Black Monday

[kiora]

The technical rot on the NZ50 index commenced last week before the covid scare..
Correction in progress. Technically/generally speaking, during corrections all medium/long term* buying should cease until buy signals re-emerge.

* The daily/one year chart below is defaulted for medium term use.

12305

Thanks Hoop. I definitely won't be taking any of the Contact offer anyway.

[Toulouse - Luzern]

Any thoughts on how much of the sell off is by overseas holders?

[JohnnyTheHorse]

One should keep in mind that the pullback of the NZX50C is not representative of the entire NZX market. The declines are very heavily attributed to MEL and CEN (which are unnatural drops), plus ATM and FPH.

Ultimately the NZX is likely to follow the SP500, which is at all time highs and just broken bullish from a bull flag. In my view this is a dip worth buying on selected shares (and no MEL, CEN and ATM are not those selected shares... yet).

[Panda-NZ-]

Nikkei is zooming along. ASX with their stale "old hat" companies are doing ok even with profit downgrades.
NZX's place is between those two I think.

[Balance]

One should keep in mind that the pullback of the NZX50C is not representative of the entire NZX market. The declines are very heavily attributed to MEL and CEN (which are unnatural drops), plus ATM and FPH.

Ultimately the NZX is likely to follow the SP500, which is at all time highs and just broken bullish from a bull flag. In my view this is a dip worth buying on selected shares (and no MEL, CEN and ATM are not those selected shares... yet).


Sssssshhhhh - I have been quietly letting the doomsday merchants preach their doom and picking up a few more shares.

[JohnnyTheHorse]

Sssssshhhhh - I have been quietly letting the doomsday merchants preach their doom and picking up a few more shares.

Best special I saw was PGW at close yesterday :)

[Balance]

Best special I saw was PGW at close yesterday :)

Yup - Asian markets closed yesterday so the buyers were absent. As usual, a few weak NZ holders (read the commentary on this thread?) sold because the buyers were on holiday. :t_up:

[Vee Vee]

Can someone explain the link between NZX50 and US markets? US dominated by massive tech companies NZX by utilities, US powered by massive stimulus NZ by not so bad economic data and some stimulus.
I may be a bit thick. Why are these two so closely linked (excepting recent break)? They seem very different animals to me.

[Balance]

Can someone explain the link between NZX50 and US markets? US dominated by massive tech companies NZX by utilities, US powered by massive stimulus NZ by not so bad economic data and some stimulus.
I may be a bit thick. Why are these two so closely linked (excepting recent break)? They seem very different animals to me.

Sharemarkets will always tend to move in tandem in the short term - principally due to overall investment sentiment & international flow of funds.

However, there is the 'beta' factor at play too. Basically, NZX is described as a low beta market - it does not synch nearly as much to the US market as say, a high beta market like ASX which synch much more closely.

[bullfrog]

Yep, been a sea of red for me this week, except for Almonds; who'd have thought my long suffering SHV shares would be rising from the dead, here's to a favourable La Nina.

[dreamcatcher]

Far too much gloom around here with a few panicking traders investors ..............

"Futures contracts tied to the major U.S. stock indexes rosein extended trading Monday evening after finishing strong last week.

Dow futures rose 250 points, suggesting an implied open of about the same magnitude, while S&P 500 contracts added 27 points, or 0.7%. Nasdaq 100 futures gained 95 points, also a gain of 0.7%."



https://www.cnbc.com/2021/02/15/stock-market-open-to-close-news.html

[bull....]

Fed’s Bullard doesn’t see asset bubble and doubts policy will tighten soon


https://www.cnbc.com/2021/02/16/feds-bullard-doesnt-see-asset-bubble-and-doubts-policy-will-tighten-soon.html



RBA’s Lowe is in no rush to taper


By swiftly announcing plans to double down on the RBA’s $100 billion money printing program (https://www.afr.com/policy/economy/rba-expands-qe-by-100bn-upgrades-employment-20210201-p56yj6) beyond April, the governor has sent a clear message to local borrowers and international financial markets that he is no mood to taper the extraordinary easy money

https://www.afr.com/policy/economy/rba-s-lowe-is-not-for-tapering-20210202-p56ysw

RBNZ statement 24 th feb be a big shock if they stray from everyone else in there policy

[Balance]

Postings, especially some recent ones, reveal some on-the-edge traders here who dance to Wall Street & market daily gyrations, especially whenever markets go backwards - happy trading guys and gals but

1. Don't lose sight of the big picture &

2. Don't spend too much time losing sleep when you are invested in the market with your fingers nervously hovering above the 'Sell' button. Stay comfortable with your exposure level.

Big picture is plenty of free money being printed out there.

[winner69]

Postings, especially some recent ones, reveal some on-the-edge traders here who dance to Wall Street & market daily gyrations, especially whenever markets go backwards - happy trading guys and gals but

1. Don't lose sight of the big picture &

2. Don't spend too much time losing sleep when you are invested in the market with your fingers nervously hovering above the 'Sell' button. Stay comfortable with your exposure level.

Big picture is plenty of free money being printed out there.

And keep watching CNBC cheerleaders to get the warm fuzzies

[winner69]

NZX50 could be heading to its worst month in 10 years according to Lister

@MarkListerNZ
The local sharemarket is having a difficult month, in contrast to offshore peers. The NZX 50 is currently down 4.1% in February. If nothing changed from here, that would be the fourth worst monthly performance in the past ten years.

[ratkin]

NZX50 could be heading to its worst month in 10 years according to Lister

@MarkListerNZ
The local sharemarket is having a difficult month, in contrast to offshore peers. The NZX 50 is currently down 4.1% in February. If nothing changed from here, that would be the fourth worst monthly performance in the past ten years.

A healthy sign, some of the valuations were (and still are) scary high. Although that 4% pretty much utility stocks. In the land of EBOS the sun is still shining

[Baa_Baa]

Sector selection is very important unless you’re into ETFs tracking the index. Selective mode will find the opportunities but betting on the normalised index is likely to be unsatisfying imho

[Jaa]

A healthy sign, some of the valuations were (and still are) scary high. Although that 4% pretty much utility stocks. In the land of EBOS the sun is still shining

Not any more.

Higher interest rates, higher costs (shipping, wages, disruption) and increasing demand = inflation ???

[bull....]

big day wednesday in NZ.
The RBNZ meeting.
very important meeting this for stock investors in NZ

NZ market is already up against it at the moment due to rising NZ dollar and rising bonds and at this time is the NZ50 is down 7.5% YTD the worst performing market in the world due to its yield focus which made this market outperform the last few years on the hunt for yield theme. anyway thats not the case anymore.

Its important as it will clarify weather the RBNZ will stick with the herd ie The FED , RBA The UK etc etc all who are printing more and going into inflation averaging. which would maintain the current status ,

anything different in my opinion will have far reaching outcomes for the dollar , rates , and obviously not very good for the stock market.

NZ dollar uptrend at the moment resistance at 74c odd opening up 78c i reckon.
Also bond rates will go much higher 2% resistance area
and of course stock market will continue to under perform.

[JohnnyTheHorse]

Bear break of the 3885 level on the SP500 overnight, but zero bear follow through and quickly recovered. Healthy consolidation on tech stocks and sector rotation. Bulls are just too strong in this market.

[peat]

NZ dollar uptrend at the moment resistance at 74c odd opening up 78c i reckon.


agree , been long since 19th.
12333

[bull....]

bit of a hammering again on the nasdaq and bitcoin getting a good pounding showing a negative divergence on the RSI. On CNBC they were raising some good points about ark innovation funds how concentrated they are in some stocks ... could be a worry if there a rush on redemptions as its so big now ? Can a ETF blow up ?

[JohnnyTheHorse]

Bear break of the 3885 level on the SP500 overnight, but zero bear follow through and quickly recovered. Healthy consolidation on tech stocks and sector rotation. Bulls are just too strong in this market.

Bears finally got their break with a good flush down to the next support. Mostly recovered now so the short term bottom should be in. A drop like this doesn't really concern me as we are just seeing sector rotation, rather than money leaving the market. We have seen this exact same rotation a couple of times over the last year.

Are things generally massively overvalued? Unless you think interest rates will never go up again then yes. But whilst money keeps being printed it has to go somewhere.

[Scrunch]

Bears finally got their break with a good flush down to the next support. Mostly recovered now so the short term bottom should be in. A drop like this doesn't really concern me as we are just seeing sector rotation, rather than money leaving the market. We have seen this exact same rotation a couple of times over the last year.

Are things generally massively overvalued? Unless you think interest rates will never go up again then yes. But whilst money keeps being printed it has to go somewhere.

Over time doesn't there become a point in time when printing money aka buying bonds is necessary to avoid the tightening situation of existing bonds owned by the central bank maturing and reducing money supply as the cash leaves the system. If i'm right, any idea when this tipping point is?

[JohnnyTheHorse]

Over time doesn't there become a point in time when printing money aka buying bonds is necessary to avoid the tightening situation of existing bonds owned by the central bank maturing and reducing money supply as the cash leaves the system. If i'm right, any idea when this tipping point is?

There is so much debt in the world that we can't afford to have rates increase. The only way I can see this ending is either rapid inflation that comes out of nowhere (highly unlikely - although everyone thinks this and usually the opposite of what everything thinks happens) or a loss of faith in currencies (i.e. people realise their money is essentially worthless if the government can just print more and more and never pay it back). Both of these would be very painful.

Would be interested to hear others thoughts.

[Biscuit]

There is so much debt in the world that we can't afford to have rates increase. The only way I can see this ending is either rapid inflation that comes out of nowhere (highly unlikely - although everyone thinks this and usually the opposite of what everything thinks happens) or a loss of faith in currencies (i.e. people realise their money is essentially worthless if the government can just print more and more and never pay it back). Both of these would be very painful.

Would be interested to hear others thoughts.

Aren't those two things essentially the same thing? hyperinflation and loss of faith in currencies?

[BlackPeter]

There is so much debt in the world that we can't afford to have rates increase. The only way I can see this ending is either rapid inflation that comes out of nowhere (highly unlikely - although everyone thinks this and usually the opposite of what everything thinks happens) or a loss of faith in currencies (i.e. people realise their money is essentially worthless if the government can just print more and more and never pay it back). Both of these would be very painful.

Would be interested to hear others thoughts.

Yes :);

In the past did the printing and circulation of fiat money which was not backed through GDP increases always result in inflation and ultimately the crash of currencies.

Obviously - this time will be different ;):

[bull....]

agree , been long since 19th.
12333

Good jump in the NZD overnight , up against resistance now so might consolidate but i think im gonna hold ride the trend as the US dollar still declining will keep pushing the NZ dollar higher.

[Habits]

Good jump in the NZD overnight , up against resistance now so might consolidate but i think im gonna hold ride the trend as the US dollar still declining will keep pushing the NZ dollar higher.

Yep kiwi currency moving to a new level... going to be good for importers but exporters who cannot reprice will struggle

*100*

[bull....]

Yep kiwi currency moving to a new level... going to be good for importers but exporters who cannot reprice will struggle

*100*

exporters will get caught out i reckon on there forex hedges they probably didnt expect such a fast or big rise

importers like WHS etc should do well

[Greekwatchdog]

As will the likes of HLG,FBU,KMD, any importer will do well with Kiwi trading higher. Market dynamics have changed quite considerably these past for months.Are you in or out??

[nztx]

exporters will get caught out i reckon on there forex hedges they probably didnt expect such a fast or big rise

importers like WHS etc should do well

A month or two back there was something which predicted 0.77 Kiwi/USD coming up

The smart ones will have moved to cover exposures as the rate has advanced up IMO

Further stimulus announced since then being thrown in up in the USA may see higher than 0.77

[bull....]

A month or two back there was something which predicted 0.77 Kiwi/USD coming up

The smart ones will have moved to cover exposures as the rate has advanced up IMO

Further stimulus announced since then being thrown in up in the USA may see higher than 0.77

RBNZ wasnt forcasting this high this soon , so i dont imagine banks were either which i would guess most big companies do there hedging thru

[Greekwatchdog]

We must be in Correction territory after another mauling..

[bull....]

anyone into gamestock up 100% today and up another 80% after hours

[McPussPuss]

Yea, my 2 GME shares will have me into an auckland property in no time

[JohnnyTheHorse]

NZX50 is into RSI oversold conditions on the daily. Most of the drop still being caused by the NZX10 (down ~15% from the peak). Some sectors really performing well (retail & financials).

I expect to see property relate stocks start to outperform again soon. Retirement villages more than commercial (as commercial property value is so heavily influenced by yield).

