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
The Co-operative Bank cut its six month fixed rate by -10 bps to 6.09%. All rates are here.
TERM DEPOSIT/SAVINGS RATE CHANGES
No changes here today. All updated term deposit rates less than 1 year are here, for 1-5 years, they are here.
OUR ECONOMY MAY BE SUBDUED, BUT PEOPLE STILL WANT TO COME
Just under 200,000 people are currently in here on work visas, with residence visa approval numbers up +59% compared to pre-Covid levels.
POSITIVITY HARD TO FIND
The latest ANZ Truckometer monitoring shows there is no relief from the dour economic performance the nation is mired in at present.
A MINOR DIP
Both SMP and WMP prices slipped in the latest GDT Pulse event overnight from the prior week's full dairy auction. But the dips were minor, so you can say prices have basically held after the recent run-up. At the same time, the NZD has fallen, so that mitigates the latest easing in local currency.
SHRINKING SECTOR
The manufacturing sector is in a rather serious decline. Excluding the dairy and meat industries, nominal sales have now declined on a full year basis for seven straight quarters to be down -6% to just $83.3 bln. Since these records began in 1992 there has never been such a long term decline. In volume terms it is down more than -17% from its 2021 volume peak. Making or processing stuff here other than dairy is tough. The businesses that do so are heroes just to survive.
NZX EQUITY MARKET UPDATE
Here is a summary of how the NZX equity market traded today, as at 3pm. Hallenstein Glasson, The Warehouse, and Mainfreight lead todays gains, with Manawa Energy, Ryman, Stride Property, and the NZX the big decliners.
AUDITOR-TURNED-POLITICIAN CANCELLED
The FMA has cancelled the New Zealand licence of Sydney based auditor, Sam Danieli, to carry out FMC audits in New Zealand. New Zealand allows recognition of Australian based auditors under the Trans-Tasman Mutual Recognition Act (the TTMRA). The decision stem from the audit of former FMC reporting entity Alliant Perpetual’s financial statements for the year ended 31 January 2022. Danieli conducted the audit. Danieli is a high profile Sydney accountant who was once mayor of Warringah Council, and who ran for the Sydney City Council.
SPENDING HABITS NOT YET DRIVING RECOVERY
Our largest bank says the card activity of their clients remains very subdued. Overall card spend was down -1.2% in November from a year ago in nominal terms, more so obviously after inflation's effect. They say the types of spending most sensitive to interest rates (housing, durables, and discretionary spending) are still experiencing the largest falls.
"SAVING THE PLANET IS AN ILLEGAL ANTI-COMPETITIVE SCHEME"
The peak farming lobby group, Federated Farmers, is upping is campaign against the Net-Zero Banking Alliance, where banks have agreed to focus their lending on climate-friendly projects and avoid climate-unfriendly ones. Fed Farmers have complained to the Commerce Commission about fears banks will move to stop lending to 'petrol stations' and ask existing borrowers to pay back those loans. Essentially they claim membership of the Alliance is an anti-competitive arrangement. More here.
FMA SEEKS APPLICANTS FOR 'REGULATORY SANDBOX'
The Financial Markets Authority is launching a pilot “regulatory sandbox” and is seeking applications from interested parties. A regulatory sandbox is a concept allowing firms to test innovative products, services or business models. An initial pilot phase will run from January to July 2025, with a decision on the need for a permanent FMA regulatory sandbox to be made later in the year. The pilot's open to all parts of the financial sector that fall under the FMA remit and can include new entrants and firms already with a market presence. The FMA says products or services that, for example, simplify compliance solutions, or use blockchain or regulatory technologies, could feature.
SIGNS POINT TO RATE HIKE IN JAPAN
In Japan, producer prices rose +3.7% in November from a year ago, higher than in October and exceeding market estimates of +3.4%. It was the 45th straight month of producer inflation, marking the highest figure since July 2023. These pressures will eventually show up in consumer prices. And that in turn will encourage the Bank of Japan to raise its +0.25% policy interest rates. They next review it on Thursday, December 19, 2024, when a +25 bps rise is anticipated by financial markets.
