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. The "short is good" strategy may have peaked in July.
TERM DEPOSIT/SAVINGS RATE CHANGES
Heartland Bank reduced its TD rate offers today. AMP followed suit. All updated rates less than 1 year are here, for 1-5 years, they are here.
AUCTION PRICE SLIP, BUT WESTPAC RAISES ITS PAYOUT FORECAST
At today's dairy auction prices fell -0.4% from the prior auction, principally because WMP fell -2.5%. Apart from that, prices held at their recent higher levels. Westpac have upgraded their farmgate milk price forecast to $8.70/kgMS, reflecting the generally positive developments over the last few months. But that is not as high as ANZ's $9 forecast last week
OVERALL COMMODITY PRICES HIGHER
The ANZ World Commodity Price Index increased +2.1% in August from July as prices for meat and dairy had a strong month. From August a year ago, these prices are up +14%, up +12.5% in NZD terms.
DEMAND CHALLENGES
Log prices are little-changed in August, just marginally softer. Local timber processors have been rocked by very low demand and very high electricity costs. China demand still hamstrung by property market woes. India demand is hurt by high freight rates and more competition. It is an achievement that current prices are holding.
MIXED FEELINGS
ASB's latest Housing Confidence Survey features an unusual mix of opinions with a big jump in the number of people expecting interest rates to keep falling, and a big drop in the number expecting house prices to rise. And people were relatively evenly split on whether or not it's a good time to buy a house.
BARELY HOLDING ON
Retail spending is still falling but there's hopes in the sector of better ahead. Worldline NZ data shows that retail spending slipped -0.5% in August when compared with the same month in 2023. RetailNZ said its now a case of hanging on till the end of year holiday trading.
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.
LESS OF A CRSIS
Recent rains have seen our hydro lakes replenished somewhat.
MORE LENDING
RBNZ data for July shows there was +$12.2 bln of new lending in July, up +19 from $10.2 bln in June-24. Compared to July-23, total new lending was up by +36%. The category with the largest monthly percentage change was business lending for commercial property development, which rose by +$64 mln to $127 mln in July, more than double the $63 mln in June.
SOME UNPLANNED TIME AVAILABLE?
There are many changes in the Wellington workforces at present. If you have some special insights into important public policy issues or debates with some unique analysis, please feel free to contact us if you would like to opine on them. This is not an invitation to breach any confidentiality restrictions. Rather an opportunity to share insights or perspectives on important issues. Contact us.
CANCELLED
The FMA has cancelled Integrity Advisers Insurance’s Financial Advice Provider licence for engaging in serious misconduct. Integrity is a Christchurch-based adviser providing financial advice to approximately 500 retail customers, many of whom are from the Filipino community. Integrity’s sole director and shareholder is Mr Yuriy Bazhak. The breaches relate to Integrity’s treatment of clients who wanted to cancel their respective insurance policy between September 2022 and June 2023. The FMA said “Contrary to its name, this firm lacked any integrity with its clients. Mr Bazhak not only risked causing serious harm to his clients but preyed on their vulnerability through the threat of involving Immigration New Zealand."
A HESITANT EXPANSION
The Caixin China services PMI eased a bit but is still expanding. Incoming new business and activity remained in growth, with export business rising at a faster rate in August. Meanwhile capacity pressures were still evident, but firms reduced staffing levels amid cost concerns.
UNINTENDED CONSEQUENCES
Think rent controls are a viable option for rental affordability issues? Most Dutch renters would not agree as rent controls force renters into some very difficult situations.
BARELY EXPANDING
Australia said its GDP was +1.5% higher in its June year after a smaller-than-expected +0.2% expansion in the June quarter. "Helping" keep it positive was record federal government spending on the public payroll and on the healthcare sector.
IT'S GETTING UGLY ON THE WORKSHOP FLOOR
Meanwhile an August survey of the Australian manufacturing sector was particularly grim. The Ai Group Industry Index dropped sharply by 11.3 points to -30.8 in August, further deepening the contraction that has persisted for two years.
