Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
SBS Bank cut rates today across the board. They are staying close to market levels, but with no market leading rates.
TERM DEPOSIT RATE CHANGES
Kiwibank ended its 2.70% six month rate, reverting back to 2.50%. Heartland Bank has said its existing-customer offer of 100 days at 2.70% IAM, and 10 months at 2.90% interest paid quarterly, will both end on Friday, April 3, 2020.
RBNZ GOES FURTHER ...
The RBNZ will buy more government bonds, as well as corporate and asset-based securities to support liquidity in the corporate sector. Basically, it means that banks can sell-on corporate loans to the RBNZ to realise more liquidity. The RBNZ is hoping that means banks will keep lending to the corporate sector if they know they can offload these loan contracts to the RBNZ. More here.
... TO DEAL WITH ISSUES LIKE THIS
The type of distress that Smiths City is going through is what the RBNZ is trying to prevent. Following discussions last Friday, Smiths City’s bank ASB has agreed to delay by four weeks, the repayment of $1.5 million of the company’s $65 million Senior Secured Facility due for payment on Tuesday 31 March 2020.
ANOTHER MILLION
The Government has fast-tracked up to $1 mln to help Air New Zealand move urgent freight to and from New Zealand, with the first flight to Shanghai leaving tonight.
ASSET FINANCE GETTING NEW OWNER
Clare Investment Management will acquire an 83% share in Whakatane's Asset Finance following Clare's proposed purchase of Blackstar Finance from Hong Kong's Blackstar Capital Group in the first half of 2020. It won't change Asset Finance's sub-investment grade rating of B-, according to S&P.
MONEY & INVESTMENT IN A CRISIS
Authorised financial adviser Martin Hawes says he will be running free financial webinars every day starting Wedenesday, April 1, daily at 4pm. The first seminar is: Money and Investment in a time of crisis. The topics for this seminar will include: Investment, KiwiSaver, Taking stock, Income and expenditure, Mortgage and debt. This is not a commercial event and there is no 'sponsor'. You can sign up here. He says topics will change over time and he expects to offer this webinar service during the rest of the lockdown.
ANOTHER VERY GOOD YEAR FOR INSURERS
According to updated data published today by regulator the RBNZ, insurers booked a +29% rise in profits in 2019 although that was down from a +38% rise in 2018. Life insurers however saw their net premium income fall -17% while general insurers booked a rise of more than +8% in premium income. Insurers earnings from investments were the star however, up +48% in 2019 to almost $5.4 bln. Some of this will have been unrealised of course so is likely to have crashed since then. Investment gains made up only 18% of their total net revenue however. (As a knowledgeable commenter pointed out, this is an industry that has not yet stepped up with premium deferral plans to help get their clients through the current crisis. Insurance clients have the bridges burned behind them if such arrangements aren't forthcoming. It is not possible to get or keep a mortgage, for instance, if you don't keep the house insurance policy up to date.) Update: see below.
IAG NZ'S COVID-19 ASSISTANCE FOR SMEs
IAG New Zealand says it will defer premium payments for small businesses experiencing financial hardship due to the COVID-19 pandemic. It also says small businesses that need to close premiums due to COVID-19 can maintain full insurance cover on the premises with no increase to their premium. IAG, NZ's biggest general insurer, also says it has reduced payment times to suppliers to no more than 15 business days. IAG is considering options for other customers experiencing COVID-19 related financial hardship. There's more detail from IAG here.
INSURERS TO 'RESPOND FLEXIBLY & RESPONSIBLY'
The Insurance Council of New Zealand (ICNZ) says support for customers' financial hardship due to the COVID-19 pandemic will be up to each member to implement. The ICNZ, whose members don't include health and life insurers, says its members will continue to handle all insurance claims and support customers. In addition they will "respond flexibly and responsibly" to those in genuine financial hardship or are vulnerable or have difficulties communicating with them. The ICNZ says all customers should contact their insurer if they are in genuine financial hardship.
LOCAL UPDATE
There are now 589 Covid-19 cases identified in New Zealand, with another 75 new cases since, in six important clusters. One person has now died here. We have twelve people in hospital with the disease, and three are expected to be discharged soon. Most hospitals have now discharged patients who are 'elective' and/or who may be vulnerable if they fill up with virus cases. Hospitals are now less than 50% full, awaiting a rush that hopefully never comes.
