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. All rates are here.
TERM DEPOSIT/SAVINGS RATE CHANGES
Xceda Finance changed its TD rates today. All updated rates less than 1 year are here, for 1-5 years, they are here.
LABOUR MARKET WEAKNESS SHOWING THROUGH
Stats NZ released its monthly jobs data based on the IRD's PAYE system. That showed a fourth consecutive monthly fall in filled jobs, pointing to further rise in unemployment. Employment is in its weakest period since the Global Financial Crisis with the number of filled jobs down -0.5% on the same time a year ago
NO PROBLEM FOR NOW
The latest quarterly Reserve Bank figures show that now the long-expected DTI limits are finally with us, we can actually forget all about them - for the moment. These debt-to-income ratios have plenty of room to move before they become a real issue.
SALES UP, PROFIT DOWN
Local supermarket operator, Australian-owned Woolworths NZ said its annual profit fell -56% despite booking rising revenues that topped $8 bln food sales, up +3.2%. It said the profit fall was due to ‘competitive market’ pressures making it a "challenging year".
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. Updates to annual results were released today for Meridian and Precinct.
IT IS NEVER EASY AT SYNLAIT
Synlait's dramas have taken a new twist. Former CEO John Penno has challenged the right of both Bright Dairy and A2 Milk to vote on its capital raising plan. Penno owns 2.3% of Synlait. He left his roles with the company in May 2024. Here is his latest rationale.
STUDHOLME/WAIMATE UPGRADE
Meanwhile, Fonterra says its South Canterbury site will be expanded with a $75 mln upgrade as a hub for high value proteins. These are used in products of medical and high-protein sports nutrition customers.
MORE CAPACITY
The central bank's foreign currency intervention capacity, while modest at $22.3 bln, rose more than +$1.3 bln in July from June, the largest rise that didn't involve a direct purchase/sale. (The July fall in the NZD might have accounted for about half of the rise because it is valued in NZD. The recent rise in the NZD has all happened in August.)
MARGINALLY LOWER, BUT STILL ABOVE TARGET
Australia released their month CPI Indicator today. It rose 3.5% in July from a year ago, down from June's 3.8% but above consensus of 3.4%. It was the lowest figure since March, as electricity prices fell sharply following the extended Energy Bill Relief Fund rebate. Inflation remains outside the RBA’s target range of 2-3% and that electricity component is hiding some of the higher prices elsewhere. Don't expect Aussie rate cuts any time soon. (Their policy rate is 4.35% with financial markets pricing in one -25 bps cut in December but with low conviction; ours 5.25% with markets pricing in -75 bps of cuts over October and November.)
SWAP RATES STILL LITTLE-CHANGED
Wholesale swap rates are probably little-changed again today. Our chart below will record the final positions. The 90 day bank bill rate is unchanged at 5.22%. The Australian 10 year bond yield is up +4 bps at 3.97% after the high inflation reading. The China 10 year bond rate is up +1 bp at 2.18%. The NZ Government 10 year bond rate is up +5 bps at 4.31% and the earlier RBNZ fix was at 4.25% and up +8 bps from yesterday. The UST 10yr yield is down -2 bps from yesterday at 3.79%. Their 2yr is now at 3.90%, so that curve has now tightened up, inverted by just -11 bps.
EQUITIES MOSTLY LOWER AGAIN
The NZX50 is down -0.3% in late Wednesday trade. The ASX200 is down -0.4% in afternoon trade. Tokyo has opened down -0.2%. But Hong Kong is down a full -1.0% at its open. Shanghai is down -0.2%. Singapore is down -0.4%. Wall Street ended its Tuesday trade up +0.2% to buck the trend.
OIL DOWN
The oil price is down nearly -US$1.50 from yesterday at just under US$75.50/bbl in the US, and at just over US$78.50/bbl for the international Brent price.
CARBON PRICE HOLDS
Today the carbon price is only marginally firmer today at $60.70/NZU. See our new daily chart tracker of the NZU price for carbon, courtesy of emsTradepoint.
GOLD FIRM AT ITS HIGHS
In early Asian trade, gold is up +US$5 from this time yesterday at US$2514/oz.
NZD TURNS HIGHER
The Kiwi dollar is up +30 bps from this time yesterday, now at 62.4 USc. Against the Aussie we are up +20 bps at 91.8 AUc. And against the euro we are up +30 bps at 55.9 euro cents. This all means the TWI-5 is now at 70 and up +30 bps.
BITCOIN DROPS SHARPLY
The bitcoin price is down -5.7% from this time yesterday, now at US$59,374. Volatility of the past 24 hours has been very high at just on +/- 4.3%.
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66 Comments
There's 25 points (1/4%) of easing priced into every meeting until December next year so rates have and are falling. The NZD going up is in fact the USD going down. And when you get a fundamental shift in the USD, the NZD move tends to get exaggerated because we are a small and relatively illiquid currency compared to other highly traded ones.
... electricity prices fell sharply following the extended Energy Bill Relief Fund rebate. Inflation remains outside the RBA’s target range of 2-3% and that electricity component is hiding some of the higher prices elsewhere.