SWAP RATES TURN DOWN
Wholesale swap rates are probably sinking like everything else in the global financial markets today. Our chart below will record the final positions. The 90 day bank bill rate is down -2 bps at 5.19%. The Australian 10 year bond yield is down -6 bps at 3.98%. The China 10 year bond rate is down -1 bp at 2.15%. The NZ Government 10 year bond rate is down -11 bps at 4.26% and the earlier RBNZ fix was at 4.24% and down -10 bps bps from yesterday. The UST 10yr yield is down -8 bps at 3.83%. Their 2yr is now at 3.89%, so that inversion is still a minor -4 bps.
EQUITIES SINK
The NZX50 is down -0.2% in its late Wednesday trade. That is minor compared to the ASX200 which is down -1.9% in afternoon trade. Tokyo has opened its Wednesday trade down a startling -3.3% at its open. Hong Kong is down -0.8% and Shanghai has opened down its own -0.2%. Singapore is down -1.5% at its open. Wall Street returned from holiday in a down mood, with the S&P500 falling -2.1% in Tuesday trade. Nvidia's plunge set the tone, down almost -10% on its own.
OIL EDGES 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 PRICE DIPS, NZU AUCTION FAILS
Today the carbon price is marginally softer today at $61/NZU. See our new daily chart tracker of the NZU price for carbon, courtesy of emsTradepoint. No units were traded at today’s Government auction of NZUs. The auction floor price of $64/NZU set for today’s auction is still higher than the price units have recently traded in the secondary market.
GOLD HOLDS
In early Asian trade, gold is up a minor +US$1 from yesterday at US$2495/oz.
NZD EASES LOWER AGAIN
The Kiwi dollar is down -40 bps from this time yesterday, now at 61.8 USc. Against the Aussie we are back up +30 bps at 92.2 AUc. And against the euro we are down -20 bps at 55.9 euro cents. This all means the TWI-5 is now just under 69.9 and down -30 bps.
BITCOIN DROPS YET AGAIN
The bitcoin price is down -4.5% from this time yesterday, now at US$56,722. Volatility of the past 24 hours has been high at just on +/- 3.3%.
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63 Comments
Argentina's recent repeal of rent control by libertarian President Javier Milei has led to a surge in housing supply, with the freedom to negotiate contracts, previously restricted, directly causing a drop in rental prices.
https://www.newsweek.com/javier-milei-rent-control-argentina-us-electio…
Doesn't really matter that country is so stuffed you wouldn't want to be following anything they do or say. Argentina to Zimbabwe and a whole lot of disasters in between. What about Venezuela ? Now Nigeria is also down the toilet. Makes you glad to be living in New Zealand.
Yes, from bananas to oil, we extracted the best they had under them. Put puppets in place if we could, killed leaders (think: Allende/Nixon) when we needed them gone - then we spread this holier-than-thou 'democracy' crap for internal consumption.
Kissinger's Bloody Paper Trail in Chile | The Nation
It is indeed better living in a winning-side nation. While your mob outgun their mob...
The difference between all those countries is that Argentina is now lead by a libertarian president, and by all accounts has been very successful.
I believe the Argentina stock market is up around 75% (in USD) since Melei took over. Yes they were a socialist hell hole before, but now there is hope
The Securities and Exchange Commission (SEC) has charged six credit rating agencies for significant failures in maintaining and preserving electronic communications, resulting in a total of over $49 million in civil penalties. The agencies involved are:
- Moody’s Investors Service, Inc. - $20 million penalty
- S&P Global Ratings - $20 million penalty
- Fitch Ratings, Inc. - $8 million penalty
- HR Ratings de México, S.A. de C.V. - $250,000 penalty
- A.M. Best Rating Services, Inc. - $1 million penalty
- Demotech, Inc. - $100,000 penalty
Little more than a slap on the wrist.
The CRE apocalypse is starting to get some attention (outside Aotearoa of course).
Stateside, roughly USD930 billion in CRE loans are due this year - USD4.7 trillion in total outstanding CRE debt. Banks hold about USD3 trillion in CRE debt - 70% of that at regional and community banks.
On the other hand, he said, the delayed onset of the storm — via loan extensions and adjustments — has allowed banks to build up reserves. Now, he said, more banks are moving from the “denial” stage of grief to “acceptance” and marking down their holdings.
“There is a clear acknowledgment that if you’re kicking the can — this is different than 2008 — that this is not going to resolve itself in just, you know, prices and values re-inflating because of an injection of capital into the system,” Rechler said.
