Here are the key things you need to know before you leave work today (or if you work from home, before you shutdown your laptop).
MORTGAGE/LOAN RATE CHANGES
There are no home loan rate changes to advise so far today. But Basecorp reduced its rate to "from 8.85%" today. All rates are here.
TERM DEPOSIT/SAVINGS RATE CHANGES
No term deposit rate changes so far. Kiwibank cut its online call account by -50 bps. And its two Notice Saver accounts by the same amount. And Squirrel cut -50 bps off its On-Call account rate, now 4.50%. And Xceda Finance made the same change. But Xceda also cut its 90 day Notice Saver rate by only -25 bps to 5.75%. Sharesies cut its call accounts by -50 bps. All updated rates less than 1 year are here, for 1-5 years, they are here.
FIRST THE RATES, NOW THE TEST RATES
Westpac is the first out the gate to lower mortgage test rates following the OCR cut. Banks have started trimming, or thinking about cutting, their mortgage serviceability rates, opening the door to higher borrowing capacity.
RURAL LOAN RATE CUT
Rabobank has cut -50 bps off the base interest rate for their variable rural loans.
FORCED SALE
Following a judgement against a minority shareholder in General Finance, 500,000 shares in the company are to be publicly auctioned on August 24, 2024.
UNCHANGED FOR EIGHT MONTHS
The national median rent has been unchanged at $600 a week since February. And they are static around the country suggesting supply and demand are reasonably balanced.
UNDER PRESSURE IN THE REAL WORLD
Kiwi households go backwards as income drops and spending increases. StatsNZ figures show household net worth dropped by $47 billion in the June quarter, while total income fell for the first time since this data series began in 2016. Savings fell.
EMERGENCY MANAGEMENT OVERHAUL ON THE WAY
The Government says its planning to strengthen the country’s emergency management system over the next five years as the current system isn’t fit-for-purpose. There are five focus areas of our emergency management system that Emergency Management and Recovery Minister Mark Mitchell wants to overhaul. These range from giving more support to local government and delivering an investment ‘roadmap’. Mitchell said NZ had first-hand experience of the long-term impacts from emergency events – like Cyclone Gabrielle and the Auckland Anniversary floods last year – and changes needed to be made to the current system. Mitchell will provide more detail on the upcoming work program in early 2025 but added it won’t be a quick fix. “The emergency management system is inherently complex,” he said on Thursday.
NZX EQUITY MARKET UPDATE
Check out our quick update of how the NZX is faring today, as at 3pm. The NZX50 is back to its September 13 high, and that is its highest since sarly 2022. F&P Healthcare and Skellerup lead the gainers, PFI and Kathmandu (again) are the main laggards.
STILL POPULAR
Although more than $1 bln was bid for the three NZGB bond tenders worth $500 mln, this time a much bigger proportion of bids won some of that. 55 bids won of the 84 bids made across the three maturities. The hottest bidding was for the smallest bond offer, the $50 mln May 2041 which got 19 bids worth $155 mln, but only six bidders won anything.
'NEW' GOVT, BIGGER DEFICIT
Crown Financial Statements reported a -$12.9 bn annual deficit in 2023/2024, despite increased tax revenue
MORE LOCAL AUTHORITY BONDS
Christchurch City Holdings have launched two bond offers worth $250 mln in total. The 3 year $125 mln floating rate note comes with an issue margin of about +63 bps. The seven year $125 mln fixed rate bond comes with a +113 bps margin. Christchurch City Holdings is the wholly owned investment arm of Christchurch City Council, holding shares in six trading companies: Lyttleton Port, Enable Services, Citycare, EcoCentral, RBL Property, and Development Christchurch. (They also have majority positions in Orion and Christchurch Airport.)
NAME/NUMBER MATCH CLOSE NOW
Banks to launch Confirmation of Payee service for more secure payments by end of November, full rollout expected by Easter 2025.
RANGE OF RISKS VIA ETFs
Fund manager Smart is to offer four new ETFs soon. An S&P/NZX 20 ETF, a US Technology (NZD Hedged) ETF, a Gold ETF, and a Bitcoin ETF.
PAYING MORE BUT ONLY MATCHING ITS KEY RIVAL
Under pressure dairy processor Synlait has been forced to raise its 2024/25 milk payout forecast to $9kgMS to match Fonterra. It is desperately trying to hang on to its supplier farmers.
A GRIM LIST
In Australia, the main cause of death remains heart disease. But in a 2023 shift, it was a close-run thing with age-related dementia, especially in women. COVID-19 fell from being #3 in 2022 to #9 in 2023.
