Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
Westpac have sharply cut many of their key Standard rates, taking them closer to their main rivals. They have not changed their 'special' rates.
TERM DEPOSIT RATE CHANGES
HSBC, Wairarapa BS, Nelson BS, Asset Finance, and Gold Band Finance announced rate cuts. But Asset Finance actually raised its nine month rate.
HOUSE CONSTRUCTION MOVING UP A GEAR
New dwelling consents were particularly strong in Auckland in July (+7.9% year-on-year) although there's been a slide in the number of retirement village units being consented. Nationally however, the change was flat year-on-year. In Australia, July consents were up too, by +6.0% year-on-year.
UDC MUSCLES UP
ANZ has now (finally) sold UDC Finance to Japan's Shinsei Bank for $794 mln. UDC says Shinsei Bank’s strong funding, international experience and reach, coupled with its deep asset finance experience, will be a real advantage in accelerating its growth.
KIWIBANK PROFIT HALVES
Kiwibank's June year profit has been hit as COVID-19 related loan impairments ramp up, expenses rise and income falls.
LISTINGS UP BUT INVENTORY DOWN
New residential property listings were up +16% in August from the same month in 2019. They have recovered well after the Level 4 lockdown but remained flat over winter. Inventory levels are suddenly back down to the record lows we saw in mid 2016.
GOOD FUTURE
Rabobank sees New Zealand beef returns staying elevated, especially on good demand from the US market. They see the China market fading somewhat, and although the UK trade deal may hit the headlines, it will be of little consequence to us.
COVERED BOND INVESTORS GET OFF LIGHTLY
Ratings agency Fitch says that although the take-up of mortgage payment holidays were widespread, the quality of the covered bonds pool mean't that these investors suffered only a minor impact, with the specific pool impact ranging from 0% to 12%.
DODGY MAPS RELEASED
Farmers fear they have been stitched up. Federated Farmers is pointing out that new 'slope' maps issued by the Government can be wildly wrong. This is important to farmers because it is defined within the Resource Management (Stock Exclusion) Regulations 2020. These low slope maps take in some hill and high country that is so steep, farmers will need to pay for helicopters to lift poles and other supplies in order to fence off waterways. The new maps are wildly different to what the Government talked about in consultation (which farmers supported), quadrupling costs indicated in consultation.
EQUITY UPDATES
The S&P500 ended its session earlier down -0.2%. Shanghai, Hong Kong, and Tokyo are all up about +0.2% so far in early trade. The ASX200 is getting thrashed today, down -2.0% in early afternoon trade. And the NZX50 Capital Index is also on a downer, down -1.2% near its close.
SWAP RATES UPDATE
Update: Swap rates fell sharply today at the end of trading especially at the short end. Two year swaps fell -4 bps to just 0.04% (that is $4 of interest per year for a $10,000 position), five year rates fell to 0.15%. These are notable moves down and are approaching 0%. The 90-day bank bill rate is up +1 bps to 0.30%. The Aussie Govt 10yr is unchanged at 0.99%. The China Govt 10yr is down -3 bps at 3.06%. But the NZ Govt 10yr yield is back up, rising by +2 bps to 0.63%. The UST 10yr has retreated from yesterday's close, down -2 bps to 0.71%.
NZ DOLLAR FIRM
The Kiwi dollar has risen again, now at 67.6 USc as the greenback fades further. But against the Aussie we are little-changed at 91.3 AUc. Against the euro we are soft at 56.4 euro cents. That all means our TWI-5 is holding at 70.
BITCOIN UNCHANGED
The price of bitcoin is unchanged at US$11,648. The bitcoin price is charted in the currency set below.
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101 Comments
16.2% of kiwis now on benefits, nearly 4% higher than worst of GFC and approaching levels seen in worst days of late 80's recessions, and we haven't gotten anywhere near the worst of the fallout from lockdowns and closed borders. https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12361086
And demographics being what they are, there's a headwind blowing, even without the current economic issues.
the population aged 65 years and over is expected to pick up after the year 2011, when the large baby boom generation begins to enter this age group. For instance, between 2011 and 2021 the elderly population is projected to grow by about 200,000 and in the following ten years by 230,000. By 2051, there will be over 1.14 million people aged 65 years and over in New Zealand.
