Im sorry but I may have contributed to this one.. bought a laptop just last week. And I ride a bike when I can so do not consume so much fuel.
Printable View
He a good guy that Rodney Dickens
Truly independent and not swayed by the views of the popular bank economist / commentators who seem to have an agenda to drive and take a rather myopic view of things.
Rodney has worked in the RBNZ as well as for a bank. I think he saw the error of his ways so went out on his own.
The export economy is damaged by the high AUD, this is reason enough to cut rates if a solution on slowing house prices is found. I am not impressed by the latest attempts though.
http://i.stuff.co.nz/business/money/...r-restrictions
I stumbled on an extremely interesting little article on the NZD-AUD cross from an American (?) currency trader's perspective. It's his favourite macro trade. Amazing to see how closely correlated the AUD-NZD rate and performance of Emerging v Developed markets are - with obvious implications for asset allocation. Well worth a read!
http://seekingalpha.com/article/3186...-and-nzd?ifp=0
I'm sorry Winner69, your data is very selective & makes the figures extremely flattering to reality.
Q1 2014 was a very poor quarter whereas q12015 was a very good quarter.
Correct me if I'm wrong here you are saying sales were up 7% year on year by comparing Q1 2014 to Q1 to 2015?
That's not a year on year comparison.
From NZ Stats. "March was a boom quarter for retailers, Statistics New Zealand said today.
The total sales value was $19.3 billion in the March 2015 quarter, almost $1 billion (5.1 percent) more than the previous March quarter. Fuel retailing, down due to lower prices, was the only retail industry to have lower sales.
After removing the impact of price changes, total retail sales volumes rose 7.4 percent in the March quarter compared with the same quarter last year."
No doubt retail sales have been steadily growing when the NZ economy has been in a substantial growth mode underpinned by property prices, export prices & National's increased government debt program to fund road building. Retail sales is a lagging indicator obviously and two of the growth industries being diary & forestry are now not what they were.
Here is probably a much fairer reflection from NZ Govt stat. Under what they term is 'Key facts'.
Key facts
For the March 2015 quarter, compared with the December 2014 quarter (seasonally adjusted):
- The total volume of retail sales rose 2.7 percent – the largest percentage increase since December 2006. In dollar terms, it was a record increase since this series began in September 2003.
- All 15 industries had higher sales volumes.
- Electrical and electronic goods retailing recorded the largest volume increase, up 8.9 percent.
- The total value of retail sales rose 1.7 percent.
My view is we have had a very healthy clear-out in an extremely overweight trade, i.e. long NZD / short Aussie. The jawboning worked to great effect. Now that it has cleared out & seems to be settling down I would suggest NZD strength returns, albeit perhaps relatively short term. I have no doubt that the NZ economy will weaken over the next six months or so. Obviously there has been a flood of foreign money into the property market, although I expect this to continue, it may slow some with things like National's largely ineffectual CGT. Foreign property ownership is becoming a political hot potato & I think we are likely to see further actions around the fringes at least from Government.
And then there will be the impact of lower export prices, which effectively means less NZDs are bought to convert from USD.
Let alone the impact that lower prices will have on spending from the rural sector.
If the NZD looks like approaching parity again, we are likely to see the same jaw boning from the RBNZ.
Will the economy slow enough to lower rates? Perhaps, but its certainly not a foregone conclusion.
Why did the Kiwi just pop higher half a cent? I see banks dropped rates, but that's in anticipation that the RBNZ may drop rates next month.
Thanks. Amasing Aussie unchanged & Kiwi jumps half a cent on an AUD announcement.
Just shows how speculatively driven the Kiwi is driven at the moment with the yield available.
I'm long NZD/AUD cross as of yesterday, so happy days indeed.
The rise today in NZD prob due to the Survey of Inflation Expectations which showed expectations of higher inflation than most thought
Not what I saw, was watching at the time. Aussie pretty much unchanged, Kiwi jumped.
Anyway, see the dairy price dropped along with other commodities overnight.
Payout from Fonterra now at $4.50, but that maybe under pressure.