[ynot]

anyone into gamestock up 100% today and up another 80% after hours
I assumed that the drop from $300 to it's current price would have allowed the short sellers to exist their positions. Is that correct or are there short sellers still looking for an exit ?

[bull....]

I assumed that the drop from $300 to it's current price would have allowed the short sellers to exist their positions. Is that correct or are there short sellers still looking for an exit ?

lots of theories why it jumped one being charlie munger ( berkshire ) talking about it this morning calling all the people in game stop gamblers with a mindset of a race dog. so they ran the price up to rub it in his face. the uncanny thing is it all took off around the same time munger was trash talking heaps of people lol

https://finance.yahoo.com/video/charlie-munger-gamestop-short-squeeze-185123566.html

[ynot]

lots of theories why it jumped one being charlie munger ( berkshire ) talking about it this morning calling all the people in game stop gamblers with a mindset of a race dog. so they ran the price up to rub it in his face. the uncanny thing is it all took off around the same time munger was trash talking heaps of people lol

https://finance.yahoo.com/video/charlie-munger-gamestop-short-squeeze-185123566.html
Interesting, but like I was wondering, did all the short sellers get out a couple of weeks ago after the big drop ? If they did then gme can't have much of a future.

[bull....]

Interesting, but like I was wondering, did all the short sellers get out a couple of weeks ago after the big drop ? If they did then gme can't have much of a future.

looks like short interest is 15% still so no

anyone interested in charlie munger ( berkshire ) 2 hr talk

https://www.youtube.com/watch?v=Pp4CvjNw-9Y

[LEMON]

looks like short interest is 15% still so no

anyone interested in charlie munger ( berkshire ) 2 hr talk

https://www.youtube.com/watch?v=Pp4CvjNw-9Y


Fools gold GME, people just chasing what's been done and dusted. Some big sharks will be sitting in the tank waiting for this moment. Funny how so many people have made money from picking the social cues. Understanding other peoples reactions is certainly the big moneymaker in this game but a 50/50 gamble is what I have noticed. IMO.

Has the share market always been like this Bull or is it with all us new investors really messing with the system, funny how many newbie investors have no idea what they're doing or ever care to know. They just follow the crowds and it works for some.
Certainly not a long term strategy but for now some are winning.

[bull....]

Fools gold GME, people just chasing what's been done and dusted. Some big sharks will be sitting in the tank waiting for this moment. Funny how so many people have made money from picking the social cues. Understanding other peoples reactions is certainly the big moneymaker in this game but a 50/50 gamble is what I have noticed. IMO.

Has the share market always been like this Bull or is it with all us new investors really messing with the system, funny how many newbie investors have no idea what they're doing or ever care to know. They just follow the crowds and it works for some.
Certainly not a long term strategy but for now some are winning.

markets have always had area's of speculative activity or gambling if you like. makes good news stories eh. anyway if your fast and nimble you can make some serious money really fast. unfortunately most are not and lose in this area of the market

[bull....]

in case no one picked up on it yesterday bond rates went thru the roof in NZ why cause grant robinson

heres a news on it since its big news the govt intervening on the RBNZ course of action again , i did warn that govt can make bad decisions as a market risk in NZ

NZ housing policy stand blows up the bond market


The New Zealand bond market imploded on Thursday as traders raced to price in a better-than-even chance of a rate hike coming as soon as this year, to ensure the central bank meets a shock Ardern government mandate to keep housing affordable

https://www.afr.com/markets/debt-markets/nz-housing-policy-stand-blows-up-the-bond-market-20210225-p575my

now this could tank the NZ stock market you know why bccause we are a utility dominated market with bond rates going up you need to adjust the models , so with a higher discount rate these utility type stocks in nz are no longer as valuable as they were yesterday.
also keep a eye on the property market rules to come over the mths all these govt interventions in the market may have implications overall for the wider economy. the reason i say wider economy is because robinson maybe forcing orr to do stuff against the grain of other central banks policy. so putting nz out of syn with unintended consequenses

bad for utilities , property stocks as we are seeing with performance of these stocks last mth , up stocks over same period covid recovery stocks , retailers and financials for NZ

[arekaywhy]

...

bad for utilities , property stocks as we are seeing with performance of these stocks last mth , up stocks over same period covid recovery stocks , retailers and financials for NZ



Sorry, that last bit is not clear, what is your read on property stock/retailers/financials?

[ynot]

looks like short interest is 15% still so no



anyone interested in charlie munger ( berkshire ) 2 hr talk

https://www.youtube.com/watch?v=Pp4CvjNw-9Y


Hi Bull. Where do I find the info you refered to about there still being 15% short sellers still active ?

[bull....]

Sorry, that last bit is not clear, what is your read on property stock/retailers/financials?

rising bond yields change the valuations for stocks such as utilities and property , adjusting up the discount rate ( bond rates typically used) up affects the value of cashflows and the valuation of the stock price. might even use a duration of cashflow for a property stock in the valuation. also the govt actions around property might mean you add a bit more risk in as well when assuming cashflows from sales etc on property. thats why these stocks all selling off valuations are being adjusted and risk/ returns changed.

retailers not effected by these things
financials generally benefit from higher rates
tech shares being sold of to based on the bond going up and the cashflow duration needed now to achieve profits for a lot of these companies
metals shares going up - reflation trade
covid recovery stocks going up as part of the back to normal trade

so nz down 10% this year probably based mostly on this bond yields going up.

of course things can change all the time but thats whats happening at the moment could be just a big rotation going on

[Toulouse - Luzern]

[QUOTE=bull....;874039]

... so nz down 10% this year probably based mostly on this bond yields going up. ...

Some Questions:
What % of Kiwisaver portfolio is invested in NZ stocks?
Has this gone up or down over last 6 months?
Are Kiwisaver, ACC et al currently investing in NZ stocks, or selling?

Thanks

[nztx]

TV News tonight - on at the moment:

COVID-19

Auckland --> LEVEL 3 as of 6.00 AM Sunday 28 Feb 2021

Rest of the Country back into LEVEL 2

Good bye - Round the Bays .. etc

Monday NZX open could be interesting ..

[LEMON]

TV News tonight - on at the moment:

COVID-19

Auckland --> LEVEL 3 as of 6.00 AM Sunday 28 Feb 2021

Rest of the Country back into LEVEL 2

Good bye - Round the Bays .. etc

Monday NZX open could be interesting.

Could be but in the last couple of clusters in the community, the NZX never reacted!
In saying that people are already panicked with the current stock markets down in the red, so you're right I have a feeling there will be a flurry of panic especially with some newbies down in the red and now another community case, possible cluster.

[winner69]

Ashley body language suggested this is quiet serious

[nztx]

Ashley body language suggested this is quiet serious


Yes picked that up too .. may be due to the infectious non compliant bod was out & about
5-6 days in the community .. god knows how far it has potentially spread from that !

A few ignorant non compliant idiots out there = Millions or potentially upwards in losses + inconvenience to everyone else !

Ardern didn't sound too happy either with 'Rule Breakers' right under Health Ministry's noses .. ;)

[LEMON]

Totally agree

[Tomtom]

Ashley body language suggested this is quiet serious Well there are no firebreaks if this takes off because our vaccination program has only just started (hopefully that now gets bumped into high gear) and we have almost no one who has acquired immunity the traditional way.

As for the market we've had a beautiful run since the Financial Crisis of '07-'08, longer than most cycles run thanks to very accomodating monetary policy and despite poor fiscal inputs and tepid productivity. I don't think too many could argue that when this one pops it hasn't delivered.

All that's left now if for Aucklanders to pack their bags and head out of town for a week before the 6am deadline.

[bull....]

Hi Bull. Where do I find the info you refered to about there still being 15% short sellers still active ?

if you do a google search on shorts interest us stocks you might something of a free nature to help you but it is probably lagging data , for up to date data it would be a paying service for the info

[bull....]

[QUOTE=bull....;874039]

... so nz down 10% this year probably based mostly on this bond yields going up. ...

Some Questions:
What % of Kiwisaver portfolio is invested in NZ stocks?
Has this gone up or down over last 6 months?
Are Kiwisaver, ACC et al currently investing in NZ stocks, or selling?

Thanks

i dont really follow kiwisaver funds as there mainly passive funds , google search will probably provide your answers better than me. ACC are more active so of more interest to me.

[Toulouse - Luzern]

Thanks Bull.
I have had a look with google.
My interest was whether Govt related entities current investment strategies and buy/sell actions may have any negative impact on NZX share prices in the current correction. (NZX is now minus 10% in 2021.)
Likewise the Cullen fund. (NZ Super Fund).
Google tells me eg. the NZ Super fund divested investments in 350 International oil/energy shares after alobbying from green interests. I accept it is impossible to know the impact, negative or positive of moves like this on fund earnings.

[Tomtom]

Most kiwi saver growth funds reference the MSCI global index as their benchmark so it's unlikely a high proportion of funds are invested locally.

[Timesurfer]

Bleeding red is getting a bit monotonous. what happened to spring green?

[bull....]

nice bounce of important nasdaq support dragging other indexes up , needs to get over 13300

[JohnnyTheHorse]

nice bounce of important nasdaq support dragging other indexes up , needs to get over 13300

Certainly looks like the near term bottom is in. SP500 closed on a triple bottom on Friday, with bit of a capitulation on high volume. The size of this bounce suggests this most likely isn't just a dead cat bounce.

Got to remember that the Fed hasn't stopped printing!

[Rawz]

Certainly looks like the near term bottom is in. SP500 closed on a triple bottom on Friday, with bit of a capitulation on high volume. The size of this bounce suggests this most likely isn't just a dead cat bounce.

Got to remember that the Fed hasn't stopped printing!

And never fight the Fed!

[bull....]

Certainly looks like the near term bottom is in. SP500 closed on a triple bottom on Friday, with bit of a capitulation on high volume. The size of this bounce suggests this most likely isn't just a dead cat bounce.

Got to remember that the Fed hasn't stopped printing!

bond yields stabilizing giving people confidence to jump back in also march is tradionally a good month for stocks so might support your not a dead cat bounce suggestion

[greater fool]

And never fight the Fed!

https://www.smh.com.au/business/the-economy/europe-s-economic-recovery-is-under-threat-before-it-has-really-begun-20210301-p576la.html

"As matters now stand, the Fed has lost control over US monetary policy. Investors are betting that the overhang of excess M3 money created since COVID-19 began
will combine with the Biden administration’s war economy stimulus - 13 per cent of GDP, including the pre-Christmas package - to lift the economy rapidly out
of its malaise.
Rightly or wrongly, they are pulling forward an inflationary implication. Futures markets have priced in a full rate rise in 2022 and two more rises in 2023.
This is self-fulfilling and will soon start rippling through financial contracts unless corrected.
Put another way, bond traders are dictating policy. They are tightening long before the Fed thinks the coast is clear. So much for the charming idea of
“running the economy hot”."

[Scrunch]

I wonder if gamestop indirectly has anything to do with this. Gamestop showed retail clients can move a market (or at least individual stocks). Perhaps now the insto's also wish to show they can also move the market, but this time the target is the us bond market.

[Balance]

https://www.stuff.co.nz/business/opinion-analysis/124392058/markets-are-fighting-the-fed-again-and-will-probably-lose

Don't bet against the Fed.

Simple.

[Balance]

https://www.stuff.co.nz/business/opinion-analysis/124392058/markets-are-fighting-the-fed-again-and-will-probably-lose

Don't bet against the Fed.

Simple.

[JohnnyTheHorse]

Certainly looks like the near term bottom is in. SP500 closed on a triple bottom on Friday, with bit of a capitulation on high volume. The size of this bounce suggests this most likely isn't just a dead cat bounce.

Got to remember that the Fed hasn't stopped printing!

Good to finally see a fairly settled day of trading on US markets. Exactly what I wanted to see after that run has happened - a drop down to set some higher low support levels. If we can break yesterdays high in the next day or two then we are in a very comfortable position again, with this drop just setting healthy weekly higher lows.

[Tomtom]

Can we fight RBNZ? Looking at the data this morning house prices and milk products, the cornerstones of New Zealand's economy, are running searingly hot. The Guv' seems to be caught flat footed if this is an indication of inflation.

[bull....]

nice bounce of important nasdaq support dragging other indexes up , needs to get over 13300

as was saying yesterday nasdaq needed to get over 13300 , tounched it briefly yesterday but failed hence the sell off today.

[Balance]

Can we fight RBNZ? Looking at the data this morning house prices and milk products, the cornerstones of New Zealand's economy, are running searingly hot. The Guv' seems to be caught flat footed if this is an indication of inflation.

House prices = capital item, not included in CPI.

