Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
No changes today.
DEPOSIT RATE CHANGES
No changes today.
A LIFT, BUT ...
May data brought a rise in dwelling consents nationally, but they still lag well behind the growing demand in Auckland where their housing shortage continues to worsen. However, the Auckland data is showing a preference towards denser dwelling types.
MAY DATA TURBOCHARGES Q2
Infometrics is reporting: "There was a solid lift in non-residential building consents in May, with consent values coming in at a respectable $605 mln for the month. A total of $6.5 bln non-residential consents have been issued over the past year, owing to strong growth in Auckland and other parts of the country outside Canterbury."
HEROS & VILLAINS
Dun & Bradstreet are reporting that the vast majority of businesses pay their bills on time. In fact, they say the high (80.5%) rate that do this suggests the overall economic environment "remains solid". And the average late payment period is less than six days. But their detail shows it is large businesses that are the laggards, paying on average 20 days late (an abusing their dominance on the trade payment relationship. It may be that our large businesses tend to be Aussie-owned, which has a real culture problem with on-time payment.) Auckland businesses are the slowest of all main regions, although they are improving the quickest. (Rural businesses pay the quickest. Utilities take the longest to pay.)
JUDGE HITS WARMINGER HARD
The penalty has been imposed on Mark Warminger, the ex Milford Asset Manager found guilty of market manipulation. The High Court has fined him $400,000 for two contraventions of the Securities Markets Act 1988. The judge found that the starting point for the two contraventions was a penalty of $500,000 and applied a reduction in penalty of $100,000 "to recognise Mr Warminger’s personal circumstances". Warminger has also automatically received a 5 year management ban. Both Warminger and the FMA are each appealing the original court result.
THE NEXT BIG THING?
A major report released today highlights the investment opportunities available in horticulture. Apples and avocados show meaningful potential. But the report says the Zespri single-desk system is holding that industry back.
WHERE THE CORRECTION STARTS?
Hong Kong has the most overpriced housing in the world, certainly when benchmarked against incomes. Now local analysts are calling the top of their market, with one of them predicting a -30% fall from here.
A TAX THAT DOESN'T WORK
In Vancouver, tax data there is showing that their foreign buyer tax is not deterring foreign buyers. Tax collections from it are high, so many are just paying it. Plus, local real estate people say there are "a number of creative ways to get around the tax".
WHOLESALE RATES JUMP
Local rates have raced higher and gotten steeper today in a major move up. The 2 year rate was up +5 bps to 2.33%, 5 year was up +8 bps to 2.87% and 10 year was up +9 bps to 3.36%. The 90 day bank bill rate is up +2 bps to 1.98%. (But this shift higher only puts the two year back up the level that we had for the Mid-March to mid-May period, and to be frank, it won't really be meaningful until the two year rate goes back up to 2.50% or above. And to be meaningful, the 90 day bank bill rate will need to rise to above 2.10%.)
NZ DOLLAR RESILIENT
The bond market changes initially hurt the Kiwi currency but it has since shrugged off the depression. In fact, we are now back to about the same levels we had at this time yesterday. The NZD is back at 73.2 USc. On the cross rates we are trading at 95 AUc and at 64 euro cents. That takes the TWI-5 to 76.9.
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Japan’s Inflation Edges Up But Remains Far From BOJ’s Target
The BOJ is betting that a growing economy and the tightest labor market in decades will eventually fuel acceleration in wage gains and inflation. So far pay has risen only modestly, and the key inflation gauge has only turned positive since January. The question is how low unemployment must fall to fuel bigger pay increases and stronger inflation. For now, the BOJ’s forecast of 1.4 percent core inflation for the 2017 fiscal year is seen as optimistic by private economists, who forecast it at half that level. Some expect the BOJ to revise the figure when it issues its quarterly outlook report in July. Read more
Aussie shares are dishing out some of the worst returns in the developed world this quarter as banks, hammered by government levies and a credit rating downgrade, decline along with energy shares. Citigroup Inc. and the quants at Morgan Stanley led a chorus of bears recommending to avoid most stocks Down Under. The nation’s dollar struggled with the second weakest performance among major currencies as political gridlock and signs of limp consumer spending overshadowed a slew of positive data surprises for the economy, including the best jobs growth since 2004. Read more
Another week on Trade me . Property for sale 10210, (10400), price reduced 150 (151), mortgagee 13 (8 ) desperate 8 (9), must sell 221 (226) must be sold 308 (271) reluctant 18 (18), urgent 153 (149). 1 still divorcing Available rentals 4325 (4300). On past 2 months sales figures, currently 5 months of stock available for sale.