On a similar note, Supermarket milk prices haven't changed ! Oh well I don't mind supporting our farmers. ;-)
Sorry mate for doubting you, just proves I shouldn't believe everything I read in the papers
However, the dollar plunged one-third of a cent to US79.60¢ – its lowest for a week – after the release of the Reserve Bank minutes.
http://www.smh.com.au/business/marke...19-gh4x11.html
Suppose it was the word plunged that attracted my attention
Its ok, I didn't take it that way. ;-)
The USD rallied generally overnight with commodities & ccys whacked.
Any thoughts on the Kiwi/Aussie cross anyone? I had a resting order to buy Kiwi against AUD that just got hit at 1.0785.
Cheers Daytr
I jobbed out last night for 3/4 of a cent profit & then reset entry level and now back in again.
I still think short term the Kiwi will strengthen against the Aussie.
I here on the radio...... on average NZ Dairy farmers will be in the red some 150k NZD this year ...now we could well see prices stay low for some time(or long term with so much worldwide production on stream $4-5 could well be the average) ...
Yep I agree JB & I think many have underestimated the hit to the NZ economy that is coming.
Still a little way off though I suspect.
I posted this link to this analysis a while ago. Counterintuitively falls in dairy prices don't appear to stuff the economy. But with x-rate its the traders who rule by creating as much as noise as possible.by reacting to any snippet of econ info.
http://www.sra.co.nz/pdf/DairyPricesAug14.pdf
A couple of extracts -
Since 1992 there have been seven significant falls in dairy product prices including the latest fall and in only one of these was there are recession and this was when the financial crisis struck in 2008/09 and had a major negative on a number of things.
And
Interestingly, between 1992 and 2007 the correlation between dairy product price inflation and annual GDP growth was -0.45 ........All of the five significant falls in dairy product prices prior to 2008 coincided with above average economic growth.
Farmers would be loving it if they were going to get the $6/kg in the article, but instead they are going to get $4.40.
So that $4.5Bln+ is now a lot +++ more likely over $7Bln.
There will be farmers that go to the wall on this, how many will depend on if & when the price recovers, however NZ is now one of the most expensive producers of dairy product in the world because of intensification & dairy conversion on unsuitable land.
Will it cause a recession? Who knows, but I prefer to look at current facts rather than relying on what happened in the past.
I would suggest this is by far the biggest fall in dollar value & [perhaps percentage terms for dairy. In dollar terms for any export market in NZ.
In relative dollar terms it would be similar to the wool glut of the late 70s or something similar.
The purse strings in places like the Waikato are already drying up & it will impact a hell of a lot more than just farm buildings.
Importing of feed, new machinery, fertilizer, wages among others will be first things to be wound back.
Its a cliché, but its different this time, as previously we haven't had the conversion of so many farmers to dairy as we have seen in recent years. We now have a dairy industry in sheep heartlands of the Hawkes Bay and Canterbury. So its more wide spread & the price fall much bigger.
Good points. I will reflect on them
But interestingly the current $4.40 plus 20-30 cents dividend is the average payout from 2000 to 2007. Prices are only reverting to the average after a period of boom times and high prices.
I wonder where the 'excessive' profits have gone over the last few years? I would hazard a guess a lot has not "trickled down" into the towns and cities. This a lot of the touted billions that is being taken out of the economy was never there in the first place.
Very happy I picked up some ASX stocks when it was around 0.99. Sold out entirely of HNZ @ $1.31 and move it all across to ASX holdings, sitting on a nice wee currency buffer at the moment. All eyes will be on the RBNZ announcement next week.
They are reverting to a mean, but meanwhile costs aren't other than fuel. As I said NZ has become one of the most highest cost producers of dairy in the world for a large scale producer & this wasn't the case 10 years ago. Dairy land values has probably doubled in that time as well.
Well farmers, the better ones at least, rightly so use those billions to pay off debt & save for a rainy day. Well its raining.
Logs are obviously down as well, however beef & lamb prices are doing well.
The problem with the dairy conversions is that the capital outlay is high so its not like they can just switch back, well they can, if they can afford the stock, but the capital outlay or debt still remains.
Traders (who want noise and plenty of it) and bank economists / commentators (no doubt for selfish reasons) calling for OCR cut this week
Will Wheeler be a wimp and give in to their 'demands'? Hope not
Guy on radio this morning said if not rate cut Thursady NZD will spike up, maybe as much as 3 cents
But we have even reached the stage where in those bank commentary things some are even suggesting what Wheeler could say ...Westpac in particular suggesting the paragraphs he writes. Weird.