SWAP RATES LOWER
Wholesale swap rates are probably lower today. Our chart below will record the final positions. The 90 day bank bill rate is down another -10 bps to 4.65% after the MPR. The Australian 10 year bond yield is up +5 bps at 4.26%. The China 10 year bond rate is unchanged at 2.19%. The NZ Government 10 year bond rate is up +8 bps from this time yesterday at 4.41%. And the earlier RBNZ fix was at 4.33% and up +4 bps from yesterday. The UST 10yr yield is now at 4.26% and up +24 bps from yesterday. Their 2yr is now at 4.01%, so that curve is now positive by +25 bps and its steepest since September 25.
EQUITIES UP EVERYWHERE
The NZX50 is up +0.4% in its late Thursday trade. The ASX200 is up +0.6% in afternoon trade. And Tokyo is up +0.4% at its open. Hong Kong is up a stronger +2.7% at its open. Shanghai has started with a small +0.3% gain after yesterday's retreat. Singapore is trading up +0.5% at its open. Wall Street ended its Wednesday trade with the S&P500 up +0.7% and yet another ATH (it's 44th this year alone, if anyone is counting).
OIL LITTLE-CHANGED
The oil price is unchanged from this time yesterday at just on US$73.50/bbl in the US, but down -50 USc to US$77/bbl for the international Brent price.
CARBON PRICE BOUNCES BACK UP
The carbon price rose +$1 today to $62.50/NZU. See our new daily chart tracker of the NZU price for carbon, courtesy of emsTradepoint.
GOLD LOWER AGAIN
In early Asian trade, gold is down -US$13 from this time yesterday, now at US$2608/oz.
NZD EASES AGAIN
The Kiwi dollar has fallen -30 bps from yesterday, now at 60.8 USc. Against the Aussie we are down -10 bps at 90.5 AUc. And against the euro we are down -10 bps at 55.5 euro cents. This all means the TWI-5 is down to 68.9 from this time yesterday.
BITCOIN DOWN
The bitcoin price is down -2.7% from this time yesterday, now at US$60,702. Volatility of the past 24 hours has been modest at just on +/- 1.8%.
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75 Comments
Followed PDKs youtube link this morning and stumbled on this wee nugget:
https://www.youtube.com/watch?v=8FJDd0PsGaM
In light of recent OCR reduction and the cheerleading that followed, we do not have the policy levers in place to deal with a long term debt bubble. We're not getting a return on our private debt ($700b), we're relying on there being more debt for the same stuff we already own tomorrow just to pay the interest. At what point do we exit the boom/bust cycle and enter the bust/bust cycle?
we're relying on there being more debt for the same stuff we already own tomorrow just to pay the interest
Apparently not so. How money works is new stuff gets created and then debt gets raised to buy it. It helps stop the average person getting poor.
At least that's what a bright spark on here proclaimed.
But that stuff gets created from a stock of finite, and curtailed, resources.
So sooner or later, the issuing of exponentially-more debt, was going to cross the reducing stock-graph. Acutely, not mergingly.
At which point, the debt-holders are carrying the parcel when the music stops. Which means DC is wrong; debt is a notional thing, and a keystroke-created claim on something it doesn't ascertain pre keystroking. It's not a matter of one owing the other thus cancelling out; it's a matter of the aggregate whole demanding ever-more, of ever-less planet.
Debt, at this point, either gets inflated away, jubileed-away, or the system collapses.
What they're doing is piggy backing the iShares Bitcoin Trust ETF. Tax advantageous for the normies I suspect.
They're also introducing a Gold ETF, piggy backing the iShares Gold Trust. IMO, stay away from this. You're better off holding PMGOLD.
Sudden pviot to gold and the ol' rat poison.
Gold would be one of the worst punts out there.
Really dragging the chain behind stock markets and property - and no dividend. Gold salesmen like Peter Schiff and Jim Rickards are always banging on about how it's a terrific bet, but they're making a killing from suckers and subscribers, who believe their BS.
Schiff's been telling his gullible disciples for years that we're running out of gold and that it's going to US$20,000+. There's one born every minute, I tell ya. From memory, Jim Rickards' latest prediction was of the order of US$40,000. Gotta keep those subscriptions rolling in.
Depends Wingy.
In the 1970s, the gold price appreciated 24-25x. That's much higher than the average inflation rate of 7.4% for the same time period. The S&P 500's average price return was approximately 1.6% per year during the 1970s.