Milk products - have a look at NZD vs USD before extrapolating into inflation.

[Rawz]

RBNZ doesnt just look at inflation.
Putting up rates will increase the NZ$. Hurting the economy/growth/jobs.

The amount of money we need to print to keep in step with what the Fed is printing is crazy. Basically if the RBNZ wanted to push down rates they could print away.
It's not like QE causes inflation anyway

[bull....]

another day of nasdaq 100 getting a hiding dragging down the sp500 with it , due to rising bonds today. that rejection at 13300 setup the negative flow for the week.

the reflation trade still seems to be working trannies holding up with the dow

[Tomtom]

It's not like QE causes inflation anyway I have some reservations about using StatsNZs CPI as an inflation gauge.

I'll give you an example, with a little overview of many similar OECD countries:
- StatsNZ report that 28% of their index weight is attributed to "Housing and Household Utilities".
- The US Bureau of Labour Statistics report that "Shelter" and "Utilities" is 36.4% of their index weighting is attributed the same.
- In Canada that "Shelter" and "Utilities" figure is about 40.2% of their CPI index weighting.
- In the EuroZone (Household, Utilities and Communications) is 37.7% of their CPI index weighting.

A few years ago New Zealand published a series of shockingly under-target CPI results that just made no sense and sent me down the path of asking why are housing and utility costs would be so much lower in New Zealand than other OECD countries. My conclusion was that the methodology or implementation StatsNZ where using was likely very different to other OECD countries.

This sort of might partially signal why housing and utilities have been such high performing investments in New Zealand as well.

[winner69]

Tomtom - how do you measure NZ inflation? Have your own index?

I look at the tradables v non-tradables numbers, esp to get an idea what domestic driven inflation is

Like year to Dec20 tradables decreased 0.3%, and non-tradables increased 2.8%

Gave the overall CPI of 1.4%

[Rawz]

Rapidly advancing technology is inherently deflationary. Going to be near impossible for central banks to generate inflation even with their super low interest rates.

That's why we are all going to have a universal basic income within the next decade (fiscal policy). :t_up:
USA already have it. They just call them "stimulus cheque's". and look- talk of inflation.

[bull....]

nasdaq getting a hiding again today , powell didnt suggest any QE to stop bonds rising .... markets tanked on the news. no more sugar ?

[Rawz]

The Fed did this in 2019 and markets sold off so much that they came out and basically said, ‘ah don’t worry we were just joking, and ramped up QE’. Lots more sugar to come. Treasury’s can’t handle interest rates going up- everyone will go bust

[Tomtom]

nasdaq getting a hiding again today , powell didnt suggest any QE to stop bonds rising .... markets tanked on the news. no more sugar ? Oil being tight was the only major announcement.

[bull....]

Oil being tight was the only major announcement.

oil has had a big rise today but this what caused the sell - off

Stocks Turn Lower After Powell’s Comments

Nasdaq falls nearly 3%, bond yields rise as investors digest Fed chair’s comments


By Caitlin Ostroff and Gunjan Banerji

Updated March 4, 2021 2:07 pm ET





PRINT



TEXT








U.S. stocks dropped and Treasury prices tumbled as investors parsed comments from Federal Reserve Chairman Jerome Powell about the outlook for inflation and the central bank’s views on rising bond yields (https://www.wsj.com/articles/feds-evans-not-worried-by-rise-in-long-term-bond-yields-11614807614?mod=article_inline).

https://www.wsj.com/articles/global-stock-markets-dow-update-03-04-2021-11614847492

[Balance]

Tech stocks are suffering fresh losses on Thursday, as spiking bond yields continue to spur investors to move out of cloud, e-commerce, and semiconductor stocks and into other more economically sensitive—and cheaper—issues.

[peat]

times like these you re-learn its not so much about stock picks as overall market flows.

[Swala]

times like these you re-learn its not so much about stock picks as overall market flows.

I think you hit the nail smack on the head there.

[bull....]

futures tanking again. nasdaq pulled everything up , will it pull everything down?

[Rawz]

USA sneezes and the rest of the world gets a cold eh

[bull....]

gotta love the the big bounce on US markets friday right off some critical support and from oversold levels. lets see if it turns out to be a dead cat bounce.

testy times indeed. look at NZ cant even keep it up , after opening up 1% today it now in the red .... NZ really is out of favour at the moment. wonder why? no concrete plans on NZ future post covid? or is it all about the bonds or a combo of both

[Baa_Baa]

gotta love the the big bounce on US markets friday right off some critical support and from oversold levels. lets see if it turns out to be a dead cat bounce.

$US 1,900,000,000,000 stimulus.

[Tomtom]

look at NZ cant even keep it up , after opening up 1% today it now in the red .... NZ really is out of favour at the moment. wonder why? no concrete plans on NZ future post covid? or is it all about the bonds or a combo of both RBNZ have just offered us a little more of the "special sugar" by increasing the rate of bond purchases.

[Tomtom]

$US 1,900,000,000,000 stimulus. About US$5800 per capita. What are they squandering it on? Cash for clunkers, cheques in the mail, new tight oil projects?

[bull....]

ppt in action friday US , ppt in action china yesterday ? .... wow must want new highs

[peat]

USD topped out now? This will mean risk back on.....
I will sell again against the CHF if it goes back to 61.8 and 78.6 fib retracement levels on this
12369

[bull....]

anyone into gamestock up 100% today and up another 80% after hours

roaring again , now $342 triple your money since this post lol .... who said gme was dead lol

I dont recommend you get into this stock unless you have big balls and dont mind flushing your dough down the loo if things go bad haha this is the 9m followers play toy now

[LEMON]

This will fall hard and I know some people in it who don't want to hear otherwise.

[Old mate]

Are you in bull?

[bull....]

Are you in bull?

not now , will look again at some stage

[LEMON]

Down to $267 now?

[LEMON]

$342, drops to $193 back to $267.

[bull....]

$342, drops to $193 back to $267.

thats why i say you need big balls to play in this stock

[Alpha]

thats why i say you need big balls to play in this stock

or you are completely mad.

[LEMON]

Wonder what will happen with these $1400 stimulus cheques.
What stocks will look to be part of the "to the moon" phenomena

[bull....]

Wonder what will happen with these $1400 stimulus cheques.
What stocks will look to be part of the "to the moon" phenomena

you can track reddit meme discussions with sites such as

https://memestocks.org/

and other similar sites to find most discussed stocks

[LEMON]

I'm personally staying away from the US stock market for this time.

Let's say if a large number of Americans do put their cheques in to the stock market surely that's got to be some cause for concern. With an economy valued at 21trillion? (Quick summary) and a stock market valued at 81 trillion? (Quick summary) what are the expectations of US economy in the coming years.
Surely this needs to level out at some point.

[Getty]

Nothing fruity about your judgement, Lemon.

[Tomtom]

Don't blame you, it's a long way down to the trend growth rate from where we are today:
https://www.advisorperspectives.com/dshort/updates/2021/03/03/regression-to-trend-another-look-at-long-term-market-performance

[JohnnyTheHorse]

SP500 back touching all time highs. Nasdaq lagging well behind (due to the much larger pullback), but looking positive that this has been healthy sector rotation and weekly/monthly consolidation. I expect a rotation back into tech.

I expect the rise in bond yields was just a one off shock to the market. The first time something happens is always a shock, but after that the market no longer really cares.

[bull....]

fed leaves its decision as business as usual.

Fed sees stronger economy and higher inflation, but no rate hikes


https://www.cnbc.com/2021/03/17/fed-decision-march-2021-fed-sees-stronger-economy-higher-inflation-but-no-rate-hikes.html

should keep the markets happy for longer. and said during q@A the say something about the SLR in a few days so hopefully good news


In NZ not such a pretty picture ... were in a recession again

Recovery falters, NZ probably in recession after surprise 1% drop in GDP


https://www.stuff.co.nz/business/124541330/recovery-falters-nz-probably-in-recession-after-surprise-1-drop-in-gdp


lucky the retail sector and esp house building and prices are going up or holy moly we might be in a depression now instead of a recession and no sign of a post covid plan to re-inight the economy in the new world. cause its not going to be exactly the same when things get back to normal one day.

[bull....]

US bonds pressuring stocks lower today. I see the bonds have broken back into there 10 year range of 1.36 - 3.05 so maybe we will test 3% 10 yr bond rates at some time

[Biscuit]

US bonds pressuring stocks lower today. I see the bonds have broken back into there 10 year range of 1.36 - 3.05 so maybe we will test 3% 10 yr bond rates at some time


Fortunately NZ in recession so we shouldn't see any significant rate rises here for a while. That should support the market?

[bull....]

Fortunately NZ in recession so we shouldn't see any significant rate rises here for a while. That should support the market?

no , NZ market is made up of lots of bond proxies stocks so its a negative if bond rates going up and NZ bonds will follow US bond direction irrespective of gdp rate. lower gdp in NZ is not positive for stocks in nz either

[Biscuit]

no , NZ market is made up of lots of bond proxies stocks so its a negative if bond rates going up and NZ bonds will follow US bond direction irrespective of gdp rate. lower gdp in NZ is not positive for stocks in nz either

Well, you just can't win!

[winner69]

Bond /equity relationship might be broken and punters getting worried

https://www.economist.com/finance-and-economics/2021/03/06/why-people-are-worried-about-the-bond-equity-relationship

[Hoop]

Fortunately NZ in recession so we shouldn't see any significant rate rises here for a while. That should support the market?

no , NZ market is made up of lots of bond proxies stocks so its a negative if bond rates going up and NZ bonds will follow US bond direction irrespective of gdp rate. lower gdp in NZ is not positive for stocks in nz either
Bull is correct.
Biscuit you can't assume that hypothesis as "...we shouldn't see.." when at the moment "...we are seeing..."
The NZ economic cycle in relation to the USA is further advanced in the economic cycle hence our interest rates started rising before the USA. The US media informs us "more loudly" than the NZ media, we take notice of the US media as it tends to inform its readers in a "headline soap opera drama" fashion..
This time with the economic recovery we are seeing the long term rates start rising first and as the economic recovery progresses that rise spreads down into the shorter term rates (widening of the yield curve) At the moment that is being experienced in NZ while in the USA the rise is still limited to the long term rates only. If the USA economy keeps recovering, as is expected, the rate rising will eventually filter down to effect the shorter term rates.
The market dictates the long term rates and the Central banks dictates the very short term rates (e.g OCR (https://www.rbnz.govt.nz/monetary-policy/official-cash-rate-decisions))
A method to influence the long term rates is for the Central Bank to compete in that market.

Below is a screen print from www.interest.co.nz (https://www.interest.co.nz/charts/interest-rates/swap-rates)showing an interactive 10 year NZ swap rate. Click on the link to get the chart and have a play with it..note the uptrend on the shorter term rates.

12383

[Biscuit]

Bull is correct.
Biscuit you can't assume that hypothesis as "...we shouldn't see.." when at the moment "...we are seeing..."
The NZ economic cycle in relation to the USA is further advanced in the economic cycle hence our interest rates started rising before the USA. The US media informs us "more loudly" than the NZ media, we take notice of the US media as it tends to inform its readers in a "headline soap opera drama" fashion..
This time with the economic recovery we are seeing the long term rates start rising first and as the economic recovery progresses that rise spreads down into the shorter term rates (widening of the yield curve) At the moment that is being experienced in NZ while in the USA the rise is still limited to the long term rates only. If the USA economy keeps recovering, as is expected, the rate rising will eventually filter down to effect the shorter term rates.
The market dictates the long term rates and the Central banks dictates the very short term rates (e.g OCR (https://www.rbnz.govt.nz/monetary-policy/official-cash-rate-decisions))
A method to influence the long term rates is for the Central Bank to compete in that market.

Below is a screen print from www.interest.co.nz (https://www.interest.co.nz/charts/interest-rates/swap-rates)showing an interactive 10 year NZ swap rate. Click on the link to get the chart and have a play with it..note the uptrend on the shorter term rates.12383


Well, hoop, you and Bull are dancing in a circle. You are saying we are in an economic recovery, interest rates are going up in response.... Bull is saying we are in a recession but interest rates are going up anyway because US interest rates are going up. You have both arrived at the same place but it was an awkward tango to watch. The secret to an artful dance is to be in step at every turn.

[Hoop]

Well, hoop, you and Bull are dancing in a circle. You are saying we are in an economic recovery, interest rates are going up in response.... Bull is saying we are in a recession but interest rates are going up anyway because US interest rates are going up. You have both arrived at the same place but it was an awkward tango to watch. The secret to an artful dance is to be in step at every turn.
Did you read my earlier posts about the 4R's Model from Yale University ( a product from previous financial crises.) that NZ and most other Countries have adopted using it's guidelines to fight this economic crisis?