How does it behave in a normal winter? Do you have similar data from past years?
Having a quick look at the last REINZ report (for May, so not ideal), it talks about a 50% increase in dwellings for sale compared to last year, an increase in number of days to sell (highest May figure for 9 years at 40 c.f. 32 in May last year), so it seems like a significantly worse outcome than last winter. What data are you basing your statement on?
http://www.interest.co.nz/sites/default/files/embedded_images/REINZ%20M…
Similar story from Harcourts
http://www.interest.co.nz/sites/default/files/embedded_images/National%…
If one believes interest rates are rising, why not try a leveraged bet with a modest built in loss reduction buffer?
Bit by bit, the stupidity of negative spreads is disappearing. Now, maybe this piece is about to top tick the swap spread move. After all, I know next to nothing about this space. But it sure seems like a trade that might end up as a surprise win that few are watching.
You are probably wondering how to execute this trade. Well, Goldman rejected my ISDA application, so for mopes like me, we need to stick to the listed futures market.
But don’t let that stop you. It’s quite easy. Dial the two symbols in your Bloomberg terminal, and type PDH2 to get the Position Hedging ratios. Here is the 30 year swap future versus the long bond future calcuation:
If you are like me, and a big fixed income bear, then you don’t even need to worry about the spread. Shorting the swap outright is 30 basis points better than treasuries. If you get a backup in yield, along with a continued widening of swap spreads, it could simply a better product to be outright short. Read more
Anyone see two trolleys of similar food in herald, in London costs about half as much. Personally I blame the media to some degree for not reporting on this sooner, also the commerce commission for allowing a duopoly. But shouldn't the government do something to break the duopoly? Force Woolworths to split countdown into two and sell half? Force foodstuffs to split pak and save and new world? Why would the government allow their citizens to be so ripped off? Two litres of milk twice the price in NZ.
Thanks Jimbo, I did see it; pretty bad for the long suffering Kiwi household. It followed on from a previous article comparing our fresh food prices with Aussie. That particular article was quickly replaced with one excusing our outrageous prices with some utter nonsense about our food being so good the Asian market was buying it all up. Yeah Right!
You should go into business supplying NZ supermarkets at the prices the British supermarkets pay their suppliers. Good luck with that.
Or of course, you can go into business as a supermarket here. By all accounts you will make a fortune supplying customers at much lower prices. Easy as, apparently. "Everyone" is rushing here to do that because there are huge profits to be made, so you had better get in quick.
What's holding you back?
Andrewj - a lot of kiwis,especially those who were fortunate to buy a house pre 2007, are apparently almost oblivious to how hard it is to get by with the cost of living in this country these days. Really quite shocking how blase many seem to be. House prices, rent, fruit, veges, fuel, telecoms, electricity. I shake my head when I see the high price and poor quality of veges - awful in terms of public health outcomes
Well I hope British supermarkets don't pay half the price for milk than NZ ones do!
And you can't compete with them because they have all the good sites and they won't allow their suppliers to trade with you. I've heard they buy up good sites they don't need and put covenants on them preventing it being an opposition supermarket and sell them on. They are evil to the core.
the Australian duopoly will soon be broken, and as most overseas cooperates see Auckland as a branch office I would expect them to open here once successfully established
http://www.news.com.au/finance/business/retail/aldi-rival-kaufland-sets…
My local supermarket in Amberley, North Canterbury, which opened a few years back took 10 years to get through from planning permission to completion. So David competition is not that easy.
What NZ should do to make healthy food cheaper is legislate every council make land available for a weekly wholesalers fresh produce market within cities and towns.
An Otago medical school study shows that would save families $50 a week if they shopped at produce markets not supermarkets. http://www.otago.ac.nz/medical-school/news/archive/otago067315.html
NZ grocery prices are now +2.5% higher than in July 2011. (But only if you buy 'healthy'.. we are not checking junk food prices.)
Just a reminder: BBC, Riots and looting: my memories of Asia's financial crisis
http://www.bbc.com/news/business-40439787
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