The median American house appreciated by approximately 159% from 1970 to 1982, which matched the Consumer Price Index (CPI) inflation rate during that period.
If you consider that the gold price bottomed out in recent times at USD1,200 in 2014 and we have target prices of USD40K+ by 2030, that's a 33x. I doubt Aotearoa house and stock prices could do similar. But I could be wrong.
"In the 1970s, the gold price appreciated 24-25x"
Because the USA Govt had fixed the price at USD35 oz since 1934 (reconfirmed after WW2 under Bretton woods agreement). Prior to that it was fixed at USD20.67 for nearly a century.
Then Nixon killed the gold std.
https://en.m.wikipedia.org/wiki/Gold_standard
https://en.m.wikipedia.org/wiki/Gold_as_an_investment
https://mises.org/mises-daily/losing-battle-fix-gold-35#:~:text=Prior%2….
Gullible people believe anything.
Gold's a useless metal that has no dividend, "it has no utility" as Warren Buffett says. When inflation's raging, everything goes up.
There's still goldbugs out there that call gold 'money', but I've never been anywhere in my life where they've asked me for a chunk of gold to pay for groceries, a car, an airline ticket, or anything else.
As for silver........OMG!!!
I don't really care what form the money is in, so long as it's as easy and uncomplicated as possible
Stupid fiat is the most convenient form of money. It's almost universally accepted, with a stable enough value to warrant it being a reliable enough form of operating capital if you're a business.
I'd never have more than a couple of years worth just sitting around.
It's not my principles, as I said, I have very little wealth tied up in storage, and that's usually working capital, or rainy day money. I usually prefer to put it to work, and I'm not going to gamble it's value for it to maybe be worth more, because if it's worth less it's of less use to me.
" Because everyone except goldbugs knew the gold standard would never work, there's not enough gold in the World.
No one believes in the gold standard, expect maybe you." ..... and the BRICS coalition by the looks of it , the FED certainly wont be wanting Gold to take flight and debase their currency... ....lol
Funny Gold prices are going up, unlike NZ House prices... and gold has done well from 2005 to 2025 its like up 600%
And you can margin trade gold many more times leveraged then NZ property....
in the last year its 1800 to 2600... not bad maybe better then boghead
keep digging wingers you may find some gold and bog kauri
And you can margin trade gold many more times leveraged then NZ property....
You can always short gold but you'd need to be trading high volume to make it worth your while. A novice trading gold is like a monkey flying a plane.
Traders short Bitcoin all the time. Doesn't make any sense whatsoever to me. You're just asking to get rekt.
Of course, orgns like the IMF hate BTC. The IMF was tasked to kill the Gold Standard, centralise the worlds money into the control of a few and open the way for a rug pull into fiat money. Once Nixon halted the convertibility of USD to Gold in 1971, the fiat rug pull was complete. Fiat was born and the IMF was out of a job. The IMF then pivoted to enslaving developing countries with their fund. They now lend out money to countries in exchange for extractive policy changes that keep them poor.
That's why its called PropertyMan Sachs.... with 2 trillion under management
winger have you ever worked in a business with 2 trillion under management?
I see you as more a Du Val or Williams type guy who only sells property in a swamp....
not really a qualified diversified investment advisor
There is an outside chance you work for Bayleys given your general attitude.
Its a bit late now that so many EFTs offered.
I have never understood why you would short bitcoin without a derivative based hedge (now available)
This derivative market also makes it possible for the big guys to market make towards EFTs etc...
Once you have this depth you are made as a commodity.
So banks hate gold and BTC as when you pay away to purchase you deflate their balance sheet.
no bank economist going to tell you to put 5-10% into these off balance sheet asset classes
even wingnut tells you not too?
"Will rents drop due to interest rate cuts? Investor who owns 45 homes says no"
And he's right.
And encouraging him to sell his stock to market, via recent all-time high resale prices; to change his tenants into owners hasn't worked. So the only option left is - to financially frighten him into doing it.
Kiwirail's original Kings Wharf proposal.
https://rpnyc.org.nz/blog/response-to-kiwirail-plan-to-move-to-kings-wh…
This made me chuckle:
300 Kiwis claim to work 168 hours a week
Is it possible for people to work more than 24 hours a day, seven hours a week? They seem to think not.
Wow. Talk about naive!
Recent conversation:
Project manager (PM): I need this done. Give me a price!
Me: Probably 200 hours.
PM: Yours for 100 hours.
Me: Nah. 150 hours will go in project meetings.