To refresh your and others memories, the 4 R's are Run Rescue Recession Recovery...I think it's safe to say that NZ has been in the Recovery Phase for a while now.. Yale says the recovery phase is a process best described as a road towards recovery..from reading Yales' summary (click on this Link (https://som.yale.edu/news/2020/05/ypfs-describes-four-phase-model-of-the-economic-consequences-of-pandemic)) we can assume that the word recovery phase is indeed the recovering process.

Yales using the wording road to recovery demonstrates how difficult and full of challenges that road can be...On the road to recovery there will be set backs.

Yes Biscuit the last 3 months has seen a set back in NZ (a drop in GDP) ..The market sees this as a expected scenario in the difficult road of economic recovery process (probably why the interest ratess are still rising)..Remember too that historically many of businesses fail during the recovery phase of the economic cycle and unemployment rate is often high or sometimes still peaking (lagging indicators) during the recovery phase.

If the recovery phase is mis-managed there is a risk of a double dip recession, as happened in Europe.

[Hoop]

Well, hoop, you and Bull are dancing in a circle. You are saying we are in an economic recovery, interest rates are going up in response.... Bull is saying we are in a recession but interest rates are going up anyway because US interest rates are going up. You have both arrived at the same place but it was an awkward tango to watch. The secret to an artful dance is to be in step at every turn.
Did you read my earlier posts about the 4R's Model from Yale University ( a product from previous financial crises.) that NZ and most other Countries have adopted using it's guidelines to fight this economic crisis?

To refresh your and others memories, the 4 R's are Run Rescue Recession Recovery...I think it's safe to say that NZ has been in the Recovery Phase for a while now.. Yale says the recovery phase is a process best described as a road towards recovery..from reading Yales' summary (click on this Link (https://som.yale.edu/news/2020/05/ypfs-describes-four-phase-model-of-the-economic-consequences-of-pandemic)) we can assume that the word recovery phase is indeed the recovering process.

Yales using the wording road to recovery demonstrates how difficult and full of challenges that road can be...On the road to recovery there will be set backs.

Yes Biscuit the last 3 months has seen a set back in NZ (a drop in GDP) ..The market sees this as a expected scenario in the difficult road of economic recovery process (probably why the interest ratess are still rising)..Remember too that historically many of businesses fail during the recovery phase of the economic cycle and unemployment rate is often high or sometimes still peaking (lagging indicators) during the recovery phase.

If the recovery phase is mis-managed there is a risk of a double dip recession, as happened in Europe.

[Biscuit]

Did you read my earlier posts about the 4R's Model from Yale University ( a product from previous financial crises.) that NZ and most other Countries have adopted using it's guidelines to fight this economic crisis?

To refresh your and others memories, the 4 R's are Run Rescue Recession Recovery...I think it's safe to say that NZ has been in the Recovery Phase for a while now.. Yale says the recovery phase is a process best described as a road towards recovery..from reading Yales' summary (click on this Link (https://som.yale.edu/news/2020/05/ypfs-describes-four-phase-model-of-the-economic-consequences-of-pandemic)) we can assume that the word recovery phase is indeed the recovering process.

Yales using the wording road to recovery demonstrates how difficult and full of challenges that road can be...On the road to recovery there will be set backs.

Yes Biscuit the last 3 months has seen a set back in NZ (a drop in GDP) ..The market sees this as a expected scenario in the difficult road of economic recovery process (probably why the interest ratess are still rising)..Remember too that historically many of businesses fail during the recovery phase of the economic cycle and unemployment rate is often high or sometimes still peaking (lagging indicators) during the recovery phase.

If the recovery phase is mis-managed there is a risk of a double dip recession, as happened in Europe.

Great, recovery, so its onwards and upwards? What is Bull so worried about?

[Hoop]

Great, recovery, so its onwards and upwards? What is Bull so worried about?

You have to ask Bull that question...

There's plenty to worry about .. Even after the economy has recovered there will still be worries..Mrs Hoop may decide to go on a spending spree:t_down:
Life is full of worries ...eh Biscuit:)

[Biscuit]

....Life is full of worries ...eh Biscuit:)

That is very true. We are programmed to worry. Or at least I am, usually at 3am unfortunately. People who make a lot of money quickly are perhaps those who worry less?

[winner69]

Maybe not Recovery stage yet?

Annual GDP nearly 3% lower than March 2020 ...and probably a few more quarters of decline

GFC times - GDP didn't get back to pre GFC levels for two and half years

[TobyPascoe92]

Do either of these graphs concern anyone? Worth reading up on the Shiller PE Ratio if you haven't heard of it before.
12386

[TobyPascoe92]

Or this 12388

[Bobdn]

https://www.youtube.com/watch?v=2TeIl8Pdtb0

I like listening to Tom Lee or Marko Kalonovic when I'm feeling a little anxious about markets

[Tomtom]

Do either of these graphs concern anyone? Worth reading up on the Shiller PE Ratio if you haven't heard of it before.
12386 Apparently the market narrative is that we get a wave of explosive earnings growth to support current prices thanks to reopening and stimulus. Listening to Cathie Wood say her price target for Tesla was $3k I did wonder if the Dow would get to 36,000 this year.

[bull....]

NZD is getting absolutely thumped on the housing news. obviously market is pricing in no rate hikes next year now. As for the property market investment property is not such a clear cut winner now when waying up investment decisions has leveled the playing field with other investment alternatives for sure.
I dont see property market falling over might be a pause but the supply issue isnt going away overnight. Also dont see rents rising other than due to supply issues creating demand. rents will stabilse once more supply comes on. supply and demand is more a determinant of rent than interest deductions on mortgage relief.
build to rent buildings are obviously the future. eg mirvac in australia model.
US markets still look good DJI the clear winner at the moment.

[alokdhir]

Investment property has surely lost its lustre with just one master stroke of removing mortgage interest deduction as expense ...It helps almost all other category of citizens and companies other then property investors playing with Bank money .

House prices will stabilise as one class of participants will not find it lucrative enough to chase prices up ...thus making it easier for actual users to get it

NZD drop due to pressure off from RBNZ to act to curb property prices thus bringing Bond yields down big time Ten year is 1.52 ...much below US 1.62 !!!

NZD drop helps exporters struggling with high dollar since long

Low yields and lots of leeway with RNBZ to actually support real economy which is in trouble with more QE and reduced rates for longer

Making productive assets like equity and business investments more attractive compared to all chasing investment properties as it made more financial sense ...Geared asset which never falters ...all who could leverage their financial status did so to take advantage of Bank's cheap finance to chase up property prices for now 50 years ...Being a landlord was a status symbol

Equity market should be encouraged more by providing tax incentives so that NZ can develop equity culture like many developed nations

Overall my full support to new measures to help majority of the citizens of NZ except for property investors who will be surely paying more taxes

[winner69]

Making productive assets like equity and business investments more attractive .....

I’ve always wondered why if say I buy heaps of shares from you in XYZ how is it productive ( ie improving the
Productivity of the country).

None of the cash is going to the company for them to become more ‘productive’

Our transaction only improves productivity if you don’t reinvest in another equity and put the cash actually into a new start up or something.

[alokdhir]

I’ve always wondered why if say I buy heaps of shares from you in XYZ how is it productive ( ie improving the
Productivity of the country).

None of the cash is going to the company for them to become more ‘productive’

Our transaction only improves productivity if you don’t reinvest in another equity and put the cash actually into a new start up or something.

U r forgetting here that a vibrant equity market helps companies raise funds for productive purposes very easily and very efficiently . So trading at NZX actually helps companies with their capital requirements and price discovery

Recent example of OCA ...how easy and efficiently they got it at 1.30 as we were buying or trading it around 1.40 !!!

[Biscuit]

.....Overall my full support to new measures to help majority of the citizens of NZ except for property investors who will be surely paying more taxes

Well, I'm a property investor. I haven't had any leverage for many years so the changes don't effect me personally, plus all my properties have been held for 20+ years and they are held in trust with no anticipation of ever being sold so no chance of being hit with the brightline test. But there is no logical reason why interest rates should not be deductible for a rental business in the same way they are for every other business. Business people and investors should not, in my view, applaud another group of business people/investors being hit with an ad hoc tax. It is simply appalling for the Govt to act like this. Also, this will certainly push investors out of the market to some extent which will make development less attractive which will not lead to greater housing supply.

[alokdhir]

Well, I'm a property investor. I haven't had any leverage for many years so the changes don't effect me personally, plus all my properties have been held for 20+ years and they are held in trust with no anticipation of ever being sold so no chance of being hit with the brightline test. But there is no logical reason why interest rates should not be deductible for a rental business in the same way they are for every other business. Business people and investors should not, in my view, applaud another group of business people/investors being hit with an ad hoc tax. It is simply appalling for the Govt to act like this. Also, this will certainly push investors out of the market to some extent which will make development less attractive which will not lead to greater housing supply.

I agree with your thoughts on fairness basis ...but sometimes Govts need to do things for the greater good ...like lockdowns were very bad for small business but they were right thing to do ...similarly trying to control rampant house prices thus creating sharp social tensions etc is the right thing to do .

I am not anti property investors per say ...they did what made sense under the rules ...it was a financial decision and based on economics ...now Govt changing those rules for the greater good of the society ...

Now people will find other ways of safe investing as property will no longer be number 1 choice of all . After all the very appeal of this investment for obvious reasons lead to its downfall . Same way if stock market gets crazy like in USA Robinhood episode ...there also they did the UNTHINKABLE ...champion of free market ...made buying a particular share impossible as it was done for the betterment of larger group

[Biscuit]

I agree with your thoughts on fairness basis ...but sometimes Govts need to do things for the greater good ...like lockdowns were very bad for small business but they were right thing to do ...similarly trying to control rampant house prices thus creating sharp social tensions etc is the right thing to do .

I am not anti property investors per say ...they did what made sense under the rules ...it was a financial decision and based on economics ...now Govt changing those rules for the greater good of the society ...

Now people will find other ways of safe investing as property will no longer be number 1 choice of all . After all the very appeal of this investment for obvious reasons lead to its downfall . Same way if stock market gets crazy like in USA Robinhood episode ...there also they did the UNTHINKABLE ...champion of free market ...made buying a particular share impossible as it was done for the betterment of larger group

It's just an unplanned ad hoc policy that hasn't been properly scrutinized. Its not supported by IRD or Treasury. It is a political decision based on the need to be doing something and the fact that property investors and landlords are a popular target. There is nothing good about it at all. The government should aim for consistent policy that is broadly fair and has been fully thought out.

[alokdhir]

It's just an unplanned ad hoc policy that hasn't been properly scrutinized. Its not supported by IRD or Treasury. It is a political decision based on the need to be doing something and the fact that property investors and landlords are a popular target. There is nothing good about it at all. The government should aim for consistent policy that is broadly fair and has been fully thought out.

So much said about Treasury's advise and IRD recommendations ....I dont think I need to add anything more .

Also to be fair to Govt they are phasing it out over next 4/5 years for existing investors ...I am sure that's time enough to sort out alternative arrangements . They needed to start seriously from somewhere ...for me this is the first serious attempt of tackling this age old problem ...rest all did lip service

[dabsman]

So much said about Treasury's advise and IRD recommendations ....I dont think I need to add anything more .

Also to be fair to Govt they are phasing it out over next 4/5 years for existing investors ...I am sure that's time enough to sort out alternative arrangements . They needed to start seriously from somewhere ...for me this is the first serious attempt of tackling this age old problem ...rest all did lip service

A socialist party not smart enough to have thought through all the ramifications. Next the greens will push for diesel to become non-deductable and our transport sector will be crippled. Then the conservative christians will push for water rates to be non-deductable in a brothel. Oh wait lets make fertilizer non-deductable as less grass means less food for poluting cows. Where does this end? There are only 3 exemptions I can think of in GST to keep it simple for everyone. This is a very concerning move by the CCP - I mean Labour. I cant make myself say government - maybe comrades?

[Biscuit]

......for me this is the first serious attempt of tackling this age old problem ...

What "age old problem"? That there is currently a relative shortage of housing supply? The "solution" does not address that problem. This is just a political game - redefine the problem you can't solve. Make it about landlords/investors (who are generally unpopular) and then publicly whack them. Labour party the hero to all the lazy, resentful gits who missed out on making money from property.

