and libertarians are treated like everyone else, the better.
I agree, and wonder what the global solution is when the wealthy threaten capital flight. Sure, some will go, but many will still remain as they will continue to profit and live comfortable lives due to the level of wealth they have. Hopefully if the USA lead on this we will see more multilateral change in this space. I do however wonder, in a world that seems to compete for lower and lower corporate tax rates, what will become of this space.
Yesterday CBA had a larger market cap than the Vampire Squid (Goldman Sachs). Because of market movements, GS moved above CBA overnight. Might seem unbelievable, but it's true.
This gives you some idea of the size of the Aussie mortgage market.
https://companiesmarketcap.com/banks/largest-banks-by-market-cap/
1990's Recession - Australia.
"Unemployment jumped to 10.8 percent. House prices remained resilient"
"House prices remained resilient". That's all that matters, apparently. (NB: They fell. About 10% from memory. People were walking away from their deposits etc. But that...must be the definition of resilience)
Getting shit done.
Day after accusing councils of wasting money, government puts $750K toward dance festival
Economic Development Minister Melissa Lee on Thursday afternoon announced the government would stump up $750,000 from its major events fund to go towards the inaugural World Dance Crew Championship in Auckland next year.
Auckland Council would also match the contribution, Lee said.
The announcement came a day after Prime Minister Christopher Luxon called on councils to "rein in the fantasies" and focus on the basics.
Japan's trade stats the perfect example of the price illusion "recovery" from 2020. It costs a ton more to get a lot less. That's why there is a global recession; not only do people have to pay those prices, it also means there is so much less stuff being made, moved, and bought. Link
Some sad news on the trades front (I'm in the trades, and someone close to me is involved in apprenticeship training):
- apprentices being laid off, left right and centre
- they've been used as cheap Cannon fodder the last few years (plus their employers have been getting govt subsidies)
- haven't been taught a full range of skills (been getting used for bitch work), so don't have very marketable experience
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