They are desperate .....Wheeler will bow to popular opinion which has a rather myopic view of the situation. Ans snaps will lose money on this trade.
And in a couple of years time we will have interest rates much higher than they needed to be.
Snaps -all primed and ready to go to trade that spike (up hopefully or down) at 9 am
Maybe for a selected few its 8.59 am .....how cynical
Cut 25bps! Funny, in the last couple of days I started to get the gut feeling they may cut, but was probably 50:50 on it rather than 25:75 previously. NZD down around 2% at one point! RBNZ indicating more cuts as well. Seems their economic forecast is quite different to the government's.
Perhaps he does Winner, but his view is more aligned with mine than yours or the political spin of the government. ;-)
Winner, that's your inference it wasn't mine.
All I said was that your outlook is aligned with the Government's.
Banks celebrating their win today, even better news for them as no mention of any future increases but more cuts likely
As foreign wholesale funding rates creep up (ie higher costs for local banks) they now every excuse to screw NZ depositors even more to make up the shortfall.
Well done Cam Bagrie et al, you have done a good job for your bosses.
Well the banks dropped lending rates for one & two year as the curve dropped in anticipation of the RBNZ lowering rates.
Banks will make much better margins of a higher interest rate environment than a low one, so overall the RBNZ lowering rates is not helping the banks at all, quite the opposite.
You may be right daytr ....seems like everybody is reading the same papers
I still to be convinced though but the trick is to prosper if one can prosper from the commentators myopic view of the current state of the economy. Thinking about that
http://www.interest.co.nz/opinion/75...aster-had-been
Well its been my view for a while & in fact I said when the RBNZ raised rates last year I said it was a mistake, but they were between a rock & a hard place due to the Auckland property market & immigration. Well they have targeted the Auckland property market recently, not sure what impact it will have, but some & now they can have policy that is dictated by the whole country's position rather than just one out of control property market.
Good for this exporter sector worker.and the spine of NZ's economy ....sub 90c NZD/AUD fine by me ....the idea of higher rates has and will continue to be a pipedream..of the media and those that believe high NZD = great times !
Just because the flood of foreign money & people into the likes of the Auckland Property market shouldn't be the main driver of RBNZ policy
but of the immigration office ...having money shouldn't equal easy entry into NZ and it's property market....must be a stand down period IMHO maybe new builds only or rent first 5yrs to foreigners
rant over
Thanks for that Snaps. I wondered earlier if it was going to breach .91 and then saw it at .9039 and wondered what had happened. Still same on US cross so assumed it was Australian influenced. That is a double whammy. Not that I am complaining... topped up on Aussie stocks around time of the "parity" talks.
Nice rant though JB! ;-)
Snaps, obviously the economy is rooted and needs a decent boost. I see some bank commentators now touting cuts in July and September, all the way to 2.75%
Looks like NZD to fall even further. You hanging in there for the ride?
Next shock (noise) is GDP number out soon. Lower than expected they say making that bet even better.
That how you playing it?
I'm a person that believe in the the wealth and health of a Country's Economy is measured by its currency.....
The unfortunate fact of life JB is the hard working kiwis have to rely on the rich bastards in industry. ...At the moment these rich bastard's investment money is leaving NZ in droves...Both Kiwis money and overseas peoples alike.
An already trending down NZ$ followed by a cut in the OCR.. Thanks Mr Wheeler for suddenly making NZ an unattractive place to invest in...
I hope Mr Wheeler is in control of his sledge hammer.....as there are some very delicate bubbles in our economy.
Hoop, I agree, but its not his job to continually inflate bubbles, in fact quite the opposite. They have to work with the policy given them by the government & sometimes the RBNZ policy will need to negate poor government policy say in regards Auckland housing.
There is still plenty of money pouring in, due to other reasons & mainly the woes of other countries has seen Kiwis come home in droves.
There are also industries like tourism & exports that will benefit from a weaker dollar, so it certainly isn't all bad. In fact its only the 'hot' money that you are referring to & that would have left at some point anyway. Real investment is made more attractive by a lower ccy & lower interest rates.
Economy well and truly rooted according to headlines--- up a miserly 0.2% seasonally adjusted (the yanks would say 0.8% annualised)
March quarter activity +2.5% up on pcp, annual growth 3.2%
Traders happy, NZD down
Daytr happy, more rate cuts sooner than later
Well the lower Kiwi overall will be much better to NZ as we are an export led economy.