[Ferg]

They needed to start seriously from somewhere ...for me this is the first serious attempt of tackling this age old problem ...rest all did lip service

This is 100% bad policy, irrespective of one's political leanings. If I borrow to buy an income producing asset such as a building, a plane, machinery, or a fleet of buses etc. then the cost of borrowing those funds is quite rightly tax deductible. But to exclude a very particular class of asset (residential rental property) which is also an income producing asset is not only inconsistent policy but also incredibly lazy policy. Lazy in the sense that the Government has not clearly defined the problem or done any research, because the answer certainly wasn't to remove interest deductions or to extend the bright line test. Furthermore those who mislabel interest deductions with phrases such as "loophole", "tax break" or "tax advantage" are being disingenuous. The basic rule of thumb is that if you spend money to make money, then it is tax deductible. That is how it should continue to be, irrespective of the industry or asset class. The alternative is not worth pondering.

As for the need to push changes through under urgency; that shows a reactive Government thrashing around trying to find solutions, without actually doing any work. There is more depth in your average sidewalk puddle than the Labour front bench. The "age old" problem is actually a mismatch between demand and supply - the levers to which the Government actually control. Furthermore, successive Governments of the past 30+ years have washed their hands of social housing and pushed it into the private sector and then they have the audacity to say "yeah but not like that!". What were they expecting? Lastly, Government also control the levers to inflation, so to not have inflation adjusted capital gains is risible. As investors we now have to look out for unintended consequences and wonder if other classes of assets will also fall under the microscope. It is very tempting to go and live somewhere not run by a bunch of unthinking, spiteful and envious amateurs.

[McPussPuss]

Amusing to see the property investment class out in full voice having a grizzle after 12 months of outrageous capital gains and cheap credit, it is still not enough.

This govt, (love or loathe) originally campaigned and was elected on a housing affordability platform. Now after almost 4 years of diddly squat and soaring capital gains for investors they have finally made a move.

In my opinion the primary driver of the property market since the 80s is demand driven through credit availability, Interest rates in a one way direction. Borders are closed and prices up 25%?

Sure interest deductability may not now align with other business tax regulations but so what, it is targeted at property due to malinvestment and speculation creating an unsustainable distortion in the economy.

I dont know it if it the right move but it will temper overleverage and loss making property portfolios with a sole eye on capital gains.

As for rental supply decreasing, are these properties going to suddenly vaporise??

[arekaywhy]

...but sometimes Govts need to do things for the greater good ...like lockdowns were very bad for small business but they were right thing to do ...similarly trying to control rampant house prices thus creating sharp social tensions etc is the right thing to do ....


*snort* "right thing to do"

Here's another thought...how about not messing about with the market, getting out of people's way, and maybe making it such that there is an actual incentive to do something else other than property?

[McPussPuss]

Yes, top of my list for getting out of the markets way would be scrapping of the accomodation subsidy.

My tax dollars subsidising landlords who already have preferential access to artificially (not free market interest rates) cheap credit in an already artificially supply constrained market.

[Aaron]

*snort* "right thing to do"

Here's another thought...how about not messing about with the market, getting out of people's way, and maybe making it such that there is an actual incentive to do something else other than property?

Agreed starting with letting markets decide interest rates rather than having a central bank control them. That is probably the cause of the problem in the first place. We should all be upset that this is allowed to continue, landlords and renters alike.

[alokdhir]

Amusing to see the property investment class out in full voice having a grizzle after 12 months of outrageous capital gains and cheap credit, it is still not enough.

This govt, (love or loathe) originally campaigned and was elected on a housing affordability platform. Now after almost 4 years of diddly squat and soaring capital gains for investors they have finally made a move.

In my opinion the primary driver of the property market since the 80s is demand driven through credit availability, Interest rates in a one way direction. Borders are closed and prices up 25%?

Sure interest deductability may not now align with other business tax regulations but so what, it is targeted at property due to malinvestment and speculation creating an unsustainable distortion in the economy.

I dont know it if it the right move but it will temper overleverage and loss making property portfolios with a sole eye on capital gains.

As for rental supply decreasing, are these properties going to suddenly vaporise??

Thanks buddy for your support ..lol I thought I am the only one here supporting these bold moves of a very popular Govt . I totally agree with your thoughts ..if we have a supply side problem then controlling demand side is very justified .

Till real market forces can function fully till then trying to maximise benefit for most is perfectly right way to go for any democratically elected Govt .

Do I need to remind strong opponents of these policies that 2023 is before 2025 when interest deductions gets fully phased out ...Lets see what the public opinion in our democracy says ...after all we elect MPs to make laws for us . They are doing their job which they think is right ...if we dont like then we get our chance in 2023 .

National has already said they will reverse it immediately ...May gain 5% votes for that but will loose 10% for saying so ...IMHO

Social order and equal opportunities , having hope for future is the right of all not just few ...

We dont need deep divisions in our largely peaceful society ...I rather eat 2 bites in peace then tummy full in strife

[moka]

*snort* "right thing to do"

Here's another thought...how about not messing about with the market, getting out of people's way, and maybe making it such that there is an actual incentive to do something else other than property? If you are providing incentives you are messing with the market. So something wrong with your logic.
Or is it only disincentives (changes that you disagree with) that are messing with the market?

[jonu]

If you are providing incentives you are messing with the market. So something wrong with your logic.
Or is it only disincentives (changes that you disagree with) that are messing with the market?

I think arekaywhy is suggesting the govt keeping out of the way is the "incentive". Can be a big disincentive when you know the govt is going to continually change the rules.

[Bjauck]

If you are providing incentives you are messing with the market. So something wrong with your logic.
Or is it only disincentives (changes that you disagree with) that are messing with the market? Investments should be taxed on their total returns, whether capital gains or annual income. To tax capital gains differently from income gains is messing with the market. Investment decisions have been skewed in favour of those that produce capital gains at the expense of those that produce income. Of course the borrowing for owner-occupied housing which produces neither taxable income nor taxable capital gains sucks up so much lending. So it is already a totally unequal environment.

[Biscuit]

Investments should be taxed on their total returns, whether capital gains or annual income. ......

I do not agree with that, or at least I think it is a more complex thing than is made out. Everything moves in value against everything else. Its problematic to talk about capital gains. You buy a house, at the end of 50 years it is still just a house and still worth one house (minus depreciation - that you can no longer deduct). It is arguably nonsense to say you have made a capital gain. If you borrowed all the money to buy the house and paid only interest then you could work out the "capital gain" as the difference in the dollar value of the home minus the interest paid (no longer deductible). If you paid in cash then there is no capital gain. Also if you lived in the house and didn't rent it out there would be no income with which to pay the tax on the nonexistent capital gain.

[SPC]

Every investment opportunity that has ever existed comes with a number of obvious and perhaps not so obvious risks. Be it shares or cash or classic cars or art or stamps or phone cards or... surprise.. property. Of course when you buy a house for investment purposes there is no disclosure statement but we all know what the risks are, and as is the case with EVERY investment class these risks include include 'changes in legislation'. The government can and does adjust tax legislation to suit it's fiscal and social objectives continuously. It has now chosen to do so regarding interest offset for borrowed money. It's no great surprise. Better also get ready for insurance cover to be withdrawn eventually due to climate change affects as well. It's nothing to do with fairness or betrayal. It's just risk.
No asset class is without risks.

[Panda-NZ-]

NZD is getting absolutely thumped on the housing news.

Great news, will help to build a real economy based on exports rather than migration and property hoarding.


Yes, top of my list for getting out of the markets way would be scrapping of the accomodation subsidy.

Agreed.. :)

[Getty]

In my opinion, the latest govt housing policies may benefit a few new home buyers who are near to having their deposits to buy ready, if the policy works as intended, but at the expense of far greater numbers of rent payers who will face increased rent,

That in turn means those renters will then find it harder to save their home deposit, thus defeating the changes.

It will also lead to those same private renters putting themselves on the state housing waiting list, expecting subsidised rent, and thus putting more pressure on state housing, propped up by taxpayers.

That pressure will lead to more homelessness, as less private landlords enter the game, or increase their stock.

Maybe 1% win, (the first home buyer in the short term), and the other 99% of taxpayers all lose in the short to long term.

Is it worth the disruption?

The real issue is supply and demand, and I feel the above will lead to less private property development, not more.

[Panda-NZ-]

In my opinion, the latest govt housing policies may benefit a few new home buyers who are near to having their deposits to buy ready, if the policy works as intended, but at the expense of far greater numbers of rent payers who will face increased rent,

It will keep interest rates down for a longer period benefiting every mortgage holder. Plus lower NZD.

[Getty]

Please explain How so?

[Panda-NZ-]

RBNZ doesn't need to lift rates early OR increase capital requirements. House price increases create an economic risk we can do without.

[Bjauck]

I do not agree with that, or at least I think it is a more complex thing than is made out. Everything moves in value against everything else. Its problematic to talk about capital gains. You buy a house, at the end of 50 years it is still just a house and still worth one house (minus depreciation - that you can no longer deduct). It is arguably nonsense to say you have made a capital gain. If you borrowed all the money to buy the house and paid only interest then you could work out the "capital gain" as the difference in the dollar value of the home minus the interest paid (no longer deductible). If you paid in cash then there is no capital gain. Also if you lived in the house and didn't rent it out there would be no income with which to pay the tax on the nonexistent capital gain.

You work to earn income for food and shelter - in other words to stay alive - yet you are double taxed: Forst on that income and second with GST on food and services. Talk about an unfair burden?

Why should some asset owners be given an inflation allowance? Why not extend an inflation allowance to the owners of fixed interest investments too for the inflation component of their return?

[Getty]

Well, hoop, you and Bull are dancing in a circle. You are saying we are in an economic recovery, interest rates are going up in response.... Bull is saying we are in a recession but interest rates are going up anyway because US interest rates are going up. You have both arrived at the same place but it was an awkward tango to watch. The secret to an artful dance is to be in step at every turn.

https://youtu.be/WJ_IRK944YY

[Ferg]

Amusing to see the property investment class out in full voice having a grizzle after 12 months of outrageous capital gains and cheap credit, it is still not enough.

Amusing to see sycophantic apologists for badly designed policy.

If you are assuming I hold investment property then you have assumed incorrectly. I am more than capable of spotting bad policy without being a landlord. Maybe you think we should suspend "tax loopholes" or "tax benefits" for transport companies who get a tax deduction on their fuel costs, given that is bad for the environment? Where does this bad sort of policy stop? Should rich people not get tax deductions because it's not fair poor people spend a greater proportion of their income on essentials? I could go on. The solution around deductibility does not solve the problem, because the problem has not yet been correctly defined. In other words, Labour have done zero work or research in this area since they got into power, as evidenced by badly thought out policy and the lack of consultation with Treasury and IRD.

[McPussPuss]

I agree that the policy will not really achieve much and there will be unintended consequences (eg justification for the RBNZ to keep interest rates low which the NZD sniffed out immediately).

No political party will be able to grapple with the main driver of the bubble which is the global monetarist socialism experiment; centrally controlled interest rate suppression masking risk and causing malinvestment.

I do enjoy seeing a grenade lobbed into the darling investment class that has been bestowed with decades of artificial tailwinds to the detriment of the real economy.

[Panda-NZ-]

Is deductibility for interest the international norm or not?

The UK is limiting it even for business purposes which is a bad policy. Though for property it is not.

Capital gains tax free plus interest deductibility is a free ride.

[winner69]

Encouraging property speculators to be become share market speculators should be good for the nzx

[Balance]

Encouraging property speculators to be become share market speculators should be good for the nzx

Not going to happen in a big hurry with IPOs like MFB?

The IPOs of the energy companies during Key’s tenure should have done a lot to encourage all NZers to become share investors - but did they?

[dobby41]

Is deductibility for interest the international norm or not?

The UK is limiting it even for business purposes which is a bad policy. Though for property it is not.

Capital gains tax free plus interest deductibility is a free ride.

Good point

[Biscuit]

.....Why not extend an inflation allowance to the owners of fixed interest investments too for the inflation component of their return?

I think we are never going to agree on this Bjauck, as we seem to look at this from opposite perspectives. Private property ownership as the cornerstone of our society, its why our farms are productive, its why our businesses are competitive, its why you can go and rent a house if you don't own one yourself. Why would you "extend an inflation allowance" to fixed interest assets? No one is being asked to pay a capital gains tax on fixed interest assets, are they?

[Onion]

I think we are never going to agree on this Bjauck, as we seem to look at this from opposite perspectives. Private property ownership as the cornerstone of our society, its why our farms are productive, its why our businesses are competitive, its why you can go and rent a house if you don't own one yourself. Why would you "extend an inflation allowance" to fixed interest assets? No one is being asked to pay a capital gains tax on fixed interest assets, are they?