INSURANCE CONSOLIDATION
Meanwhile a huge Japanese life insurer has been on the acquisition trail again. Nippon Life and its wholly-owned MLC Life Insurance business in Australia has acquired Resolution Life. This comes after it also agreed to take over Asteron Life.
SWAP RATES HOLD
Wholesale swap rates are probably little-changed-to-soft today. Most analysts don't see them falling much from here. But to be fair, they have slipped over the past week probably by a bit more than expected. Our chart below will record the final positions. The 90 day bank bill rate was down -2 bps yesterday to 4.30%. The Australian 10 year bond yield is down -3 bps from yesterday at 4.24%. The China 10 year bond rate has fallen another -2 bps to just over 1.89% and another all-time low. The NZ Government 10 year bond rate is down -5 bps at 4.44% while today's RBNZ fix was 4.38% and down -8 bps. The UST 10yr yield is now at 4.23% and up +3 bps. Their 2yr is now at 4.15%, so that positive curve is now +8 bps, with another small rise.
EQUITIES MIXED
The NZX50 has changed little in late trade today. The ASX200 is down -0.5% in afternoon trade. Tokyo has opened its Wednesday trade down -0.3%. Hong Kong is up +0.5% and Shanghai up +0.2%. But Singapore is down -0.3% at its open. The S&P500 was also down -0.3% on Tuesday Wall Street trade.
MARKED DOWN
Shareholders are passing judgment on the ANZ Group succession plan in a fierce way, selling out. The ANZ share price has fallen -6% since the new CEO was announced on Monday.
OIL FIRMS AGAIN
The oil price is up +US$1 from this time yesterday, now at US$69/bbl in the US, and up +50 USc to just on US$72.50/bbl for the international Brent price.
CARBON PRICE SAYS DOWN
The carbon price is staying lower today at NZ$59.25/NZU and a four month low. See our new daily chart tracker of the NZU price for carbon, courtesy of emsTradepoint.
GOLD RISES FURTHER
In early Asian trade, gold is up +US$37 from yesterday, now at US$2701/oz.
NZD FALLS
The Kiwi dollar is down -50 bps from this time yesterday, now at 58 USc. Against the Aussie we are also down -50 bps today to 90.9 AUc. And against the euro we are down -30 bps at 55.1 euro cents. This all means the TWI-5 is now just over 67.6 and down -40 bps from yesterday.
BITCOIN SLIPS AGAIN
The bitcoin price has fallen to US$96,103 and down -1.9% from where we were at this time yesterday. Volatility of the past 24 hours has been moderate at just under +/- 2.1%.
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40 Comments
Back on track:
Previously we were going to get 2 new rail enabled ferries for $550m (well that was the contract, might have gone to around $700m if renegotiations happened).
Now we will get non rail enabled ferries for $900m. And they will be smaller.
What an own goal. Utterly predictable though, I did say that they would do this, get less ferry for higher price, then call it a win.
I'm not a ferry expert by any means, but could we have just bought the original bargain rail-enabled ferries and delayed using the 'rail-enabled' bit to save money on the ports?
Did we need to trash half a billion in order to save that 2 billion?
I could well be missing something, did the ports need to be upgraded to deal with the sheer size of the rail-enabled ferries or was it just to deal with the rail-enabled aspect?
As I previously pointed out:
"Whatever the preferred solution, rail freight will continue to be able to be transported between the North and South Islands.”
https://www.rnz.co.nz/news/political/536339/live-government-won-t-revea…
At least the proposed ferries should now be able to use the Tory Channel entrance, unlike the previous ones ordered.
Some of my family members were in on the design of these boats. One is high up on the bridge... he tells me they would have been fine to go through Tory Channel and I would believe him. When I bought this up he said:
Boats were significantly more powerful
Boats had much more power plant redundancy (assume could run off battery too)
Boats were 40m longer, but that wouldn't be an issue.
Laughable that people were bringing up that they were 5m wider when the navigation channel in Tory Channel was 300m wide at its narrowest point.