“So at some point or another, the day of reckoning needs to come,” he added. “I think it’s here.”
https://www.politico.com/news/2024/09/02/office-property-values-fed-001…
It's sad to see a once NZ flagship company like Fletcher Building become like a dinosaur floundering in the post-asteroid mire due to the sheer incompetence of former directors, CEO's and the plodding bureaucracy of former military-types in middle management. Fletcher down yesterday....10 cents....now $2.86 !
Down again today another 10 cents !
We have seen before how once-dynamic family companies have been run into the ground by so-called professional directors and useless CEO's when the family pulls out. These directors don't have the necessary entrepreneurial nous to direct a company like Fletcher's; they may have 'directorship experience' or a top academic degree, but more than that is necessary. I would say we needed types as competent as Albert Speer, Germany's head of war production during WW2....but without the Nazi affiliation, of course. Instead, we get the likes of Jenny Shipley ex kindergarten teacher and 2-year Prime Minister who helped bring Mainzeal to it's knees: an obvious case of the failure of political and management sinecures. .
I see 'Alan Gray' which is either an Australian fund manager or private equity firm (not to mention 'Schroeder') has been stealthily buying up Fletcher shares of late and it wouldn't surprise me if eventually an Australian private equity firm snaps Fletchers up leaving only a pittance for current shareholders.
The latest claim brought against Fletchers by the Commerce Commission is unwarranted; it has been driven by the hair-pulling and ululations of disaffected grasping builders and developers who think that the main reason they're not making an easy profit is because of the price of gib-board. Well someone was importing 'Elephant Board'.....what's happened to that?
So, this misguided and belated attempt by the Commerce Commission to placate the builders' wrath will probably end up merely adding another push towards Australian ownership of Fletchers....at a fire sale price.
I'm beginning to think that the Commerce Commission is just a waste of space.
ALL the useless governments we've had over recent decades have failed to see that working in a type of joint venture between government and Fletchers, perhaps with funding imput by the ACC and the Super Fund, could have helped solve our infrastructure problems as well as establishing a successful trades' cadet school funded jointly by the government and Fletchers to help mop up those 40% of uneducated school leavers. Such a joint venture could easily have captured all Australasian infrastructure developments. NZ has always punched above its weight in producing engineers probably due to our large Scottish heritage whereas Australia has never done so well on a proportionate basis. But our commerce specialists, on the other hand, are on a downward spiral.....you only have to look at the share price (pitiful credit control but trying to blame it all on the weather) of one of vaunted Infratil's darling subsidiaries, Mananwa Energy, to witness the decline of commercial management.
And the genocidal dismantling of the Ministry of Works has added its share of fuel to the fire: the burning down of the Casino Convention Centre would never have happened with MOW and clerks of work oversight.
Speaking of asteroid mires. At least we won't have to worry about net zero.
"Spanning 335-375m, asteroid 99942 – dubbed ‘Apophis’ after the Egyptian god of chaos...Initially, it was assessed as being a 2.7% chance of impacting Earth in 2029, 2036 or 2068.
In the years since, though, observations of Apophis’ orbit around the Sun have led astronomers to reassess those changes: no impact is expected to occur within the next 100 years.
How close? With the tug of Earth’s gravity working on it, Apophis will duck inside the orbits of certain geostationary satellites at about 32,000km. This act will substantially alter the asteroid’s subsequent orbit."
How do we fix the debt issues local governments appear to have created - is it excessive spending or leaving rates too low for too long? (or both..)
One part appears to be excessive remuneration to staff - at least in my opinion. There have been large wages paid, even in smaller rural communities - seems way over the top to me - I’d be embarrassed to receive that pay for that role while knowing the citizens of your community are struggling to pay their rates while feeding the kids.
https://journals.plos.org/plosone/article?id=10.1371/journal.pone.03051…
David Chaston posted the link the other day on one of the briefings.
Thanks for asking I_O.
With 3 Waters putting a huge cost back on local governments I think we'll see property taxes (a.k.a. Rates) skyrocket away into the stratosphere. Private business supplying waters services to fragmented local governments will make out like bandits while banks and lenders will make out like bandits charging higher interest rates, ensuring Councils get further into debt, while the investment bankers work behind the scenes to get Council assets - always monopolies - sold off to the rich so the rich can get even richer.
People get exactly what they vote for. (LOL)
Kinda stuck either way.