I think the RBNZ will be very aware that interest rates are already historically low & I wouldn't expect too many more cuts.
2-3 more 25bp cuts would be my pick. Enough to get the dollar where they are more comfortable to offset lower commodity prices.
Of course this will make NZ property cheaper for foreign buyers, so its not all what the RBNZ would like.
New Zealand's economy grew slower than expected in the quarter ending March, prompting analysts to forecast another interest rate cut next month.
Gross domestic product (GDP) rose by 0.2 percent in the March quarter, down from 0.7 percent in the previous quarter, the government statistics agency said Thursday.
The lower growth reflected a 2.9-percent fall in primary industries, the largest fall since September 2010, according to Statistics New Zealand.
"Oil and gas were big factors in the lower GDP growth this quarter," national accounts manager Gary Dunnet said. "There was less extraction and exploration, as international prices fell."
Agriculture fell by 2.3 percent in the March quarter, dragged down by lower milk production.
Forestry production and exports of forestry products were also down.
A 2.4-percent increase in retail trade and accommodation helped to offset the decrease in primary industries.
Possible contributors to retail trade and accommodation includes the 2015 Cricket World Cup, which New Zealand co-hosted with Australia, and more visitors during Chinese New Year than in the past.
International tourist spending in New Zealand was up 2.3 percent in the March quarter.
Despite lower quarterly growth, annual GDP growth was still strong at 3.2 percent.
The size of the economy was 239 billion NZ dollars (165.17 billion U.S. dollars) for the year ended March.
An Economic Note from the ASB Bank said the quarterly growth was weaker than the market's median expectation of 0.6 percent.
It said the figures would be a "significant surprise" to the Reserve Bank of New Zealand (RBNZ), which cut the official cash by 25 basis points to 3.25 percent earlier this month and signaled another possible cut in September.
"We now expect this rate cut to come in July rather than September," said the Economic Note.
Finance Minister Bill English said the figures showed solid, sustainable economic growth that had seen 74,000 jobs created in the past year, and average annual wages rising faster than inflation.
"The lower dairy output was in line with Treasury's forecasts, which see the economy continuing to grow at around 2.8 percent on average over the next four years," English said.
"This results highlights that New Zealand is closely tied to international markets, and risks are ever-present."
I became bear on NZD and AUD from 2013/14 onwards and still I am one of the big bears for both AUD and NZD due to new development in the currency market. Now I am one of the big bears for housing markets in Auckland, Sydney and Melbourne.
My ideas are not a recommendation to either buy or sell any property, security, commodity, or currency. Please do your own research prior to making any investment decisions.
I agree winner, re Auckland particularly. Its all happened too fast & many people will see the potential to cash up & buy in the regions. Regional property is about to explode in my view as a result. Sydney & Melbourne & too a lesser extent Auckland depend a lot on immigration so if that holds up so to might property. Eventually however it will come unstuck.
Well the Greeks have given the fingers to Germany et al talking about having referendum. The insiders will hate this, they can't control referendum outcomes.
That'll teach them in trying to bail out the banks by essentially transferring the debt to the Greek tax payers. Tough bikkies guys, you should have been more responsible in the first place and not letting Greece get into this state to start with.
Whatever things will get uglier for the Greeks. But what's the point of 'raising taxes' so the extra bit can go to rich creditors.
No cash left in Greek banks .....what then happens to the NZD
If there is a Grexit, which seems to have now become more likely, (but obviously could go either way) you would think the dollar rallies at least initially anyway, so Kiwi lower. All will depend on the fallout and its the first time I have heard the likes of Key playing down a Grexit, so it appears they think it will happen. The debt has largely been privatized, (Banks bailed out again) so its now the European taxpayers & IMF mostly on the hook.
Criminal how bail out funds to Greece was purely to ensure commercial banks got their money back & taxpayers pick up the bill.