Yes, capital gains on sale of fixed interest securities are taxable. Losses are deductible. See IRD form IR3K.

[Biscuit]

Yes, capital gains on sale of fixed interest securities are taxable. Losses are deductible. See IRD form IR3K.

Where capital gains tax is being applied, I totally agree there should be an "allowance for inflation".

[dobby41]

Where capital gains tax is being applied, I totally agree there should be an "allowance for inflation".

People didn't want a CGT - this is what they got instead.
They would have been better off under a CGT.

[Zaphod]

People didn't want a CGT - this is what they got instead.
They would have been better off under a CGT.

Then Labour would have been better to swallow the poison pill and implement a CGT; spend some of that voter support capital, doing the right (according to many) thing, instead of pandering to what is politically expedient.

[dobby41]

Then Labour would have been better to swallow the poison pill and implement a CGT; spend some of that voter support capital, doing the right (according to many) thing, instead of pandering to what is politically expedient.

Agreed - Jacinda could have just spent a bit of political capital on it and done it.

[Ferg]

We already had a capital gains tax prior to the introduction of the brightline test. If a person or entity was either in the business of buying and selling property, or bought property with the intention of resale for gain, any such gain was already taxable under existing legislation. The issue we had was the Government's lack of enforcement of their own policy, in this case for decades! Regarding limiting interest deductibility having unintended consequences, I saw on the news tonight that a number of developers have put their development projects on hold until there is clarity around interest deductibility for developers. The unintended consequence is a short term choking of additional supply - which is the exact opposite of what the Government intended! Not even The Onion could make this up. Yet again it is more evidence of lack of research, work and foresight by Labour before implementing bad policy. This pack of amateurs couldn't organise a booze up in a brewery.

[winner69]

https://www.businessinsider.com.au/stock-market-forecast-sp-4000-equities-bullish-bond-yields-goldman-2021-3

Goldman Sachs predicts the S&P 500 will hit 4,300 over the next year

[bull....]

https://www.businessinsider.com.au/stock-market-forecast-sp-4000-equities-bullish-bond-yields-goldman-2021-3

Goldman Sachs predicts the S&P 500 will hit 4,300 over the next year

good closes for the week and april has seasonally been a very strong month.

[alokdhir]

https://www.businessinsider.com.au/stock-market-forecast-sp-4000-equities-bullish-bond-yields-goldman-2021-3

Goldman Sachs predicts the S&P 500 will hit 4,300 over the next year

I wont be surprised if its 4500 next year ...as now all know USA cant let stock market drop ...then " Hell Freezes Over " ....

[alokdhir]

Exactly why these new policies are good for general well being of our society ...people who should not be even trying to have another house did so as they thought nothing to loose as its always win win in nz housing market that they went on to over extend their financials to buy an investment property just because bank will finance them ..

https://www.stuff.co.nz/business/property/124653065/investors-sleepless-nights-over-prospect-of-super-negative-cash-flow

[Zaphod]

Exactly why these new policies are good for general well being of our society ...people who should not be even trying to have another house did so as they thought nothing to loose as its always win win in nz housing market that they went on to over extend their financials to buy an investment property just because bank will finance them ..

https://www.stuff.co.nz/business/property/124653065/investors-sleepless-nights-over-prospect-of-super-negative-cash-flow

Meanwhile my former neighbours, have sold their house (which has had 8 owners in the 20 years since it was placed on the section) moved into yet another family home which they plan to slap a coat of paint on, fix a few minor issues, and hock as soon as possible without being captured by IRD. That's okay according to government policy. Serial housing monogamists are welcome here.

[Balance]

https://www.nzherald.co.nz/nz/investors-stay-away-from-south-auckland-open-homes-after-govt-housing-shake-up/AQQAF6WEFLH7ZOBU26UL3N2V4Q/

Turning point for the property market?

[mike2020]

No just a headline at this stage, all the investors reading it will probably decide that means its a good time to get out there and start looking. Normal home buyers are still at each others throats this week just gone, give it a while.

[alokdhir]

Meanwhile my former neighbours, have sold their house (which has had 8 owners in the 20 years since it was placed on the section) moved into yet another family home which they plan to slap a coat of paint on, fix a few minor issues, and hock as soon as possible without being captured by IRD. That's okay according to government policy. Serial housing monogamists are welcome here.

IMHO trading in your own home is still better then trying to horde many homes thus depriving others from having one .

[alokdhir]

https://www.nzherald.co.nz/nz/investors-stay-away-from-south-auckland-open-homes-after-govt-housing-shake-up/AQQAF6WEFLH7ZOBU26UL3N2V4Q/

Turning point for the property market?


It needed a shock like this to get people thinking and if prices start falling then its main job done ie to make people realise that both ways of price movement possible like is sharemarket .

At present property Investors think its only one way and that is up ...so if they find bank can loan then $ 1 million on their financials they start looking for a house little more then that as want to get maximum possible out of that leverage .

Where as in sharemarket if bank provides 70% margin lending a prudent investor only will use 35-45 % of it for safety against margin call

[artemis]

IMHO trading in your own home is still better then trying to horde many homes thus depriving others from having one .

You do realise there are thousands of homes for sale right now? More than 20,000 just on Trademe, many others listed elsewhere. New ones listed every day. Thousands in the affordable category. Plenty for the 'deprived' to choose from. Wonder why they are not buying them.

[alokdhir]

You do realise there are thousands of homes for sale right now? More than 20,000 just on Trademe, many others listed elsewhere. New ones listed every day. Thousands in the affordable category. Plenty for the 'deprived' to choose from. Wonder why they are not buying them.

Answer is simple ...as too many hoarders chasing up the prices thus making them out of reach of those people thus making them deprived ...IMHO

Though neither I am a property investor nor a first home buyer but I have always found our NZ housing market very one sided ...Housing should not be pure business or about money ...it effects the lives of people . This government intervention shows how important it can be to maintain peace and harmony in the society ...after all hope should be for all

[artemis]

Answer is simple ...as too many hoarders chasing up the prices thus making them out of reach of those people thus making them deprived ...IMHO

Though neither I am a property investor nor a first home buyer but I have always found our NZ housing market very one sided ...Housing should not be pure business or about money ...it effects the lives of people . This government intervention shows how important it can be to maintain peace and harmony in the society ...after all hope should be for all

Home ownership has always been out of reach of some households. That in itself doesn't make them 'deprived'.

Meanwhile thousands of first home buyers take out bank loans every single month. Maybe they built up Kiwisaver and savings, lived carefully, worked second jobs or overtime, upskilled, and kept their housing expectations on the low side.

[artemis]

...Housing should not be pure business or about money ...it effects the lives of people . This government intervention shows how important it can be to maintain peace and harmony in the society ...after all hope should be for all

Do you feel the same way about supermarkets? Or power companies?

No reason at all people in New Zealand can't set up charities or charitable businesses to provide food, housing or anything else. Or, since this is a share oriented site, invest in businesses that meet similar criteria.

But no need to expect others to do it, or even think that government intervention in commerce is a good thing.

[alokdhir]

Do you feel the same way about supermarkets? Or power companies?

No reason at all people in New Zealand can't set up charities or charitable businesses to provide food, housing or anything else. Or, since this is a share oriented site, invest in businesses that meet similar criteria.

But no need to expect others to do it, or even think that government intervention in commerce is a good thing.

Government is not intervening in commerce here ...Govt . is trying to make other investment areas rosier by reducing the appeal of investment property . I think in the previous set up it was a no brainer to choose investment property as best form of investment or shall I say leveraged investment as all perceived it to be risk free way to make money on borrowed money and that perception was right also under those rules . So it made sense to keeping bidding the price higher till it balances mortgage interest payments with rental income and other allowances thus pocketing the cool yearly long term capital gains for free . So when RBNZ reduces rates to help industry and economy and businesses it ends up reducing mortgage payments for investment properties too thus helping change the above equation in favour of further higher bidding on house prices and so on ....

Why this property investment was so popular ? Because it had no market associated risks like equity market / businesses etc so all piled on ...It was such because of distorted tax rules favouring it so now Govt is trying to adjust it so that it is one of the investment opportunities not THE ONE .

By adding costs of extra tax they want to change the above equation to make sure its no longer profitable to bid up house prices for investment purposes

I understand that this transition will hurt in the short term but people will find other areas of investment opportunities . Aim is that only to move people away from this way of creating wealth IMHO

[Ferg]

Why this property investment was so popular ? Because it had no market associated risks like equity market / businesses etc so all piled on
That is not true. There have been plenty of property price corrections.


...It was such because of distorted tax rules favouring it
Again, that is not true. It is a basic premise that if you spend money to make money then it is deductible. There is no distortion per se. It is normal business expenditure.

[Zaphod]

IMHO trading in your own home is still better then trying to horde many homes thus depriving others from having one .

Hording homes? I don't know of anyone doing that. Certainly amongst my colleagues, those that own multiple properties are providing fully-tenanted rental accommodation which are a necessary service in this market. Thus they are not depriving anyone of a home.

[Baa_Baa]

Hording homes? I don't know of anyone doing that. Certainly amongst my colleagues, those that own multiple properties are providing fully-tenanted rental accommodation which are a necessary service in this market. Thus they are not depriving anyone of a home.

Likewise, one of my mates with quite a few multi bed rentals has most of them on the market now. The rules have changed and broken his business model. There’ll be about 60-70 students that have their rental security abandoned. He’ll keep a few of the freeholds to maintain income. The students are devastated that their rentals might be sold soon. He can’t be bothered trying to make it work, the rent increase would be obscene to cover the lost claim on interest expenses.

Hello kidder has some moral stance that doesn’t reflect reality, no one hoards property without providing that to the rental market. The law of unintended consequence is going to imo really bite this government intervention targeting providers of rentals.

[percy]

According to the latest Census data released by Statistics NZ, there were 1,855,929 dwellings throughout New Zealand in the 2018 Census, with 191,646 (10.3%) of them unoccupied. That was down slightly from the 10.6% of homes unoccupied in the 2013 Census.26/09/2019

[alokdhir]

Why the property investors think they were in it for providing rentals service to others ....they were in to make money ...now they need to find another way to make money ...simple as that .

Also they should not fool themselves in thinking if they decide to sell as it no longer makes business sense that renters will be coming on road .

Anyways I can understand the hurt its causing to them as they had got so used to this way of making money but I still firmly believe that Govt did the right thing

2023 will decide what majority of people think about this so called betrayal of property investor group !!!

[winner69]

According to the latest Census data released by Statistics NZ, there were 1,855,929 dwellings throughout New Zealand in the 2018 Census, with 191,646 (10.3%) of them unoccupied. That was down slightly from the 10.6% of homes unoccupied in the 2013 Census.26/09/2019

That’s an awful lot of unoccupied dwellings

[value_investor]

That’s an awful lot of unoccupied dwellings

Not surprised with the amount of "Lock up and leave" descriptions you see on some ads by real estate agents, its quite blatant. Vancouver has a empty housing tax which is due to double to 3% a year. Not sure how they administer it or how effective it is but it is interesting.

Kinda why I don't think the solution is as easy as increasing supply because net migration has run at its lowest level in years and building activity is at a high but nothing seems to be giving..

[artemis]

That’s an awful lot of unoccupied dwellings

A big number, but depends why they were recorded for the census as unoccupied. People talk about 'ghost houses' as if it would solve the so-called housing crisis if they were made available to renters (or buyers) rather than left empty to collect hassle free capital gains or something.

Stats Department reported that there are high numbers in holiday locations. Add in empty at census time for whatever reason, under reno, on the market for sale or rent..... I guess there will still be some ghost houses but one could hope that some actual numbers would be researched before panic policy.

I doubt very much that most of the 4000 households in motels etc would meet landlord criteria for these ghost houses.

[Norwest]

Meanwhile my former neighbours, have sold their house (which has had 8 owners in the 20 years since it was placed on the section) moved into yet another family home which they plan to slap a coat of paint on, fix a few minor issues, and hock as soon as possible without being captured by IRD. That's okay according to government policy. Serial housing monogamists are welcome here.

It's not OK according to government policy, It's tax evasion pure and simple if what you wrote is true.

Your neighbours are committing fraud by not filling in the capital gains in their annual IR3 tax returns.

[Carpenterjoe]

That’s an awful lot of unoccupied dwellings

I once read of a investor in Sydney who had circa 100 properties that are empty and he had no intentions of leasing them. He found the capital appreciation enough to leverage off and did not want the hassle tenants bring.

[Balance]

I once read of a investor in Sydney who had circa 100 properties that are empty and he had no intentions of leasing them. He found the capital appreciation enough to leverage off and did not want the hassle tenants bring.