Our central and local governments don't have a great recent history of delivering projects on time and at a decent price. So the alternative to private involvement is a bit of finger crossing that governments go for a massive expansion in capability, that's able to deliver value efficiently. Which would involve a massive dismantling of much of their general approach to conducting how they operate - even just today I learned that school caretakers are now not allowed to clean out gutters - too unsafe.
So no matter how you slice it, the tax/ratepayer is in for some nice big bills.
I don't think so.
I think we're seeing the peak, and perhaps we're even beyond the peak, of things being done - regardless of by whom.
We don't have the grunt anymore. And less and less 'business cases' stack up as time goes on, as you'd expect in a de-growing world.
I think we're seeing the best water we will ever see - and it'll be patch-as-patch-can from here on out.
Wow, are they going to build these on stilts like the Maldives for when the island gets submerged?
https://www.karakaisland.co.nz/?gad_source=5&gclid=EAIaIQobChMI_7iXo-So…
35% realised loss in nominal terms in Auckland, way more in inflation adjusted terms, consistent with lots of properties I'm seeing...
https://www.oneroof.co.nz/news/bought-for-750-000-sold-for-490-000-auck…
Even worse than that it was valued at 1million at the peak according to homes. Someone probably looked at that in March 2022 and paid $750 thinking they were getting a bargain.
Potential formula for working out indicative price at the moment. Look at Homes peak estimate and divide by 2.
https://homes.co.nz/address/auckland/mangere-east/2-187a-buckland-road/…
Halving the peak Homes estimate, works for this villa in Devonport to with asking price of $1.3M (Homes estimate at peak $2.6M).
Which despite me being told by many on here that it is a bargain, still hasn't sold
https://homes.co.nz/address/auckland/devonport/29-clarence-street/QXK15
You're effectively buying a site there. And with the cost of construction and finance, is something fairly unattractive in this climate - total spend would need to be something like 3.5-4 million.
Also down in value more than the average; anything that needs a major renovation or remedials, for similar reasons.
So you're saying all sales prices are down 50%? Or just cherry picking orphan properties?
No I'm saying that if anyone is looking at a house now, one of the things they can do is look at the Homes peak estimated value and divide it by half. Some properties are selling at that price.
Even though prices are still crashing some people are still overpaying (like the poor souls who fell for the bottom is in narrative when they bought in 2022).
If you're paying more than 50% of the Homes peak estimate you're probably overpaying. Some people may be fine with that as they can afford it and don't mind overpaying for whatever reason but there you have it. Obviously, don't base your decision to buy and price on Homes as it's bullshit but people do look at it and if you are looking at it then halving the peak price is a better estimate than what the current Homes estimate is likely to be (due to the algorithm being designed to game prices to the upside).
Your sample properties are dominated by listings that are the least desirable, particularly in this climate, for one reason or another.
Maybe go out this weekend and make some 50% off offers on a brick and tile in Epsom, or a renovated villa in Ponsonby and report back to us.
Agree, but I'm talking about Homes.
The Homes values were not aligned to REINZ HPI.
People still look at Homes. Some overpaid at the peak due to the Homes estimates as it inflates them. All I'm saying is that if you look at Homes then a more accurate estimate to the current Homes estimate is 50% of the peak Homes estimate.
And I also recognise that some people will not sell at that discount to their imagined peak valuation but some are selling at those prices and because prices are still falling and because there is no rush then if you don't want to overpay then look for the properties that are selling at at least 50% of the Homes estimate.
That's exactly my point. If you look at the Homes valuation at the time they bought it was pretty much bang on what they paid. People were using that valuation at the time. Now if you look at Homes estimates they are still way over what lots of houses are selling for. So if you're looking at Homes don't use the estimate. Based on what some properties are selling for you can get 50% off the peak Homes valuation, don't be suckered into thinking the Homes estimate (which will probably be at something like 30% off the peak Homes valuation) is actually in any way reflective of the current value, it's closet to 50% off.
Basically at peak Homes overestimated by about 20%.
There is some seriously deluded people here if they believe that property is worth half of Homes.co. Estimate!
Time to actually start talking with some semblance of sense!
Where in NZ is this happening, certainly not on anywhere in the South Island.
Prices are as firm as ever if you actually did your research.
Homes.co is actually quite low on ChCh prices currently.
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