Remember folks
- Govt action to prevent the high price of electricity feeding through to other prices - very bad
- Central banks increasing unemployment to hold wages below the cost of living... to prevent higher wage costs feeding through to other prices - excellent monetary policy in action
I don't understand the need for NZ governments to look appealing to businesses so as to not spook investors. FDI as a percentage of GDP in NZ has been in steady decline since the turn of the century and gross capital formation outside of buildings has also lagged since the GFC.
For reference, I say NZ governments [plural] because Cindy appeared as weak against the will of big lobbies in NZ as the current lot does. Remember the PM Cindy's Business Advisory Council chaired by Luxon.
“Labour has increased spending by 80 per cent and caused debt to blow out from $5 billion in 2019 to $104 billion in the PREFU forecast." For no noticeable improvement.
And National's current budget recovery plan requires even more debt in the short term.
"NZ governments [plural]" have an economic fundamentals credibility gap that Labour last effectively addressed in the 1980s, National in the 1990s. That's an generation or 2 of learning experience removed from their current policy incumbents.
Local supermarket operator, Australian-owned Woolworths NZ said its annual profit fell -56% despite booking rising revenues that topped $8 bln food sales, up +3.2%. It said the profit fall was due to ‘competitive market’ pressures making it a "challenging year".
Kroger (American company that operates supermarkets and multi-department stores) has a net profit margin of 1.43%. It has been operating on razor-thin profit margins for the past 30 years.
Walmart’s profit margins are about 3%. They could lower prices that much if they made zero profit.
Producers of food products typically have margins in the single-digit to low-double-digit range, which is normal for a business, and similar to what they were a decade ago.
Let's say the money supply increases by 50% within a few years, why would you expect prices not to increase throughout the supply chain?
- complete the Health Sciences First Year programme at University of Otago, or the first year of either the Bachelor of Health Sciences or Bachelor of Science in Biomedical Science at Auckland University
- complete a five-year Bachelor of Medicine and Bachelor of Surgery (MBChB) degree at Otago or Auckland
- work for two years as a house officer (supervised junior doctor) in a hospital
- Cost of degree study approx. 140K
- After 6 years of intensive study and training salary range of: 80k to 140K
- The Resident Doctors' Association reports working hours for doctors, in New Zealand, average between 55 and 60 hours a week and up to 12 days in a row without a break
- Then complete another six years of specialist training and examinations to become a Fellow of the Royal Australasian College of Physicians
Or become a real estate agent, no training, put up some "for sale" signs and start earning....
It's actually crazy, when you think about it, that anybody commits so much of their life to training in this manner (surgeons are even more absurd, isn't it like 13-15 years' total training for some specialties?).
A great deal of respect is owed just for that dedication alone, and I doctors/surgeons/medical specialists I have no issue whatsoever being paid big bucks in order to encourage people to train, and to attract 'imported' talent, and to retain staff. I have less issue with some specialist surgeon raking in a milly a year plus, than I do with some exec at the Christchurch City Council pulling in $350k to sit around in meetings and sign us up to unnecessary stadiums.
I do think we should put on our big boy pants as a society and develop schemes to fund the entirety of training for aspirant doctors, surgeons, nurses and other essential health professionals - perhaps with some kind of bonding system so they can't just up sticks and leave within a year of qualifying. We'd presumably get a wider, more diverse pool of prospective medical professionals and based on population projections etc be able to map out a sufficient funnel of trainees. Cancel free fees for less useful degrees such as BAs and funnel it all into paying for properly funded training for critical healthcare workers.
Of course that takes years and years, so in the interim we need to up the pay and then do what everybody else does and try to poach from overseas.
In the meantime, don't get sick or injure yourself! Maybe I'll trade in the motorbike for a Volvo SUV.
Is it time the whole training system for doctors is overhauled. If the doc is going to be say a knee and hip surgeon why not just train in that specialty right from the start say after year 1 of med 101 general intro to medicine. Also the working hours in hospital are plain stupid. It’s the medical council view of “ we did it that hard so should you”. Irony is they are happy to support safe working hours for other industries eg truck driving, but not their own.
Read in the papers. They stopped paying locum doctors such high rates (1.5x + standard rates) to provide relief, so they don't bother turning up or head overseas. It's a kind of like a quiet strike
There's probably job prospects once HNZ figure out their actual financial position and a realistic budget.
Unfortunately HNZ's finances probably won't satisfy everyone's expectations or targets, so finances will dictate either harbouring more and more risk by sweating assets and people or reducing services. I suspect it'll be both, much to the chagrin of the Commissioner
France just lost $10B in one day as the UAE has just reportedly put an order of 80 jets on hold (reported through Al Jazeera) because of Telegram's Pavel Durov, a UAE citizen with UAE passport.
This is possibly just the start of the capital strike that Macron has brought on France.
Its rigging when you pull like 200 people off the ballots nationwide and the whole election is only about keeping the right out as none of the other parties have a thing in common so when it comes time for them to take up the reins its a total mess. That's not politics its rigging an election.