And all of them are entitled to the aged benefit.
it's a terribly phrased paragraph, I'll give you that, but 16.2% of kiwis are NOT on benefits.
from the article you link
'It found that, if Treasury projections are correct, and the percentage of the working population on benefits reaches 16.2 per cent, it would be the highest number ever - far eclipsing the rate of beneficiaries during the Global Financial Crisis (GFC), when it was at 12.4 per cent.'
I think you may find that many more than 16% of Kiwis are on taxpayer benefits (income transfer payments). You need to count the standard working age benefits (probably more than 350,000), those on National Super (more than 800,000), and those on WfF tax credits (maybe more than 260,000). These alone add up to more than 1.4 mln people or 28% of the population. Then there are other programs like hardship, the accommodation supplement, special needs grants, and others. Most of these will be doubleups to the other programs, but it seems safe to assume more than 30% of the population are on benefits.
Try socialism! As in, govt spending being 44% of GDP:
https://www.interest.co.nz/news/105115/budget-202021-summary-all-spendi…
I think you need to broaden your horizons a bit. Have a look at other countries like the US - Oh that's right, they don't incude social security in their GDP data, but defense/offence spending? ...that's another story. WE are a social democracy firmly rooted in capitalist principles. Until recently, the bottom half of our income earners could expect a fair deal from the top 10%. That's changed over the past 20-30 years, to the point where national sovereignty is a moot point.
You can twist and turn it every way you like, but ENZED is not, and has never been a socialist country. The 'new discourse' on whats left and right has become so twisted by falsehoods that I am frightened for my children, who deserve a better history than the one we'r currently dishing up.
Dealing with the systemic issues is what we as a sovereign nation must do. Which is why I find John Key and his successors plan to sell of a few more mega hectares to American business(men/people) so offensive. We have land, we have productive capacity, we have citizens and we have a bi-cultural anchor that should give us a clear steer on the direction that ENZED as a nation needs to head. Why do we persist with policies that alienate land, or gift citizenship to those interested only in self-enrichment (Peter Thiel anyone?).
Yes we will be doubly socially responsible if we spend on programmes that promote equity and enable the people least likely to succeed.
It take guts and more compassion than many on this site are willing to subscribe to.
"The number of people claiming benefits grew by nearly 12% during New Zealand’s first month of lockdown, a new report has found, representing a demand for social welfare “unprecedented in modern history”, the government says.
Analysis by the Ministry of Social Development showed the jump in April – which saw 120,000 more people claim welfare – was the biggest monthly rise in 24 years, “noting that this period includes the global financial crisis and the Asian crisis”.Link
Cunningly designed to keep salaries low and dependent on big government.
"Infometrics chief forecaster Gareth Kiernan said it was most acutely an issue for a household's primary earner moving from a benefit to paid employment. Someone on sole parent support who earns more than $200 a week loses 70c in the dollar of benefits.
...The introduction of Working for Families by the Labour Government last decade tried to address rising living costs that were squeezing budgets for lower-middle class households, and was also a convenient vote-capturing exercise.
"Unfortunately it didn't try to address the fundamental problems, such as soaring house prices, that were actually causing the squeeze. Working for Families has effectively created an additional layer of beneficiaries who are dependent on the government for some of their income and, depending on their circumstances, don't have an easy way of getting out of that dependency given the incentives of the system. This dependency also makes it very difficult for any incoming government to substantially change or remove the system."
https://www.stuff.co.nz/business/114949505/tax-system-means-for-some-it…
We need some courageous politicians. Key railed against it as "communism by stealth" but National only kept it around and indeed last election ran on increasing it. ACT are not running on getting rid of it, nor are National this time around. Like school zones, principles of freedom have fallen away in favour of preserving property portfolio wealth while keeping wages low.
I am a supporter of WFF, but only because those 'fundamental problems' weren't, and haven't been, addressed. Which, by the way, the Clark government made bugger all effort to address. Her government was pathetic on housing.
Good points from Kiernan.
I don't get WFF and have never been eligible. My household earns well over the threshold. Even then, it's hard yakker covering costs with two children.
It must be extremely hard for families with 2 or more kids earning under 100K per annum in Auckland.
i object to WFF because of the mechanism used for delivery, i have no problem with the concept that people with kids should get help but the mechanism to deliver it is bureaucratic and costly, it like when you give a $1 to a charity by the time it gets to the end recipient there is only 10 cents left.
