Black Monday

[Paint it Black]

Yep & I just read, highest rates since 2008. Ominous.
Australia leave rates in check at 3.5%, we keep leading the world... down the wrong path.
Inflation has been driven by supply issues not over heated demand. Orr is misreading the situation completely & rate hikes aren't going to stop OPEC from cutting oil production or speed up supply of goods.
Higher interest rates isn't going to stop health workers fleeing for Australia, in fact probably drive more to leave tightening the labour market further.
He slashed rates to zero to avoid a pandemic induced recession, then creates his own recession, just as business is trying to recover.

Agree with you that currently it is a supply driven inflation issue ie too much money chasing too few goods ie worker supply. Very soon the money supply will also disappear from the private sector and we will be in an even deeper recession in a couple of months with the country going backwards for a year or more. Why couldn't Orr pause, let the lag of the existing measures take effect, and review the impact then take the next step as Australia has done or at the most apply another 25 pts as most pundits expected. I really wonder if Orr is on a bit of an ego trip trying to be the great inflation crusher at the expense of many stms companies now going to the wall. He quickly needs to publically front up with some searching questions and be informed his job is also on the line.

[Habits]

I thought value was all the NET cash that an asset produces over it's lifetime, discounted to today.

I would call it market price and value something different.

Remember in aggregate all people can ever earn from any asset is the sum of its net cash flows. Individuals can earn more or less but aggregated it's not possible.

Paying the present value of future cash flows leaves no upside and a very boring investment.

[SailorRob]

Paying the present value of future cash flows leaves no upside and a very boring investment.

My friend, you're forgetting the most important thing.

The discount rate.

You get to choose it.

Almost everyone pays more than present value thus even less upside and far from boringly, potentially losing a lot of money.

[t.rexjr]

New dwelling building consents info from February 2023

Actual. 2,972
Adjusted 3,206
Trend 3,407

New dwelling building consenting looks like it peaked in March 2022

Actual. 5,303
Adjusted 4,565
Trend 4,326

Already down ±25% from the peak. I wouldn't be surprised to see these numbers topple further in the next few months. Lots of thumb twiddling on its way...

Building industry poised to fall off a cliff.

https://www.stats.govt.nz/informatio...february-2023/

[SailorRob]

Paying the present value of future cash flows leaves no upside and a very boring investment.

I don't disagree with what you are implying though.

[nztx]

https://www.oneroof.co.nz/news/43360

‘Can I really afford it?’: Fears for mortgage holders as cash rate jumps to 5.25%

Data released this week by NZ credit agency Centrix showed a spike in the number homeowners falling behind in their mortgage payments.

There were 18,900 mortgages that were in arrears in February, up from 18,400 in January and up 23% year-on-year.

Centrix managing director Keith McLaughlin expects more households to come under pressure, with around 50% of existing home loans, by value, set to roll onto higher interest rates within the next 12 months.

“Our latest data shows mortgage arrears climbing for the seventh consecutive month, which could point to many being unable to service these higher mortgage rates – a difficult situation for anyone to be in,” McLaughlin said.

Looks like a Mortgage bloodbath on it's way within the next 12 months - folks

And you wondered why the NZX nosedived today heading out to close

With growing numbers of businesses falling over - could there be any clearer signal of what is coming ?

[JBmurc]

He was slashing in 2019 and ordering banks to prepare for negative the absolute pillock.

Yes along with the promotion that rates would stay low for longer with no material rises till 2024 to help NZ businesses from COVID issues ..next 20 or so months Orr goes nuts pushing rates 500bpts higher ..

.. pretty much you can't trust anything Orr says ... I wouldn't be surprised to see another 25bpts next meeting and talk of more if needed ....while working kiwis will continue to leave in droves living wage increases not enough to keep up with every increasing costs to live ... of course the retired rich are getting some great low risk returns in the bank and will continue to wonder what all the fuss is about .. just import the workers ?? oh they don't want to come ........

[Grumble]

He was slashing in 2019 and ordering banks to prepare for negative the absolute pillock.

Yes you are absolutely right.

[SailorRob]

Yes along with the promotion that rates would stay low for longer with no material rises till 2024 to help NZ businesses from COVID issues ..next 20 or so months Orr goes nuts pushing rates 500bpts higher ..

.. pretty much you can't trust anything Orr says ... I wouldn't be surprised to see another 25bpts next meeting and talk of more if needed ....while working kiwis will continue to leave in droves living wage increases not enough to keep up with every increasing costs to live ... of course the retired rich are getting some great low risk returns in the bank and will continue to wonder what all the fuss is about .. just import the workers ?? oh they don't want to come ........

They think they're getting great returns but in reality they're losing purchasing power faster than they were when rates were much lower.

[SailorRob]

Interesting, yes a return to interest on savings and higher dividends, but perhaps not all of those beleaguered savers and investors are spending their recently resumed 'income' from savings and investments. They have a lot of catch-up to do first, having taken conservative positions and been hammered for it for a long time and are in net effect still losing against inflation, though not losing quite as much as recent past times.

Best not to generalise imo, a large percentage of the population will not be feeling any serious threats from the rising CPI or rising mortgage rates, and remember that a huge proportion of NZ'ers wealth is in property, and a large percentage of that is debt free. If they have no debt and are not selling, and they have some savings or investments that are paying out increasing returns, then realistically it's only consumable inflation that affects them and that's a rounding error on their cashflows and has no material effect on their balance sheets.

They might not be 'rich' by your standards, but very few are I suspect. Let alone as savvy about money, investing and wealth creation as you purport to be. And that said, I suspect a lot don't really care too much about it either, in favour of a good life without concern for whether they can afford a latte or a holiday, or to renovate heir home. Most people I suspect lead a lot more simple lives, saving what they can, getting out of debt, building a legacy they can live on and pass on to their offspring.

Few I suspect really give a second thought about being rich and making all the right decisions every time at exactly the right time, whatever they are.

Great Post, yes a lot of very good points there.

Another large percentage however will be! There do seem to be a hell of a lot of folk with new swimming pools, Ford rangers plus new car for the girl and god only knows what else.

But the large percentage you speak of exist as well that is for sure.

Hopefully this doesn't turn into a political contest between the two.