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
None to report today, so far at least. All rates are here.
TERM DEPOSIT/SAVINGS RATE CHANGES
None here either. All updated rates less than 1 year are here, for 1-5 years, they are here.
STILL FALLING
Dominant Auckland realtor Barfoot & Thompson ended winter with prices for houses they sold continuing to fall and stock levels at a 14 year high for the time of year.
HIGHEST SINCE GFC
Latest RBNZ figures show the total of non-performing housing loans has now risen above $2 bln and is at levels not seen since the aftermath of the Global Financial Crisis.
UP BY MORE THAN A THIRD
Centrix says company liquidations are continuing to rise with the manufacturing sector most affected over the past year. Overall company liquidations rose more than a third in the June quarter from the same period in 2023.
TRADE TERMS AVERAGE
Our terms of trade moved against us in Q2-2024 which is the ninth consecutive quarter that this has happened. Perhaps a silver lining is that the latest year-on-year decline is the least in the series - and the last two quarters gained on the prior one.
SOON TO BE A $1 BLN EXPORT?
This same data shows that we exported 12.575 tones of gold in the year to June 2024. That brought an export value of $837 mln.
NZX EQUITY MARKET UPDATE
Check out our quick update of how the NZX is faring today, as at 3pm. We welcome comments on that update story. We have added some key index fund performance tracking.
ENGINE ROOM OPTIMISM?
The Hunter Campbell Mood of the CFO survey shows a surprisingly strong outlook for growth in the year ahead, despite clear economic challenges, following on from a remarkably upbeat view of performance over the last year. Thirty percent of CFOs feel upbeat or bullish about company performance over the next 12 months and anticipate modest to strong growth, they report. Only 21% of CFOs reported revenue declines, and 29% reporting profitability declines.
ALLEGED ADVISER THEFT
The FMA has filed criminal charges against a former financial adviser. The defendant, who has interim name suppression, has pleaded not guilty to two representative charges of theft by a person in a special relationship. The FMA alleges that the defendant procured approximately $1.7 million from two sets of clients on the basis that he would invest the funds procured on their behalf. It is alleged the defendant instead used the funds obtained for personal purposes. The alleged offending occurred between 2016 and 2022.
POSITIVE AUCTION LIKELY
There is another full diary auction tomorrow morning and all signs are good at this point. Last week's Pulse event delivered a WMP price that was its highest since October 2022. The dairy derivatives market suggest that the Pulse price levels will be maintained. If that turns out to be the case, WMP prices will be more than +30% higher than year-ago levels.
DEBTORS, LIKE US
Readers might be surprised to learn that, despite strong mineral exports, the Lucky Country is now running balance of payments deficits. Australia’s current account balance fell by AU$4.4 billion to a deficit of -AU$10.7 bln in the June quarter. This was the largest since June 2018, reflecting continued falls in bulk commodity prices and higher income paid to non-residents. They ran a -AU$6.3 bln current account deficit in Q1. For the year to June, they now have a -AU$18.8 current account deficit, the largest annual level since March 2018. In a long look back at their balance of payments data, in fact the 2019 to 2023 period of surplus has been the only period since the start of this data series in 1960 that Australia has run current account surpluses. It is this recent three years that is the anomaly, not the return to deficits.
SWAP RATES 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 down -2 bps at 5.21%. The Australian 10 year bond yield is down -1 bp at 4.04%. The China 10 year bond rate is down -1 bp at 2.16%. The NZ Government 10 year bond rate is unchanged at 4.37% and the earlier RBNZ fix was at 4.34% and up +5 bps bps from yesterday. The UST 10yr yield is holding at 3.91%. Their 2yr is now at 3.93%, so that inversion is now a minor -2 bps.
EQUITIES MIXED & QUIET
The NZX50 is down -0.2% in its late Tuesday trade. The ASX200 is down -0.1% in afternoon trade. Tokyo has opened its Tuesday trade up +0.2%. Hong Kong is down -0.2% and Shanghai has opened down its own -0.2%. Singapore is up +0.6% at its open. Wall Street is still closed for their Labor Day holiday and the S&P500 futures suggest it will open tomorrow little-changed from Friday's close.
OIL EDHES UP
The oil price is up +US$1 from this time yesterday at just over US$73.50/bbl in the US, and at just over US$77/bbl for the international Brent price.
CARBON LITTLE-CHANGED
Today the carbon price is marginally softer today at $61.50/NZU. See our new daily chart tracker of the NZU price for carbon, courtesy of emsTradepoint.