Then I don't think you understand what WFF does. It is essentially a massive productivity killer, it subsidises business owners, who then can employ more people to do the same amount of work. Instead of working smarter and being more productive, it has killed productivity and discouraged the knowledge economy and competitive labour market. It is a pernicious policy that fixes nothing long term and does tremendous long term damage. Sure, it means people will be able to pay the rent tomorrow or buy them more clothes etc, but it is also a subsidy for landlords and the supermarket business. On top of that, there is an army of bureaucrats that have to administer it. At the most it should have been a temporary policy while other things were sorted.
If you are so for WFF, just put in a UBI. Simple, near impossible to game and virtually everyone is better off.
Good points. But note as I say my support for wff is not a preference. As I stated I would much rather if it wasn't done and the housing mess was sorted out. But it wasn't and it won't be.
And yes I am open to other more efficient methods that serve effectively the same purpose.
Sort out housing of course. The costs of accommodation allowance would pay for plenty of cheap houses.
Bring back universal child benefit - it worked in the past, it is hard to cheat, it is cheap to administer and it could stop discouraging parents to stay together. Investing in all children makes sense. The only reason it isn't some party's policy is because it would mean increasing income tax to pay for it.
In that case perhaps it will only get sorted when it causes massive collapse or massive social unrest. A la Muldoon pushing NZ to the edge of bankruptcy before any government was really given the mandate by the people to effect change. Suggests young people are best served by getting angry and active enough to take serious action.
Well put RS. At a time like this a REAL capital gains tax makes more sense than ever. As our silver spoon ACT party leaders suggest that the poorest take a wage/benefit cut. property sails on. Like many others on this site, I'm a hypocrite as we have rental property investments but gee... even I'm feeling a wee bit squeamish about the source of recent value growth.
Nobody would mind redirecting subsidies to job-creating productive sector instead of property investments, where not only current income is subsidised by the taxpayer and future income and capital gains are protected by policy failures such as RMA (curtailing supply) and unbridled migration (pumping up demand).
Uhhh... around 20% are also getting Super, which will be almost 30% by end of the decade... aren't something like 40% of families getting WFF too. Then there's 100s of millions paid out every year to motel owners as accommodation supplements...
The pool of productive to non-productive people in this country is rapidly going in the opposite direction that it needs to. But don't worry, house prices are rising, because that's what we need. Productive industries? Don't make me laugh. Speculative industries, that's what we need.
The absolute lunacy of the past 20 years is going to come home to roost over the next decade or so as it all unwinds...
To simplify things - in a Nutshell the never-ending debt growth has kept the Boomers in a delusional state since they entered the workforce at the same time that the US went off the gold standard. They were first in on a massively successful pyramid scheme and now they want the Z & Millennial generation to buy their inflated assets.
Will end in tears - the end.
Foreign-owned "productive" companies (think Airbnb, Facebook, Google, Apple), much like speculators in NZ, exploit loopholes in our tax system to avoid paying their fair-share, despite sucking billions out of our economy each year.
This also gives an unfair advantage to global giants against local players on NZ's economic landscape. When these local companies finally give up due to their disadvantaged financial position, overseas investors use the cash from the un-taxed income, which was stashed away in some Caribbean island this whole time, to acquire our locally-owned enterprises and our broken system reports this outcome as a win for NZ Inc. Hooray!
I’m in awe of how a tiny automaker with less than 1% global market share is a Supernatural Phenomenon and the 7th most valuable US stock.
https://wolfstreet.com/2020/08/31/tesla-the-triple-wtf-chart-of-the-yea…
"things like Tesla, the minuscule automaker with a global market share of less than 1%, isn’t actually an automaker with stagnant revenues in a long-term stagnant or declining industry, but a data company with a secret government contract to populate Mars or whatever. You just have to put your brain on Tesla Autopilot and believe in it."
Apparently Tesla do have some sort of a technology moat but still, they only make money from flogging carbon credits to ICE. They received huge subsidies as well. I'd be pretty p155ed if I was GM or Ford.
NZ futures very negative now, -10bp out of June - cash rate of less then -.25%.