My friend (a landlord) in Vancouver told me the same thing - thousands of properties owned by overseas investors left empty because they do not want the hassle of tenants.

[alokdhir]

It's not OK according to government policy, It's tax evasion pure and simple if what you wrote is true.

Your neighbours are committing fraud by not filling in the capital gains in their annual IR3 tax returns.

Its not as clear as u making it out to be ...as per tax rules there is no capital gains tax on your own residential home so technically they not breaking any tax law but morally maybe . No bright line or dim light test for residential house of personal use !!

[mondograss]

Its not as clear as u making it out to be ...as per tax rules there is no capital gains tax on your own residential home so technically they not breaking any tax law but morally maybe . No bright line or dim light test for residential house of personal use !!

But they clearly are trading in their residential property for the purposes of making a profit. So on the basis that buying anything for the purposes of disposal should result in a tax bill for the profit, they should be paying tax on their activity.

[Balance]

Its not as clear as u making it out to be ...as per tax rules there is no capital gains tax on your own residential home so technically they not breaking any tax law but morally maybe . No bright line or dim light test for residential house of personal use !!

When a government breaks election promises as gleefully as this one, citizens are entitled to minimize their taxes in any way as long as it's legal.

Forget morality.

[alokdhir]

When a government breaks election promises as gleefully as this one, citizens are entitled to minimize their taxes in any way as long as it's legal.

Forget morality.

Thats some justification buddy ...lol like your sense of humour ....:t_up:

[thegreatestben]

Thats some justification buddy ...lol like your sense of humour ....:t_up:

I think balance makes a good point here.

[alokdhir]

But they clearly are trading in their residential property for the purposes of making a profit. So on the basis that buying anything for the purposes of disposal should result in a tax bill for the profit, they should be paying tax on their activity.

As I said its not in black and white ...their reason for selling maybe neighbours too noisy ...No one can prove intention when u bought ...They bought to live in but didn't like it so sold it ...no one can challenge that

[causecelebre]

Its not as clear as u making it out to be ...as per tax rules there is no capital gains tax on your own residential home so technically they not breaking any tax law but morally maybe . No bright line or dim light test for residential house of personal use !!

There is. As of Saturday any residential property that is unoccupied for > 12 months is now subject the the brightline tax rules.

[alokdhir]

There is. As of Saturday any residential property that is unoccupied for > 12 months is now subject the the brightline tax rules.


Its not unoccupied ..its your only residential house we are talking about here . If u have two together and leave one unoccupied for more then year then part of it gets capital gains tax ...

[dobby41]

Its not as clear as u making it out to be ...as per tax rules there is no capital gains tax on your own residential home so technically they not breaking any tax law but morally maybe . No bright line or dim light test for residential house of personal use !!

It is quite clear - the rule is that you can only use the main home exclusion twice over any two-year period.
https://www.ird.govt.nz/property/buying-and-selling-residential-property/the-brightline-property-rule/exclusions-to-the-brightline-rule

[Zaphod]

It is quite clear - the rule is that you can only use the main home exclusion twice over any two-year period.
https://www.ird.govt.nz/property/buying-and-selling-residential-property/the-brightline-property-rule/exclusions-to-the-brightline-rule

Which aligns absolutely perfectly for the family home serial house flicker. Excellent! Can't inconvenience that group of voters, can we.

[dobby41]

Which aligns absolutely perfectly for the family home serial house flicker. Excellent! Can't inconvenience that group of voters, can we.

There is probably a limit to how to make a rule that works.
I doubt that it was about not 'inconveniencing' any particular group.

[winner69]

Ha ha ..one of Megan’s staff sent an email to Stuff by mistake

PM says no rental increases likely

https://www.stuff.co.nz/national/politics/300264332/jacinda-arderns-office-gets-ready-to-fight-rising-rents-talk-with-social-media-campaign

[RTM]

Ha ha ..one of Megan’s staff sent an email to Stuff by mistake

PM says no rental increases likely

https://www.stuff.co.nz/national/politics/300264332/jacinda-arderns-office-gets-ready-to-fight-rising-rents-talk-with-social-media-campaign

And he's gloating about using it. Not very ethical...is it.

[Tomtom]

It's always interested me how far New Zealand governments where willing to go to avoid allowing more housing to be built. Our country has a tiny population, this is a really stupid problem to have.

[Balance]

https://www.goodreturns.co.nz/article/976518366/how-housing-reforms-could-impact-interest-rates.html

Low interest rates for longer if housing reforms actually work and dampen down house inflation.

[alokdhir]

https://www.goodreturns.co.nz/article/976518366/how-housing-reforms-could-impact-interest-rates.html

Low interest rates for longer if housing reforms actually work and dampen down house inflation.

Thats the reason bond yields dropped thus bringing down NZD with it , the day these measures were announced . Fixed rate and foreign currency markets actually think they can work well thus reducing the pressures on RBNZ which will be now fully focused on rates for economy and not some stupid house price bubbles

Thus it makes new measures excellent for real economy ...Rates down for longer ..good for businesses and working class mortgage owners ....NZD down great for exporters thus again helping economy

This maybe called targeted surgical strike to attack the only problem on hand while helping all others around ...No collateral damage ...Renters are making out to be the collateral damage but that can also be easily fixed as per existing rules of Tribunal making sure there is no big disruptions or distortions in rent increases

[Habits]

U.S. Consumer Confidence Surges to One-Year High on Job Optimism - Bloomberg
https://www.bloomberg.com/news/articles/2021-03-30/u-s-consumer-confidence-surged-to-one-year-high-in-march

[bull....]

Good quarter for US markets

Some quick points

april is usually a very good mth for stocks
democrats usually provide better market returns than republicans
usually when a president controls the house and senate stock market returns are the greatest

reflation trade is still the theme at the moment evidenced by the RUT , DJT and DJI being the best performers in the US over the sp500 and nasdaq.

ASX trading sideways most of quarter except financials , mining stocks and post covid recovery stocks

NZX traded down most of quarter except financials , retailers and post covid recovery stocks. NZ market does not have a big coverage of these theme stocks being mainly dominated by bond proxies type stocks hence why it has been one of the worst markets this quarter

top stocks last 3 mths in order of performance

RAK
GEO
WHS
SPY
NWF
VGL
SPN
NZM
FBU
SKO
SKL
TWR

that do the stocks fit in the sectors mentioned and also tie in with the theme in aus and us markets as best sector themes

[Ferg]

Thanks for sharing bull. Looking forward to your predictions proving correct in April...!

[bull....]

Jobs report blows past expectations as payrolls boom by 916,000 in March
https://www.cnbc.com/2021/04/02/us-jobs-report-march-2021.html

released on friday US
smashed expectations , As US markets are closed friday for good friday US futures are up big time for when markets open next week esp RUT ie on the reflation trade

[Habits]

Jobs report blows past expectations as payrolls boom by 916,000 in March
https://www.cnbc.com/2021/04/02/us-jobs-report-march-2021.html

released on friday US
smashed expectations , As US markets are closed friday for good friday US futures are up big time for when markets open next week esp RUT ie on the reflation trade

US markets will reopen overnight Monday our time while we're still closed for the long weekend. We will get to see the magnitude of the reaction before our sharemarket screens open for the day on Tuesday.... this powerful jobs result has come in even before the effect of the $1300USD helicopter cheques so its obvious how this will flow on. Strong results are building for the next earnings reports season me thinks. Personally I dont want to see higher and higher share prices as it causes massive price bubbles and then long term problems for a short term gain. Steady as she goes is much better

[winner69]

US markets will reopen overnight Monday our time while we're still closed for the long weekend. We will get to see the magnitude of the reaction before our sharemarket screens open for the day on Tuesday.... this powerful jobs result has come in even before the effect of the $1300USD helicopter cheques so its obvious how this will flow on. Strong results are building for the next earnings reports season me thinks. Personally I dont want to see higher and higher share prices as it causes massive price bubbles and then long term problems for a short term gain. Steady as she goes is much better

You have to make of the most of it while you can / as the opportunity exists

Means one day sooner than later you need to cash up and become rich ....and then come back when others have become distressed seller

Long term (say 10 years) expected returns from the markets are now negative - jeez no gains over ten years if buy now and hold.

weird times habits - play it day or week at a time

[Biscuit]

You have to make of the most of it while you can / as the opportunity exists

.......


Make the most of it, and don't worry about tomorrow. Plenty of time to go to cash when interest rates are higher. Currently 0.85% on my term deposits. Better off owning the bank for now.

[Nor]

How come (as I understand it) returns from gambling are not taxable but (as I understand it) gains from investing in speculative shares with the intention of making money (another form of gambling) are?

[Snoopy]

How come (as I understand it) returns from gambling are not taxable but (as I understand it) gains from investing in speculative shares with the intention of making money (another form of gambling) are?


The government isn't that stupid. Long term, over the total population, gambling is a losers game. In any gambling initiative, being the lottery, horse racing, casino games etc., the money paid into the prize pot is always greater than the money paid out of the prize pot. So on a population basis there is an absolute guarantee that gamblers will lose money. It follows then that if losing bets are tax deductible, as they would have to be under such a regime, then the government would be certain to lose money if they taxed gambling profits.

Having said that I believe lottery winnings are taxed in the United States. I have never figured out the logic in that.

SNOOPY

[Habits]

You have to make of the most of it while you can / as the opportunity exists

Means one day sooner than later you need to cash up and become rich ....and then come back when others have become distressed seller

Long term (say 10 years) expected returns from the markets are now negative - jeez no gains over ten years if buy now and hold.

weird times habits - play it day or week at a time

"Long term (say 10 years) expected returns from the markets are now negative"

I dont know what you mean. On what basis, what sectors and which markets?. Part of the problem of low expected returns, may be the big expectations already baked in, ergo Tesla which seemingly only makes money from trading carbon credits. If you find some markets overpriced/overhyped there is usually others which are not eg many of our own public companies are producing and distributing good profits after tax... barring black swans I don't see that changing negatively over the next ten years.

[Nor]

So from a taxation perspective the areas most favoured to become proficient in are in decreasing order horse racing, residential property then investing in companies. But the usefulness to the economy is in exactly the opposite order.

[ratkin]

How come (as I understand it) returns from gambling are not taxable but (as I understand it) gains from investing in speculative shares with the intention of making money (another form of gambling) are?

Your typical gambler is not subject to tax, as gambling = losing but if you are full time making money from betting then it is a very grey area.

[alokdhir]

Your typical gambler is not subject to tax, as gambling = losing but if you are full time making money from betting then it is a very grey area.

As per IRD any money made from hobby which is not your prime source of livelihood then is tax free ....Gambling also if not your prime source is not taxable but so can be shares trading if u can prove its just a hobby not your livelihood !!

[Bobdn]

You have to make of the most of it while you can / as the opportunity exists

Means one day sooner than later you need to cash up and become rich ....and then come back when others have become distressed seller

Long term (say 10 years) expected returns from the markets are now negative - jeez no gains over ten years if buy now and hold.

weird times habits - play it day or week at a time

https://www.youtube.com/watch?v=la-zdPUcmUQ

Good video here suggesting that the predicted return on the S&P500 for the next 10 years, using Schiller's new measure, is around 4 per cent per annum. Worth watching the whole video, however the return bit starts at 17 minute mark.

USF.NZX is already up 9.7 per cent year to date.

I'm just indexing/ETFing these days through Smartshares. 20 per cent in FNZ.NZX along with some OZY, MZY and a big chunk in USF. I also invest in Kernel Wealth's Infrastructure and Dividend funds. I don't miss single share investing, especially reading the ATM thread :) Sends shivers up my spine.

[winner69]

https://www.youtube.com/watch?v=la-zdPUcmUQ

Good video here suggesting that the predicted return on the S&P500 for the next 10 years, using Schiller's new measure, is around 4 per cent per annum. Worth watching the whole video, however the return bit starts at 17 minute mark.

USF.NZX is already up 9.7 per cent year to date.

I'm just indexing/ETFing these days through Smartshares. 20 per cent in FNZ.NZX along with some OZY, MZY and a big chunk in USF. I also invest in Kernel Wealth's Infrastructure and Dividend funds. I don't miss single share investing, especially reading the ATM thread :) Sends shivers up my spine.

Phew that 4% is a relief

Bank of America still say basically zero
https://www.zerohedge.com/markets/bank-america-expects-sp-return-just-02-over-next-decade

[kiora]

https://www.youtube.com/watch?v=la-zdPUcmUQ

Good video here suggesting that the predicted return on the S&P500 for the next 10 years, using Schiller's new measure, is around 4 per cent per annum. Worth watching the whole video, however the return bit starts at 17 minute mark.