PM: We’ll find someone else.
Me: No problem.
IT Manager, (PM’s boss): Please do this for 100 hours. Can we also get you to be a consultant overseeing the project, double your hourly rate, but limited to 25-50 hours?
Me: If the CFO signs off on that.
CFO: Hi Chris. No problem. It’d be great to have a project come in that actually delivers and doesn’t cost a fortune.
Me: I’d rather be sailing, or playing golf, as you know. But okay.
End result? I worked among the developers, and, above the PM, and the project comes in on time and slightly below budget, with few defects and one very minor one in Production.
I billed over 160 hours in one week – but worked for just over 70 hours (my actual dev stuff took about 30 hours). Other weeks were more outrageous and I spent some of each day helping the other devs grow their skills.) The IT Manger & CFO knew exactly what I was doing, and they endorsed it. (This was the last project that PM did for this company.)
Hours are like money – it depends on which currency is used.
By working no more than 37.5 hours per week (on average) while charging an hourly rate that is accepted by those who understand the work I do.
It's not that hard.
Tell me Beanie, do you have any understanding the project I'm billing for? It could be basic plumbing. It could also be as high risk as brain surgery. Or it could be even higher ... I.e. it could also cost the company millions if it was wrong, or went badly wrong. Do you need to know how much the company took out as insurance if there was a fuckup? In short, I was their insurance premium. And I cost a lot less. A whole lot less.
'nuff said. Pay peanuts = get monkeys.
Are you the CFO or IT Manager? Or the project manager?
This is sort of the problem with Unions, and many employers.
They tend to equate a person hour as being uniformly equal in value. Experience and knowledge can be huge productivity boosters. And the cost of fixing substandard work, or work that fails, can be substantial.
Question: do your clients mandate you have a rookie do some of your work? Do you charge more for your lost productivity overseeing them?
I usually mandate that I have rookies to do as much of the work as they can. I do the high level and/or tricky stuff and then hand it over and let them polish it up, and take ownership of it. I don't charge extra for it. Sometimes I get lucky and there's some seriously bright spark. I mean seriously bright - far better than me but less experienced. I quite enjoy teaching and get a kick out of their success. (Sadly, if I know who the 'rookies' are and don't rate them, then I will charge extra, i.e. more hours.) I usually stay in touch with them after the project and help them where I can. (Often it is QA'ing designs and budgets and looking at/ for risk. I frequently do this for a minimal fee as it keep me up to date.) It's just good business. They grow upwards and get budgets. I hate being 'management' but love the strategy & architecture & engineering. It's kind of funny - thanks to remote working - most of the dev teams think I'm some 20yo wunderkid. It all works out. I know the management as we've worked together - often way, way back. They've become management - I'm still just an engineer.
No but do they mandate it on you. "Must have a rookie employed. on deck doing some if our highly important work at all times", or similar?
Passing on knowledge should be everyone's priority. I'm usually happiest if someone I've trained has got to the level where they can do their own thing.
But there's not necessarily always space for a rookie, or you just haven't had one cross your path at a given time that suits.
Fraud. Even so it is only one type, but persistently increasingly so, of a brick in the wall that has built the system of capitalism. Lenin & Co identified that feature, amongst others, rather stridently and violently but hardly have been seen to produce a superior alternative. Like it or not, like it or lump it in fact, humans in any shape or form have been practising the pursuit of ascension over other humans since before recorded time.
Fraud? Hardly. "Fraud is intentional deception to secure unfair or unlawful gain, or to deprive a victim of a legal right."
That didn't occur. Re-read the exchange above.
The people signing the cheques always joke that I'll do it in a quarter of time and expect me to use the rest of time ensuring the project is successful, i.e. stepping outside my strict piece of work and working over all aspects of the project to ensure success. I've always done that. I can't just do my bit and collect my fee, while the rest of project fails around me. Especially, when I could easily step in and ensure it doesn't. That's seriously unethical in my book. The guys signing the cheques know I'm multi-skilled and expected me to do my thing. It's obviously an alien way of pricing things for you, but very common in my world. In essence, they were purchasing an "insurance policy", or paying for a "hired gun". And had things gone wrong, that I should have recognised earlier, they'd expect me to right them at no additional cost, which I would have done. Back in my corporate days, contracts were written explicitly naming certain individuals and saving they couldn't be pulled from a project until completion, or that they did a minimum number of hours every week on the project without specifying any particular bit of work or a specific role. On a few occasions, key-man insurance was bought in case certain individuals were run over by a bus. Practices of this kind aren't uncommon on complex and/or time critical projects. Many big corporates actually have a team of multi-skilled individuals to perform roles like I do. Most of my corporate life was in such teams.