Current boats or cheaper boats or second hand boats either wouldn't have the redundancy, be less powerful or their stern/port thursters wouldn't be as powerful. Remember they were designing these specifically for the conditions they were to be used in, unlike all the other existing boats or previous ones. That's the real risk, he thinks, of cheaping out with boats not designed for their role.
I understood that the issue was primarily the length as well as width (turning circle?). It was the Marlborough/Picton Harbourmaster who advised the restrictions. In any case the "people in on the design of the boats" should have checked with the relevant authorities first not rely on their own opinions.
And its a good call from the Harbour Master. However, they were applying a blanket restriction and does specify that there can be special circumstances for specific boats crews etc. Here is the latest:https://www.maritimenz.govt.nz/public/news/2024/october/harbourmaster-d…. Note:
"For large vessels, (such as those over 187m in length) the onus is on the operator to demonstrate that this can be done without impacting maritime safety standards."
There would be exceptions for the ferries who would have been specifically designed to navigate Tory Channel safely.
That harbourmaster later retracted that size rule, for whatever reason. So there's no such problem anymore.
I agree, it would've been very surprising if those in charge of sailing the Tory Channel more than anyone else for the last century were dumb enough to order ships that wouldn't fit. It would also be reputationally damaging for the shipyard to sell them ships that got wedged on their maiden voyage, so I'm sure plenty of due diligence went into this.
Ultimately I'm sure the government of the day, with the right expert assurances, could've steamrolled right over the harbourmaster if they wanted to. There's been a long battle going back to the Lynx in the 90s where the harbourmaster has tried to shut down any progress on ferries.
"...harbourmaster later retracted that size rule" thanks for that I hadn't seen it - apparently recently 1 October 2024
Not sure about " no such problem anymore" - "If there are requests to change pilotage, there is a risk management process which requires engagement with harbourmasters and other affected parties."
https://www.maritimenz.govt.nz/public/news/2024/october/harbourmaster-d…
I suspected that change didn't happen in a void and there was possibly a discussion going on about resuming the original ferry contract and reducing any egg on the face in doing so. I guess that didn't pan out.
Mind boggles we'd pay a cancellation fee roughly the same as just buying the boats. Even if we just onsold them to a cruise company at half the purchase price, or use them as tugboats to haul coal barges from Westport.. that's a better use of a half bil that has to be spent anyway!
They couldn't buy them because one of their aims is to kill the rail option dead to appease the roading lobby donors. Having the boats would have made the case more compelling to invest in rail. They have committed to spending pretty much all their infrastructure budget (not just transport, all of it) on massive unnecessary roads.
They need to kill any and all threats to road transport, hence the minister forbidding speed humps, footpaths, crossings and cycling infrastructure. By banning those transport modes nobody can demonstrate how inneficient and economically unproductive their transport commitment are.
You can't compare more efficient and cheaper alternatives if the minister has made the alternatives illegal.
I have to say I love that headline about saving the planet not being 'hand in hand' with competitiveness. I feel like that's the root of our issues as a species, always at war with each other even at a social level and the planet pays the price, i.e the future of humanity pays the price.
Austerity government? Robbo 2.0 and Luxinda are wedded to living large. She must be pushing for a cushy University job in a few years.
- Reducing the size of Government back to pre-Covid levels after an 84 percent increase in spending and hiring an extra 18,000 bureaucrats. Instead of cutting spending, Budget 2024 spends $13.9 billion more than Grant Robertson’s largess last year.
- The tax reductions amount to just half the costs to the average worker of 14 years of inflation pushing them into higher marginal tax brackets. Instead of delivering the required $49 per week for the average earner, Willis has delivered just half – at $24.89 for the average worker on $66,196 a year. This amounts to a reversal of just the last three years of fiscal drag.
Sweet Jesus, for once I agree with Profile.
100% correct, the coalition are spending more than Labour and we're going backwards.
Why? Because they are spending on the wrong things and cutting spending in the areas they should be spending.
It's a hideously mutated hybrid of Tory austerity (public service cuts) and massive spending on projects and initiatives that only benefit donors.
I have never seen such open and obvious corruption in a New Zealand government.
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