GOLD DROPS FROM ITS HIGHS
In early Asian trade, gold is up a minor +US$2 from yesterday at US$2494/oz.
NZD EASES BACK
The Kiwi dollar is down -20 bps from this time yesterday, now at 62.2 USc. Against the Aussie we are down -30 bps at 91.9 AUc. And against the euro we are down -20 bps at 56.2 euro cents. This all means the TWI-5 is now at 70.2 and down -20 bps.
BITCOIN DROPS AGAIN
The bitcoin price is up +3.5% from this time yesterday, now at US$59,408. Volatility of the past 24 hours has been moderate at just on +/- 2.1%.
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52 Comments
Not everyone agrees that the FMA was right to put Duval into statutory management - eg the shareholders
https://www.stuff.co.nz/nz-news/350401412/du-val-shareholders-urge-gove…
https://www.stuff.co.nz/business/350395959/damien-grant-was-statutory-m…
Just my opinion, but I think Damian possibly misses some important points:
1. While his perspective is generally on the mark, I feel that the ruling elite (a term used to describe the prevailing network of key decision makers) may feel spooked. Nobody really understands the tangled web and what happens when it unravels.
2. The wider community may be spooked as well. When a butterfly flaps its wings, we need to understand that the resulting chain of events can be far more destructive than imagined. To be honest, I think that realization is becoming greater.
I'm not convinced Statutory Management was required, far bigger companies have been wound up outside this process.
Of course the shareholders aren't happy, they are as good as wiped out under SM. Their only hope is to keep the corpse alive long enough such that some other mugs can be convinced to tip in. Just like the Ruapehu life time pass holders, clinging on in denial of the inevitable bad news.
"Nobody really understands the tangled web and what happens when it unravels."
Bless you, J.C.
There are some 'mega player advisers' that with a single utterance, move markets, (most, usually after their clients have taken their advice).
The funny thing about this is that 'the advice', is actually nothing new at all. Many of us can see it coming way before the 'advice' becomes public.
Like Buffet says, I can tell what is most likely to happen, but not when.
I have been following this one closely for 3-4 years. The shareholder article’s main gripe with SM seemed to be that the value of the developments exceeded the estimated $250million owed. Completed those projects might exceed $250m but they are miles from completion and existing funders like China Construction Bank bailed out last year.
I also note that in the high court the hearing about whether to release the PWC report clearly implied criminal behaviour has occurred and charges will follow. The recent Crown vs Doyle case was cited. For those who don’t know Wayne Doyle is the President of the Head Hunters gang.
In reality the shareholders lost their money 2-3 years ago- they just didn’t know it.
The shareholders would have to inject $75million, manage several extremely complicated builds and then sell 100+ units in a depressed market all whilst juggling finance payments and 100+ creditors. Best case they would get back 50c on the $1. Worst case they lose another $75 million.
Many property gurus are suggesting that the housing market will decouple from the rest of the economy.
That sounds like BS to me for the obvious reason that the housing market is the economy in NZ and vice-versa. There are 2 kinds of people in this country - ones who own multiple houses and those who aspire to do so.
Unless there are enough of the third kind who know there is more to life than owning brick-and-mortar, expect housing and the broader economy to continue moving in lock step.
the Housing market can indeed decouple from reality (pardon me) economy. There is no limit to
- how many new tenants we import
- how many we can stuff into a house
- how much landlord subsidy we can print ...
Boom times.
Sure beats trying to stuff more sheep into a paddock.
I just cant see any potential downside to this NZ Inc get richer scheme
This is where crypto markets could teach people a thing or two. Instead of shonky research painting crypto owners as paranoid, conspiratorial psychopaths, particularly the degenerates know that when an asset price is down 80%, the potential to fall another 80-90% exists. That does not mean the Ponzi can fall to similar magnitude, but people are more emotionally fragile to much less volatility.
https://journals.plos.org/plosone/article?id=10.1371/journal.pone.03051…
We also found that crypto ownership was associated with belief in conspiracy theories, “dark” personality characteristics (e.g., the “Dark Tetrad” of narcissism, Machiavellianism, psychopathy, and sadism), and more frequent use of alternative and fringe social media platforms. When examining a more comprehensive multivariate model, the variables that most strongly predict cryptocurrency ownership are being male, relying on alternative/fringe social media as one’s primary news source, argumentativeness, and an aversion to authoritarianism.
More misery in Aussie.