Global Glut
Domestic output in May reached 18.4 billion pounds, the most in any month, and is on pace to reach a record 208.7 billion pounds this year, the U.S. Department of Agriculture said June 18. Globally, production will rise 2.1 percent to a record 582.52 million tons as top exporter New Zealand sells the most ever and the European Union ends limits on dairies that had been in place since 1984, the USDA said.
http://www.bloomberg.com/news/articl...lm-u-s-dairies
Our currency has plummeted over the past two months from 77.34 (April 28) to now 66.70 on its cross with the USD. That's 10.64 / 77.34 =13.7%. Against the Pound it's even more = 1.946 to now 2.336 = .4 / 1.946 = a whopping 20% !! ..in just two months.
This is not Greece. Our currency is getting way oversold now. I've just loaded up my FOREX reserves to come in strong on any sign of a rebound, and with a cheeky bid in at 66.50.
Against the Aussie we have dropped from re 99.7c to 87.7c in re a month , thats a 12 % change!!. Sure makes all my aussie shares look good on paper though; turbo charged..
Time to move some money back across the ditch me thinks, JT...even if it does mean feeding the coffers of banks charging exorbitant fees via their FOREX spreads. ANZ for example has the audacity to state on their FOREX contract note 'transaction fee = zero" . They must think we're idiots. Their hidden fees amount to almost 2%.
Try NZ Forex BC, I think their spreads are fairly tight comparative to the banks.
I wouldn't be surprised to see the NZD go to 1.18 over time.
Cheers Daytr
I've just come in on the AUD/USD at 75.14. It's plummeted this afternoon after both disappointing Retail Sales figures and a lower than forecast Chinese Services PMI. Expecting a decent rebound to somewhere around 76c tomorrow morning.
The AUD/NZD cross has also fallen a lot over the past 24 hrs, and IMO will continue to trend down over the next few weeks closer to 1.10.
Discl: Long now on the Kiwi and Aussie both against the USD.
I hope you are right BC as I'll jump back in.
Steven Topliss economist at BNZ came out yesterday saying NZs chances of going into recession have increased & I agree with him, although the much lower NZD may save the day.
Yes recession risk increases...A tell tale sign is the inverting of the yield curve..
Back in March there was a trending move towards an inverted yield curve. With the RBNZ interest rate cut that trending move was eliminated.....Now this trending is back..with the 5y Swap very close to causing a partial inverted yield curve event.
The option to eliminate the inversion threat is drop the short term rate again and again in an effort to keep it lower than the falling long term rates.
Todays table shows a big drop....
NZ OCR 3.25 https://www.anzsecurities.co.nz/dire...ges/spacer.gif 10y Swap 3.87 -0.06 https://www.anzsecurities.co.nz/dire...ges/spacer.gif -1.53%
3m Bank Bill 3.18 -0.04
https://www.anzsecurities.co.nz/dire...ges/spacer.gif -1.24% 5y Swap 3.30 -0.06
https://www.anzsecurities.co.nz/dire...ges/spacer.gif -1.79%
I would suggest burying your head in the sand as Key basically has this morning is hardly sensible. I loved this bit. "Yes dairy prices are down a little bit" LOL
There are obvious risks to the NZ economy right now & they should be respected & acted upon.
Why do you think the RBNZ has been lowering rates? They can see the same.
You can't expect things like dairy prices to get absolutely smashed & not have a reasonable negative impact on the economy.
And now we have external factors such as China & Greece adding to the mix.
NZ as an export led economy relies on global growth & global consumption.
The problem for Key is, it doesn't suit his plans for the 2017 election of having the budget back in surplus.
He's borrowed to the hilt since he has been in power & now he may have to start spending more, meanwhile the tax take is likely to take quite a hit.
More debt.
I hope they are wrong & the BNZ was saying recession is a more likely chance not the probable prognosis.
So right, winner!Quote:
Pity we are talking our way into recession territory
Too many commentators who automatically see the half full glass as empty. But then, they're probably talking their own books!
Macduffy, there is such a thing as false optimism as well.
NZ business confidence survey down to three year lows...
Well the dollar is being hammered & interest rates lower, all good things for the NZ economy & they are getting plenty of coverage.
Tourism gets a fair shake & Auckland property you can't get away from in the media.
What other areas would you like highlighted?
Unfortunately its the way of the world that bad news always travels faster & wider than good news.
Back to my original point was that best be on the front foot about it rather than as Key is saying, if it gets bad we might do something.
Seems I must have misunderstood your original point, Daytr? I didn't read anything there about getting on the front foot.Quote:
Back to my original point was that best be on the front foot about it rather than as Key is saying, if it gets bad we might do something.