GLOBAL UPDATE
Worldwide, the latest compilation of Covid-19 data is here. The global tally is now 721,000 of officially confirmed cases, up 115% in a week and at this rate, the total will exceed 1 mln before Friday. 20% of all cases globally are in the US, up +325% in a week. The US is facing a vast death toll, with the Administration saying it will be "a victory" if it comes in under 100,000. Others see 200,000 dead in the US. This is what delay and stupidity can wreak. 14% of the global tally are in Italy (up +65% in a week), and 11% in China (up +1%) and Spain (up +180%) each. Australia has now over 4000 cases, and 16 deaths. The pace of global infection is accelerating even quicker and global deaths now exceed 34,000.
STOCK MARKET UPDATES
The NZX is the first market to open this week, and it is setting the global stage with a -0.6% fall so far on the NZX50 Capital Index. The ASX200 is up +2.1% so far. Shanghai has just opened to a -1.3% fall, Hong Kong is down -2.0% and Tokyo is down -3.4% in very early trade.
FEAR STALKS FIXED INTEREST MARKETS
Wholesale swap rates are lower today across the board. The two year is down -2 bps, the five year is down -5 bps, and the ten year is down -8 bps. All swap rates are now at record, all-time lows. The 90-day bank bill rate is up +3 bps to 0.51%. In Australia, their swap curve is even taking a sharper bear flattening with their 2 year down -1 bp, their five year down -8 bps and their ten year down -13 bps. The Aussie Govt 10yr is down -16 bps to 0.76%. The China Govt 10yr is up +2 bps at 2.70%. The NZ Govt 10 yr yield is down -6 bps to 1.03%. The UST 10yr is down very sharply ahead of the NYSE opening, down -16 bps at 0.66% and falling sharply.
NZ DOLLAR FIRM
The Kiwi dollar has has stayed up today and is now at 60.3 USc. Against the Aussie we holding at 98.2 AUc. Against the euro we are firm too, up to 54.4. That means the TWI-5 is now up to 66.5.
BITCOIN LOWER
The price of Bitcoin is softer, now at US$6,014 and down -12% from this time on Friday. The bitcoin price is charted in the currency set below.
This soil moisture chart is animated here.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
47 Comments
"Basically, it means that banks can sell-on corporate loans to the RBNZ to realise more liquidity."
Well repackaged loans yes. Its troubling. If the GFC taught us anything it's that credit agencies and banks can't price credit risk.
What hope do we have that RBNZ are buying these assets at fair market levels ?
The last thing we need is RBNZ cleaning the balance sheets of banks and taking the hit on their bad loans because that means the tax payer is taking the hit that should have been taken by the banks shareholders.
The type of distress that Smiths City is going through is what the RBNZ is trying to prevent. Following discussions last Friday, Smiths City’s bank ASB has agreed to delay by four weeks, the repayment of $1.5 million of the company’s $65 million Senior Secured Facility due for payment on Tuesday 31 March 2020.
Why doesn't the RBNZ directly buy the distressed portion of ASB's loan facility to Smiths City, which would give ASB capacity to function in a normal manner? But with restrictions to dedicate more lending to productive GDP qualifying enterprises at lower RWA capital requirements.
And while the RBNZ is busy loading banks up with inert central bank reserves the government's deficit spending into the settlement cash balance is doing the heavy lifting.
The cost is being realised by significantly higher value and more regular T Bill tenders.
They also wrongly assume that government deficits create money, when actually they create national debt & growing regressive interest transfers from the many poor to the few rentiers who they seem to be serving Link
Responding to the root cause of liquidity dislocation is surely preferred to letting the rentier class disgorge their high quality securities portfolios upon the taxpayer, together with the contingent liabilities, which they are largely underwriting with taxes. Moreover, who wants Smith City CP?
Now even the fig leaf is gone.
https://wolfstreet.com/2020/03/29/corruption-in-the-time-of-coronavirus…
China's Consumer Default Tsunami
https://www.zerohedge.com/economics/scope-pain-immense-chinas-consumer-…
Hopefully they don't send us dodgy testing kits as they have to Spain: https://www.businessinsider.com.au/coronavirus-spain-says-rapid-tests-s…
Who reckons this is legit?
https://www.dailymail.co.uk/news/article-8165717/Locals-Wuhan-believe-4…
Im cutting firewood in the drizzle. 6ml so far and that's just not enough. back country is short and brown we needed 50 ml or more and it's just not happening. Looks like works are cutting kill to %50 for lamb and %30 for beef.
Shaping up to be one hell of a winter, i'm just trying to grow something before May, when things pretty much stop around here. Wondering whats going to happen now the US ethanol industry is shutting down, that's about %30 of US corn.