Yes and I see Zuckerberg has admitted that the Democrats forced Meta to censor speech regarding Covid-19.
https://www.foxbusiness.com/politics/meta-ceo-admits-biden-harris-admin…
The bitcoin price is down -5.7% from this time yesterday, now at US$59,374
Ethereum dumped heavily last night. Mentioned to my water cooler mate he responded "glad I didn't buy any of that crap."
Getting the feeling that "crypto" is currently at the "sell your house to buy more" level. Feels like that time back in 2020 just before the price went vertical from 10k to 60k in 6 months.
Downtown San Francisco studio condo sale in the SOMA (wonderful area) neighborhood. Purchased in 2019 for $450k Just sold for $235k.
Nice gaff if you ask me. No way you could pick up something like this up in one of Aotearoa's metropolitan areas.
https://www.redfin.com/CA/San-Francisco/195-7th-St-94103/unit-302/home/…
It's ground zero for progressive liberal policy
Nice story bro. Nothing to do with it being home to tech companies that
1. Have made massive lay-offs
2. Were are the forefront of remote working movement during the pandemic which led to massive exodus of workers escaping high rents and property prices
Unless you're saying it's progressive liberal policy to lay people off and encourage remote working.
Ukrainian debt is now apparently a lucrative and highly profitable asset for speculation.
A British investment fund stated that Western investors and funds are making significant profits from Ukraine's "junk" bonds. Bonds from "Naftogaz," "Ukrainian Railways," and "Metinvest" have yielded returns of 73%, 52%, and 19% respectively for investors.
According to the British fund, the high returns are due to the fact that these debts are paid off with financial aid from Europe, making them, despite their junk status, very reliable and profitable.
In essence, German taxpayers are funding aid to Ukraine, and this money ultimately ends up in the hands of British funds that effectively own Ukraine.
Wonderful.
https://www.bloomberg.com/news/articles/2024-08-22/fund-beats-99-of-pee…
I have a good relationship with my boss, if they ring after hours I answer it... if I am out the back of barrier its bad luck... its my time, On call is on call the rest is best efforts on my side but no obligation ....
London | Britain’s Labour government is watering down ambitions to give employees a legal right to ignore work demands outside office hours, favouring softer rules that had limited impact for workers in Ireland.
Rather than seeking legislation for the “right to switch off”, ministers instead will push for a code of practice for businesses, according to people familiar with the matter who asked not to be named. The government is modelling its approach on Belgium and Ireland, which have guidelines on out-of-hours communications, and in contrast with France and Portugal, where the right to disconnect is enshrined in law.
This new UK government seems like such a flop already. I was in the UK when the campaign was on and during the initial post-election period. People were going around playing the 'things can only get better' song from when Labour got elected in the 90s under Blair. Jesus healing the sick and restoring sight wouldn't rate compared to some of the miracles people seemed to be proclaiming would occur the nanosecond Starmer got into No 10.
Fast-forward a few months and he's up on stage declaring that things will have to get very much worse before there is any chance of getting better. But at least "those with the broadest shoulders will carry the greatest burden". In other words RIP whatever is left of the middle class.
The only good news I've seen from the UK in the last few months is Oasis getting back together. Maybe a resurrection of the 'Cool Britannia' movement will save the day.
Oz legislation in force Monday
https://www.abc.net.au/news/2024-08-26/what-right-to-disconnect-from-wo…
my family shop pak n save for cheap and NW for Quality, countworths is just high priced low quality...
there is no future in the middle
as we process our own sheep and beef its just chicken and baking prods we hate the sugar loaded crap.
I just do not rate them as worth visiting, on a cost per item basis for product I can buy cheaper at pak and save, unless they are the only shop in your town I do not understand their existance
I think a bunch of their traffic is people who shopped at Foodtown 40-50 years ago.
The rebrand from Countdown to Woolworths makes me think they're trying to ditch any perception they're affordable.
My local one sells a coconut cream no one else does. Otherwise I'd never go in there.
All their stores look tired in comparison to New World
Personally unverified but reputable source fun fact, Pac n save pay more for their concrete floor than tiles because it makes them look cheap. Keeping the roof tiles off is also a strategy to make things look wholesale.
US stock market concentration is getting worse..top 10 stocks now make up 38% of S&P500 market cap.
The market is being held together by only a handful of companies (or investors speculating about the valuation of those companies..)
https://x.com/kobeissiletter/status/1828418181678932215?s=46&t=MUwQeKa7…
Most of those companies have higher P:E ratios than the average for the S&P 500.
Although Google and Meta's is lower than the average.
So I guess it's a mixture between these businesses just being that much larger than many, but then some of those are also over valued. For "reasons".
If Elon can't pull a rabbit from a hat I think he could be in for a bitch slapping.
US stock market concentration is getting worse: The top 10 stocks now reflect ~38% of the S&P 500 market cap, near the all time high of 39% seen in June. Over the last decade, this share has more than DOUBLED. To put this into perspective, in 2020, the top 10 companies accounted for just ~25% of the S&P 500. Now, this percentage even exceeds the 2000 Dot-Com bubble levels by ~12 percentage points. A few key stocks *are* the stock market.
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