"The problem for Key is, it doesn't suit his plans for the 2017 election of having the budget back in surplus.
He's borrowed to the hilt since he has been in power & now he may have to start spending more, meanwhile the tax take is likely to take quite a hit.
More debt."
Aah, I see now.
I originally read that as a criticism of JK, missing that it was actually advocating more borrowing at this point. No argument from me there, when/if such stimulus becomes necessary.
The criticism was that they have kept on borrowing through the good times & now we may be heading into a period where more government spending / borrowing is required & government debt is going to have to increase more from an already elevated level.
Cheers Daytr
Yes definitely pushing their own barrow, macduffy. And the crowds are joining in.
Westpac put out their Local Knowledge Report today. Of the 20 economic series they monitors net 30% (difference between % rising less % falling) are rising. Not often that high. Heaps more things doing better than last month than doing worse - glass more than half full.
But because it's slightly down from previous report the commentary is all about the sky falling in and we must have interest rate cuts and all that - wonder what their motive is?
What is doing better? The obvious from me is sheep & beef, tourism (lower dollar), so yep agree its not all negative, but be interested in hearing what other industries you think are doing better ?
Yeah sure, so they are benefitting from a weaker economy in a sense.
That's been my bias from the start.
Kiwi much lower & will benefit NZ as an export led economy.
Kiwifruit did very well this year.
Daytr, here's that Westpac report and the suite of the 20 things they look at
You not this Michael guy are you .....commentary is very much what you are saying. I mainly have a look at the pictures .....more things going up than down is what I see
You don't need to read the last few pages by the way
https://wibiq.westpac.com.au/wibiqau..._July_2015.pdf
Haha, do you think if I had a real job I would be spending so much time on here!
Interesting he used agricultural out in tons rather than dollars, which would be a much better chart to use.
What is quite apparent is that we need to host another world cup!
Interesting pullback in the Kiwi/Aussie cross after Key did the NZ economy no favours yesterday after the market interpreted Key's comments that the Kiwi had moved to far too fast. Doesn't the market realize this guy was in sales, not a trader! ;-)
Either way its presented what I think maybe an opportunity prior to the RBNZ decision on rates.
If they cut 50, watch the cross blow out back toward at least 1.14.
Eventually I think we are heading to 1.18 but possibly quite a bit weaker as that would really only be an historic average rate against the Aussie.
http://www.cnbc.com/2015/07/20/commo...n-decline.html
Commodity currencies: Who's the ugliest of them all?
At this rate might need to get ready for those parity parties
AUD/NZD cross rate driven by relative economic conditions in each country
NZ economy purring along nicely while Australia economy heading to a hard landing according to Macquarie analysts
http://www.smh.com.au/business/the-e...12-gk6pjz.html
Parity on th agenda again
89....90.....91....92....and today 93 .....
.........parity
Wheeler will succumb to bank commentators and cut the OCR today ....big mistake
If he does show some common sense and hold the NZD will surge
http://www.interest.co.nz/bonds/7901...-and-wholesale
AUD/NZD not surging ....I do see a spike higher most likely on a worst Aus outlook ...But no Parity party IMHO Drought conditions here will hurt along with overextended debt in housing keeping rates lower for longer
We could expect some support for AUD in the short run. However, from 2016 onwards we could see downtrend for both AUD and NZD again.
http://www.businessinsider.com.au/th...e-hike-2015-12
The Australian dollar is higher despite the US rate hike
Any further thoughts on the Aussie/ Kiwi cross for 2016. Its hard to get too excited other than history says its very high here. I keep buying at 1.05/6 wish but it keeps coming back.
My view hasn't changed much from a few months ago.
Based on relative economic growth and interest rates outlooks I expect to see the NZD remaining at these current 'high' levels (maybe about right eh) but as before expect some short term tumbles and spikes. Parity still on the cards when one f these spikes occur.
Interesting head and shoulders pattern forming on chart - maybe NZD/AUD at 85 then?
See next post
With regard to the classic "head and shoulders pattern" forming here.
It is starting to look that way but is such a pattern able to predict the direction of this trade ?
NZD still pretty strong - NZD/USD through 0.67 and NZD/AUD above 0.94.
Recognition that our economy doing more than OK in relative terms