It would be a victory if it comes in under 100,000. Was 17/18 stupid? Those numbers were with a flu vaccine. "An estimated 80,000 Americans died of flu and its complications last winter, according to the US Centers for Disease Control and Prevention."
The 1957 Asian flu in the US was 116,000 dead.
https://edition.cnn.com/2018/09/26/health/flu-deaths-2017--2018-cdc-bn/…
Trump.
Running the numbers.
Updating dates.
USA do nothing numbers, 2.2 million deaths.
https://youtu.be/pej7vM4mvjE
And
https://youtu.be/TJPrRM5iRy8
Watching the 6pm news, and as expected it is clear the lockdown is a disaster.
All "guilty" parties are rightly saying but we were told we could choose to "extend our bubble", that they are "allowed to exercise", that they are doing x/y/z for their "Mental health", and that they have stayed local because "I rode my bike here"
All the experts, ministers, and heads of various government departments are now stuck saying yes it is in line with what was stated, but is not in line with the intent.
Talk about polishing a turd. It is a losing battle when the PM went on National TV and said stay at home, well try and stay at home, well try and stay local, well only if you have too, then proceeded to give out a list of valid excuses.
The question is how do they rectify this without blaming the PM?
https://www.newsroom.co.nz/2020/03/20/1092200/why-urgency-not-gradualis…
Sam Morgan argues the usual governmental gradualism isn't enough to deal with the Covid-19 threat. He calls for more aggressive social distancing and testing measures because "each day of urgency will save lives"
I've been working full time to respond to the Covid-19 threat through whatever I can do with investors, philanthropists and the companies I'm connected with to prevent New Zealanders from dying unnecessarily.
And I'm at a loss as to why more is not being done: we're simply not going fast enough. Our Government seems committed to a failed policy of gradualism dressed up as faux-decisiveness. Our leaders and political systems are designed for peacetime. We have no experience of wartime. Our systems don’t understand needing to move before you have the data you would like. The data may not be here in New Zealand yet, but it is certainly there in front of governments in Italy, US, UK, Spain and so on.
I think most nations only ever had two options.
1. An absolute lockdown - i.e. do not leave your front door, or
2. No lockdown and accept some deaths.
We were lucky and had a third option unavailable to many others:
3. Shut the border completely.
Labour made the wrong choice. But, in absolute honestly I think National would have done worse.
The western world as a whole does not have "Leaders" in Government. We have a bunch of corporate managers - https://dilbert.com/strip/2019-04-23
but they did dily daly on option 3, and even when they so called cracked down all they did was hand people a pamphlet and send them on their way.
if they had shut the borders a month ago and did proper enforcement and testing of returning kiwis we would not be locked down.
However, there remains confusion and debate as to what activities are permitted under lockdown, with some people under the impression that they cannot leave their homes under any circumstances, while others are continuing to walk, surf, run and play golf.
https://www.theguardian.com/world/2020/mar/30/new-zealand-site-to-repor…
There is evidence of price gouging by the Duopoloy in the Supermarket sector , ostensibly under the guise of excess demand .
Its very subtle but the cost of our shop the day before the shutdown was, shall we say , expensive .
And we did not buy any more than we normally do , no hoarding , with just enough fresh fruit and veggies for a week , and long life milk instead of fresh ( which we normally buy twice a week ).
When I complained about tomatoes at a ludicrous $4,99 at NW, I was told that tomatoes will be $5,99 per kg at New World by next week.
That's almost equal to the discount cost of a kilo of Pork , ........... frankly we should be outraged , particularly when we have not yet had any frost or very cold weather , and more so given tomatoes can be grown all year round in tunnels .
Someone somewhere is clipping a very big ticket in this scam
Maybe its time some entrepreneur brought in tomatoes from the Phllippines ( they are around 70 cents a Kg there ) , like we do with bananas and pineapples , or Australia where they are retailing at Aus $2,99 in Qld.
We could be more than 100% more expensive than Aussie by next week it appears .
There is not much we can do about this other than vote with our $ and not pay outrageous prices for anything where we feel we are being fleeced
So for me its quite simple, we will not be buying tomatoes at that price , and hope others follow suit and the tomatoes go rotten and have to be discarded , it will serve that bunch of thugs running our supermarkets right
Issues a Virus Wartime leader needs consider.
With references to wartime FDR.
yes Smiths City has made bad decisions ROY Campbell is away with fairies , they have employed staff and got rid of long servers , there flagship store is run by ex warehouse stationery staff who don't have a clue about the old traditional offerings We have spent 40k with group over 36 months BUT would never deal with company again due lack of knowledge
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