A major Victorian builder has collapsed with up to 108 projects now in limbo leaving customers “devastated”.
A previous news.com.au investigation revealed that some customers from Grandeur Homes were facing a “nightmare” as building on their dream homes had stalled and they were left with an agonising lack of information on when they will be complete.
I'm quite frankly disturbed by the relentless cheerlading when this is increasingly common.
Updated link:
https://www.google.com/amp/s/www.news.com.au/finance/business/other-ind…
I wouldn't visit any country that had the gall to charged me a border fee to visit it & spend my hard earned money on improving its balance of payments.
https://www.rnz.co.nz/news/national/526894/tourists-will-have-to-pay-10…
https://www.rnz.co.nz/news/political/526935/listen-tourism-minister-mat…
(I know that many countries apply hidden/low key tourist taxes in various ways, its NZs apparently conscious arrogance that grates)
Similar to Myanmar.
The boffins will reckon $100 is nothing to HNW tourists. And they're likely correct. If I were a business traveler and were stung with this charge, I'd be pissed. For ex, a foreign business traveler on an ABTC card should rightfully not pay this. It also opens up possibility of retaliatory charges on NZ travelers.
I wouldn't visit any country that had the gall to charged me a border fee to visit it & spend my hard earned money on improving its balance of payments.
Bhutan charges you hundreds of dollars a day to be there.
Well worth the money.
Also not upset at paying higher than local rates anywhere to visit a museum/park/landmark
Japanese National Health insurance covers both Japanese and non-Japanese (who pay in to the system) abroad.
https://jassi.org/en/resources/health-insurance/how-to-use-japanese-nat…
Entry to our national parks is free, camping at a freedom camp is free, using a public toilet is free, the list goes own and on, free wifi at libraries.
TIA did them selves no favours by being selective in their economic analysis, The TIA analysis quoted that 48,000 people will not come to NZ because of the levy, and then multiply 48,000 by the average tourist spend of $4k or whatever. But these 48,000 are the ones who spend very little, perhaps they walk the TA, perhaps they free camp, use a couch surfing site, or whatever. Who has been at the bungy carpark near Queenstown at 10am in the morning, carpark is full of people washing in a plastic basket , cleaning their teeth, surfing on the wifi.
Tourists are getting off very lightly, two visits to a national park in the US would quickly chew up $100. The government had to do something, $35 was a giveaway price..
An NZ sneaky visa/entry fee. A visa charge by another name. Those who are unaware of this travel advisory within 24h of departing NZeTA (are required to pay around $200?/person to get one in a few hrs. A convenient racket. Family members were caught out at Heathrow last year when they were checking in.
“HIGHEST SINCE GFC
Latest RBNZ figures show the total of non-performing housing loans has now risen above $2 bln and is at levels not seen since the aftermath of the Global Financial Crisis.”
Maybe the government needs to lay off a few thousand more public servants, I’m sure that will help. /s
Aussies are following us down the hill - cooking the guarateed recessionary recipe of current account deficit + indebted businesses collapsing under high credit costs + mortgagors handing billions of dollars of disposable income to banks and savers + Govt opting for 'fiscal responsibility'. Big difference with NZ is that wealthy Aussie households have been stacking up the cash for years as Govt and businesses have deficit spent. At least our economies can go down together - hand-in-hand in self-destructive stupidity.
And just wait new gold mines on the go. Cromwell, Reefton, rwo existing mines wanting too expand Waihi and Macreas ain't it great yes the 4 percent royalty is good but how about the tax on all those workers staying here rather than going to Aus plus all the minor businesses that support the mine plus tge flow on effe ts in the regions from those workers and the mines. Example all the uses need a WOF they get that at the local mechanic. Also the wages that are paid to the miners are higher than average. So yes the 4 percent royalty ain't much bit the benefits are huge. Yahoo
Roy Morgan’s New Zealand Poll for August 2024 shows support for the National-led Government (National, ACT & NZ First) has increased in August, up 3% points to 53%, increasing its lead over the Labour-Greens-Maori Party Parliamentary Opposition on 43% (down 1% points).
https://www.roymorgan.com/findings/9663-nz-national-voting-intention-au…
ANZ-Roy Morgan New Zealand Consumer Confidence was up 4.3 points in August to 92.2. At 92.2 it is still well below its 10-year average (109), but also well off its lows. Both the current and future conditions indexes lifted, the latter by more.
https://www.roymorgan.com/findings/9658-anz-roy-morgan-nz-consumer-conf…
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