Yep, what would a near-monopoly on autonomous driving tech for 5-10 years (and super high entry barrier for potential competitors trying to catch up) be worth? I think probably more than Apple or Google IF it works (but that is probably more than a 10-20% chance). If not for that they would be worth less than BMW ($40 Billion) not the 400 Billion they are currently at.
as a tesla shareholder, i am amazed at the forever increase in price, i know they do more than make electric cars that is only the face of the company, it is the tech and battery development that is the real end game, but even when elon comes out on twitter and says it is over priced you have to wonder when it will turn (and he didnt get fined this time)
careful out there, this is going to be one hell of a ride.
“On behalf of the whole H2O team, we would first like to extend to you and to your clients our sincere apologies for our risk-adjusted losses, which have been particularly significant since early last week… If 2008 was a liquidity crisis, 2011, a volatility crisis and 2016, a convexity crisis, 2020 is a combination of the three previous shocks.”
https://wolfstreet.com/2020/08/31/e22bn-hedge-fund-h2o-majority-owned-b…
" (The distressed company) still clung to one hope: that central banks would step in and save the day by re-pumping the prices of the high-risk asset classes ..."
That one sentence is more than the writing on the wall for H20. EVERYONE thinks the same. And they'll be right until they aren't....
Just talked to a rancher friend in the States, beef price is way back and hurting, about the same price as we are getting here, dollar adjusted. Happened before and we just kept on sailing, this year will be interesting with all the economic trouble that could hit China.
Zerohedge
https://www.zerohedge.com/markets/challenges-are-unprecedented-chinese-…
Well, this was predictable: JHK reveals how he's gonna Vote - check yer pacemakers....alert the nearest ED....lotta Dead Rats to swallow....
Just overheard a conversation with someone who got into the sharemarket over lockdown for something to do.
Their main claim to fame and fortune is that they got into Tesla a few weeks back and it's soaring (it is). So I just casually asked, "Do you know what their PE is?" (it's about 5,000 if that makes any sense at all). The reply was "What's a PE?"
There is no hope!
i had friends waiting to get into tesla and they thought it would go lower that 325 when covid hit (because of the fundmentals) as they thought the market would finally price according to what telsa was actually doing
and they have now missed out this time as it got away from them when it recovered, they thought it was a dead cat bounce and was waiting for the second dip, so was i for top up so we all missed the buying op.
nobody knows where this will end, logic would have it would drop back but who knows with this share
if it does those that didnt get in will go told you so, if it does not they will kick themselves and say wouldve shouldve couldve
This is from Roy Morgan. I'm quite dubious about their polling, ever since about 2016 (and they didn't poll at all in 2018 or 2019) their polling has jumped around a lot from month to month a lot more than the other public polls have, suggesting their internal models aren't as sophisticated, for whatever reason.
In this case the polling was for the month of August, where the only story has COVID-19 resurgence, including the election being delayed by a month, and at the end of the month James Shaw fucking up in funding a private school. There's no reason to believe that the Greens who have been effectively invisible or recipients of bad coverage would gain 3.5% in such an environment.
The Greens will maintain thier lead as their base is far more stable than NZ First.
James Shaw will get out of his private school problem by arranging a payback from the school who are charging students to attend.
Interesting National are falling away, is this because Crusher's husband sledged Cindy. I saw this item on Prime but obviously wasn't important enough (!!!) for Three to have it tabled. I wonder why.........
Interesting to see China lowering itself even further with racist insults:
https://www.nzherald.co.nz/world/news/article.cfm?c_id=2&objectid=12361…
I can see the funny side. Just imagine the state of mind they got into to make that statement. I wonder if they had a Whiteboard session to sort of chuck a few ideas around and in the end put a big circle around that one. I'd love to see the rejected ideas - would be like a Monty Python skit.
That Fritz has been the biggest question for the US for the last six years. You have to look all the way back to 1930's Germany for comparators. The GOP has become a cesspit of self interest and (dare I say it) reaction to 50 years of redemption. Trump is only interested in himself. So are his acolytes.
The party of Lincoln as morphed into a putrid cadaver.
Even propagandists aren't safe in China. Disgusting regime.
https://edition.cnn.com/2020/09/01/media/china-cgtn-cheng-lei-rsdl-intl…
Two clicks......
But I tried paying the hairdresser in cash yesterday, and she looked at me like I'd landed from Mars!
"Oh", she said," You want to pay with cash?"
That's the way it's going. Keep your spending power in cash by all means, but don't expect everyone to take it from now on ( Cash will eventually go the way of cheques)
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