Fraud is a weird thing to accuse you of. To me it sounds like they wanted you to do a job. Were happy to pay your price based on value not time but their bureaucratic systems limit how much they can pay by hour and how many hours they can allocate to a role. They found a workaround.
We do it all the time. If the value of my work saves the company I'm working for 100's of 1000's of dollars per year, my effort is worth a proportion of that saving, regardless of how long it takes me to get them that saving. Often we have to give an hourly rate and say what tasks we'll do and how long it will take.
That's the thing with knowledge work, you don't always sit there for an hour and come up with the solution, especially if it requires creative thinking. Sometimes I'll be in the shower thinking about the problem, or the solution will come to me when I'm doing something really random like the dishes. Charging per hour only really works where man hours directly equates to output, work that involves following an established process, manual labour, things like that.
Now this is interesting. BlackRock has recently redefined its stance on Bitcoin, labeling it a global monetary alternative. This shift was articulated by Jay Jacobs, the U.S. Head of Thematic and Active ETFs at BlackRock, during a digital assets conference.
Blackrock compared Bitcoin's characteristics to traditional financial assets such as gold and USDT, emphasizing several key points such as fixed supply (hedge against inflation and monetary instability); volatility - decreased over time, indicating a maturation of the asset; portfolio allocation benefits: Scenarios proposed by BlackRock indicate that even modest allocations of 1% to 5% in Bitcoin could enhance overall portfolio returns while improving risk-adjusted metrics; and bridging financial systems.
https://www.investing.com/news/cryptocurrency-news/blackrock-calls-bitc…
If the world keeps following its current trajectory, I'd say some sort of crypto will become fairly common.
In Lebanon, I believe around 50% of all transactions are in the USD. This includes incomes for salaried professionals. Because inflation is sky high, the population are choosing to adopt an alternative money. This is also compounding tax revenue issues for the state.
The USD fills this role many places, likely in future (and likely now) more crypto will be being circulated along similar lines.
Inflation you say...
"The hyperinflation was so out of control that at one stage it took about 15 hours for prices to double and about four days for the pengő to lose 90% of its original value. On 1 August 1946, Hungary reintroduced the forint at a ratio of 400 octillion pengős to 1 (4×1029 = 400 billion billion billion), dropping 29 zeroes from the old currency"
Then you'd probably have a housing crisis.
Only the rich could ever hope to own a new house. The less wealthy potential buyers will fight it out with the upper middle class for the existing houses, bearing in mind that the average first home buyer earns about 50% more than the average kiwi household (the wealthier buyers setting the prices).
I suppose the good people can all live in 30m2 deckless apartments.
Yay progress!
I think the time for that has passed…if they’d started easing last year, like someone keeps saying 🤔, they might’ve been able to balance regular small cuts to encourage the economy & use restrictions wisely to cap house prices…they’ve f**ked it, they need something major now to get it kickstarted…they’ll end up slashing rates & easing these restrictions…they know if they fire up housing/construction that’ll pump the wealth effect & they’ll fire up the economy…not saying it’s a great long term plan…but it’ll work well enough for the next cycle 🤦🏻♂️
Good article on the economy and the US election:
https://www.theguardian.com/commentisfree/2024/oct/10/kamala-harris-pre…
Yes it is and it reveals the weakness of the American public at large, in being highly susceptible to the broad and basic influence of media saturation. Trump and the GOP have gained ascendancy in the headlines regardless of either veracity or morals. Harris has on the other hand progressively lost momentum. That now is the unfortunate and telling difference between the two candidates.
"the weakness of the American public" you can hardly blame the public - the MSM is full Soviet. CBS replaced Kamala's 60 Minutes answers to make her appear competent.
https://www.indiatoday.in/world/us-election-2024/story/democratic-presi…
It's a pity that's not on the front page of USA mainstream media rather than UK.
I suggest that the basic premise of inequitable distribution of economic productivity gains over recent decades is applicable across most of the western world, possibly less so in Oz.
The Australian cause of death statistics makes for some quite grim reading if you drill down further into it. 100,000 potential years of life lost through self harm. And that's just the obvious self harm. Many of the other deaths are caused by more subtle forms of self harm. Many years of potential life can be saved through focusing on self care. A lot of illness could be the result of simply eating the wrong foods and far too much of it.
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