USF.NZX is already up 9.7 per cent year to date.

I'm just indexing/ETFing these days through Smartshares. 20 per cent in FNZ.NZX along with some OZY, MZY and a big chunk in USF. I also invest in Kernel Wealth's Infrastructure and Dividend funds. I don't miss single share investing, especially reading the ATM thread :) Sends shivers up my spine.

It would be a good reason NOT to invest in index ETF's then wouldn't it?
Better to invest in growth Co's

[ratkin]

Expected long term returns means nothing really, it all just guesses.

[Bobdn]

It would be a good reason NOT to invest in index ETF's then wouldn't it?
Better to invest in growth Co's

That's certainly what active managers are saying: "now is he time for stock pickers" etc.

The thing is from 2009 to about 2017 I beat the indexes by a couple of per cent per year (pure luck looking back on it) and then I made some pretty stupid bets in 2018 and 2019 which undid a lot of my good work. This is what always happens, eventually just about everyone underperforms the index over a long enough timeframe. Cue the fishing stories....

I have a good friend, financially illiterate, who has outperformed Buffett 12 years in a row now and just about every hedge fund on Wall Street (Except the ARKK, but give it time) with his high growth passive kiwisaver scheme that he has ignored since he's had it.

[alokdhir]

Portfolio of FPH / MFT / KFL / FNZ now NZG has consistently outperformed index for last 10 years . Maybe got lucky for having the mix right but consistency and quality works for me rather then looking for multi baggers ... Mature stocks with diversification of managed fund like KFL and balanced by low charges NZG covers full spectrum for me . Happy with NZ equities only as thats where consistent and less volatile returns are ....

No need do too much active management ...let time do the job not timing

[Valuegrowth]

https://www.reuters.com/article/us-value-investment-breakingviews-idUSKBN2BM26Y

Breakingviews - Chancellor: Value investing’s day is coming soon

[winner69]

Came across this comment - If I hadn’t read Graham’s "The Intelligent Investor" eight years ago, I would have been retired already.

Think he was saying ‘value investing’ hasn’t been good to him

[bull....]

Rally accelerates with Dow climbing 400 points to an all-time high, S&P 500 jumping 1.5%
https://www.cnbc.com/2021/04/04/stock-market-futures-open-to-close-news.html

nasdaq correction looks finished

[kiora]

Came across this comment - If I hadn’t read Graham’s "The Intelligent Investor" eight years ago, I would have been retired already.

Think he was saying ‘value investing’ hasn’t been good to him

Value is in the eye of the beholder

[bull....]

The trans tasman bubble opening up in a couple of weeks between NZ and AUS has most business people celebrating from the roof about this big occasion , but is it really that good?

will more NZ people leave NZ to holiday in AUS than AUS people come to NZ to holiday
if more people leave NZ to AUS then that's a negative economic benefit
if more people come from AUS to NZ then that's a positive economic benefit
domestic tourism etc will shrink as more people travel to AUS , negative
will as many people actually holiday as they think in there forecasts probably not due to fear of covid still.
net / net its probably a zero net out come really and throw in the risk of a limited lockdown or two in NZ due to probabilities the economic benefit to NZ may in fact be negative. A big outbreak/ lockdown would be a major negative of course.

Hence why the dollar and stock market were very muted in there response to the decision.

[Hoop]

The trans tasman bubble opening up in a couple of weeks between NZ and AUS has most business people celebrating from the roof about this big occasion , but is it really that good?

will more NZ people leave NZ to holiday in AUS than AUS people come to NZ to holiday
if more people leave NZ to AUS then that's a negative economic benefit
if more people come from AUS to NZ then that's a positive economic benefit
domestic tourism etc will shrink as more people travel to AUS , negative
will as many people actually holiday as they think in there forecasts probably not due to fear of covid still.
net / net its probably a zero net out come really and throw in the risk of a limited lockdown or two in NZ due to probabilities the economic benefit to NZ may in fact be negative. A big outbreak/ lockdown would be a major negative of course.

Hence why the dollar and stock market were very muted in there response to the decision.

Apparently NZers going for an overseas holiday's has a negative effect on NZ Retail spending..
..Hmmm there's a few retail stocks on the NZX

[ratkin]

It would be a good reason NOT to invest in index ETF's then wouldn't it?
Better to invest in growth Co's


Think there is room for both. ETFs (smartshares etc) are useful for providing geographical diversification. An easy way for overseas exposure.

[bull....]

Apparently NZers going for an overseas holiday's has a negative effect on NZ Retail spending..
..Hmmm there's a few retail stocks on the NZX

maybe it could? but you would expect the big ticket items like pools , spa,s , boats , campervans etc to suffer in time first before if ever other retail items. they were the biggest winners in the no travel period.
most of the nzx retail stocks are not selling such big ticket items so cant really see them being effected by mostly family visits to australia in winter.

anyway back to the action in the US

Jamie Dimon said he’s optimistic the pandemic will end with a U.S. economic rebound that could last at least two years.


“I have little doubt that with excess savings, new stimulus savings, huge deficit spending, more QE, a new potential infrastructure bill, a successful vaccine and euphoria around the end of the pandemic, the U.S. economy will likely boom

https://www.bloomberg.com/news/articles/2021-04-07/dimon-says-fintech-and-big-tech-are-here-as-banks-lose-ground?srnd=premium-asia

[Bjauck]

The IMF suggests tax reform to pay for Covid as some people and companies have prospered:

“Governments could consider higher taxes on property, capital gains and inheritance"
https://www.theguardian.com/business/2021/apr/07/imf-wealth-tax-cost-covid-pandemic-rich-poor

NZ has already boosted income tax for personal higher incomes and indebted property investors. What next?

Janet Yellen, US treasury Sec., has also called for a global minimum corporate tax.

[bull....]

seems these australian analysts think along my lines that the travel bubble will have no real economic benefit to aus or nz.

largely they say

aus people only come to ski
nz people will only travel to see family/friends
no ones comfortable really to travel while there big covid risks
airlines will jack prices up to repair there balance sheets

http://New Zealand travel bubble won't guarantee cheap and easy flights, warn analysts

[Bjauck]

seems these australian analysts think along my lines that the travel bubble will have no real economic benefit to aus or nz.

largely they say

aus people only come to ski
nz people will only travel to see family/friends
no ones comfortable really to travel while there big covid risks
airlines will jack prices up to repair there balance sheets

http://New Zealand travel bubble won't guarantee cheap and easy flights, warn analysts Also in Winter the bubble will surely favour Australia - NZ older snowbirds flying to Queensland to stay at flats and timeshares will not be compensated by Aussie skiers...

[winner69]

Doing the rounds -

working class nz: i can’t afford to holiday in australia anyway

middle class nz: i can’t afford to get stuck in australia if we get locked down, so that’s a no from me

wealthy nz: holiday in australia? do i look like a f##*en peasant??

[Habits]

Also in Winter the bubble will surely favour Australia - NZ older snowbirds flying to Queensland to stay at flats and timeshares will not be compensated by Aussie skiers...

Very good for QT ... and holders of THL. I dont hold any thl now but the small company stx I follow are mostly all looking up and ready for a move higher soonish. Tonights report says that investor confidence has returned

[Bobdn]

Let's enjoy this ride. Every morning we wake up richer (on paper). Someday this bull market's gonna end...

https://www.cnbc.com/2021/04/08/jeremy-siegel-says-stock-market-could-go-up-30percent-before-boom-ends.html

[LaserEyeKiwi]

seems these australian analysts think along my lines that the travel bubble will have no real economic benefit to aus or nz.

largely they say

aus people only come to ski
nz people will only travel to see family/friends
no ones comfortable really to travel while there big covid risks
airlines will jack prices up to repair there balance sheets

http://New Zealand travel bubble won't guarantee cheap and easy flights, warn analysts

- Australia receives 1.3 million Kiwi tourists each year.
- New Zealand receives 1.5 million Australian tourists each year.

So on the face of it, would look like a small gain for NZ.

However one needs to do the math on the population sizes to see how it could be a much bigger gain for New Zealand:

- 1.3 million kiwis going to australia each year is equivalent to 29% of our population, and with ~3 million overseas trips each year, Australia accounts for about 44% of kiwi international trips

- 1.5 million Australians coming to NZ is equivalent to only 6% of their population, and with ~11 million overseas trips taken by Aussies, NZ accounts for only 14% of Aussie international trips.

So looking at that above data, then one would conclude that with New Zealand as the only quarantine-free international holiday destination for Australians, then New Zealand is poised to grab a far larger piece of the Australians itching to travel than the traditional 14% slice (whereas kiwis travelling to Australia was already almost half of our normal tourist trips anyway)

(These stats also highlight that many Australians highly likely haven't visited New Zealand this century)

[bull....]

- Australia receives 1.3 million Kiwi tourists each year.
- New Zealand receives 1.5 million Australian tourists each year.

So on the face of it, would look like a small gain for NZ.

However one needs to do the math on the population sizes to see how it could be a much bigger gain for New Zealand:

- 1.3 million kiwis going to australia each year is equivalent to 29% of our population, and with ~3 million overseas trips each year, Australia accounts for about 44% of kiwi international trips

- 1.5 million Australians coming to NZ is equivalent to only 6% of their population, and with ~11 million overseas trips taken by Aussies, NZ accounts for only 14% of Aussie international trips.

So looking at that above data, then one would conclude that with New Zealand as the only quarantine-free international holiday destination for Australians, then New Zealand is poised to grab a far larger piece of the Australians itching to travel than the traditional 14% slice (whereas kiwis travelling to Australia was already almost half of our normal tourist trips anyway)

(These stats also highlight that many Australians highly likely haven't visited New Zealand this century)

yes be interesting how it plays out.

im still thinking the fear of travelling for most people with covid still around , also trouble getting insurance and the risk your holiday might end up costing many thousands more if your unlucky to get caught in a lockdown will still put many people off.

[Norwest]

So looking at that above data, then one would conclude that with New Zealand as the only quarantine-free international holiday destination for Australians, then New Zealand is poised to grab a far larger piece of the Australians itching to travel than the traditional 14% slice (whereas kiwis travelling to Australia was already almost half of our normal tourist trips anyway)

(These stats also highlight that many Australians highly likely haven't visited New Zealand this century)


How many of these trips are for business I wonder if you can get those stats? I would fathom a guess that in the past a decent percentage of these trans-tasman flights will be for people staying in the main centres for business conferences, events and such and the majority of these won't be happening in the near term.

[Old mate]

Aside from skiing, how many ozzie's are going to come to nz in winter for a holiday?

[LaserEyeKiwi]

Aside from skiing, how many ozzie's are going to come to nz in winter for a holiday?

if you see my post above - 1.5 million Australians come to NZ each yeah, only a tiny percentage of those visitors go skiing.

[Old mate]

Yes,but for the next 5-6 months aside from skiing locations I don't think this will be positive for tourism. More kiwis will be going for sun than ozzie's come here to shiver.

[LaserEyeKiwi]

Yes,but for the next 5-6 months aside from skiing locations I don't think this will be positive for tourism. More kiwis will be going for sun than ozzie's come here to shiver. Aussies come here all year round - not just in Ski season.

[Old mate]

Yes,but for the next 5-6 months aside from skiing locations I don't think this will be positive for tourism. More kiwis will be going for sun than ozzie's come here to shiver.

[bull....]

Yes,but for the next 5-6 months aside from skiing locations I don't think this will be positive for tourism. More kiwis will be going for sun than ozzie's come here to shiver.

wait for the cries for handouts everywhere bar queenstown

[Jaa]

Bull you need to take into account the magic of economic dynamism. Activity breeds activity.

Also the bubble will help most the hardest hit parts of the economy and help them survive. These parts can then restart spending and contribute to economic growth. Good for long term growth.

Suspect also hard hit sectors will spend all they receive while the losing sectors have probably done quite well and would be inclined to save.

[Cyclical]

Yeah nah, no one's really answered Old mate's question. What does NZ have to attract Aussies in great numbers over the winter months, other than skiing (start praying for a great season)? I guess there will be those that need to catch up with family and friends, but otherwise there's not a lot. Business travel is still likely to be virtually non existent. Kiwis to Oz on the other hand, you've got warmer climes, shopping, theme parks and big cities to explore etc. Anyway, it's a great start and long may it last!

[Biscuit]

Y..... Kiwis to Oz on the other hand, you've got warmer climes, shopping, theme parks and big cities to explore etc. .....

That really sounds like a bloody awful holiday to me, but each to their own.