Retail Stocks

[Waltzing]

back to Nothing to see here ... RBNZ

 

[KW]

Aussie.....
The large, non-food retailers have had an incredible sales month in November that is far above last year and beyond anyone's expectations. While the Black Friday sales were spectacular they merely topped off a remarkable month.
Those large non-food retailers who report to their shareholders that sales were sluggish in November have a structural problem.
Certainly, among those with structural problems are the smaller stores on the "High Streets" of Australia.
While most held their ground in November they did not enjoy the boom. Longer term, to survive, they will need to adapt to a changed world.
If Reserve Bank officials leave their Martin Place bunker and check on the real world they will have enough information to prevent rate cuts later this month.
By February, the official figures will be available and any thought of lower interest rates will be banished.
Those within the Reserve Bank who were advocating for higher interest rates will now have their case strengthened, but I don't think it's likely that the Reserve Bank will lift interest rates on the eve of an election.
Top economists believe the Reserve Bank of Australia is misjudging the impact of the jobs market on inflation. The RBA estimates unemployment needs to remain at 4.5 per cent to keep inflation stable. The Federal Treasury suggests the safe rate is closer to 4.25 per cent.
Clearly the battlers with rent and mortgage stress are not part of the November retail charge but, even in this area, as I will describe below, there may be a surprising development.
There are two clear reasons why areas of the economy such as non-food retail are surging ahead and taking lower interest rates off the short term agenda.
A large number of Australians, particularly those in the public service have received substantial pay rises and state and federal governments are spending money like drunken sailors.
Most states, led by Victoria, are going deeper into debt and there is no sign of any major restraint in spending so consumers are feeling it's time to spend.
The job market is tight because of direct government hiring and hiring by enterprises relying on government income.
At some future point credit markets will tighten and force well overdue public service administration cuts but at this stage the sky is clear.
Both Chalmers and Gallagher need to tell the Australian public the truth and explain that interest rates are high as a result of big spending both from Canberra and the states.

[winner (n)]

NZ retail will still be in doldrums next year in spite of OCR cuts

My mate musicalchairs sums it up -

RBNZ end of October data - two and a half months after the first OCR cut shows people are paying more interest than before. 

The effective interest rate on mortgages (weighted average) is still *creeping up* as people fix for longer, pay off their cheap rate mortgages, take on new ones, move to floating rates etc.

It means that people are paying an estimated $10bn a year on mortgage payments that we would have otherwise been spending into the real economy.

No wonder retailers are still seeming weak sales

I reckon won't change for some time as disposable incomes won't increase over next 6-12 months.

Cool chart says it all

You cannot view this attachment.

[BlackPeter]

Not sure, whether "like" was the appropriate reaction, but it for sure is an interesting chart.

I wonder, whether the RBNZ is using their own data for analysis, or whether they just collect and distribute?

Anyway - does not look flash for 2025, doesn't it? .. but hopefully we might see a peak in early 2025 rather than late.

On the other hand ... just tried to book some events for the festive season - and much of the expensive stuff is already booked out. So, I don't know where people get the money from, but it appears there still are people around spending it.

[winner (n)]

Not sure, whether "like" was the appropriate reaction, but it for sure is an interesting chart.

I wonder, whether the RBNZ is using their own data for analysis, or whether they just collect and distribute?

Anyway - does not look flash for 2025, doesn't it? .. but hopefully we might see a peak in early 2025 rather than late.

On the other hand ... just tried to book some events for the festive season - and much of the expensive stuff is already booked out. So, I don't know where people get the money from, but it appears there still are people around spending it.

BP, in those with money don't know there's a cost of living crisis ...or even about recessions. Life just goes on 

[winner (n)]

Retailwatch sales data for November pretty gloomy with total sales down 2.7% on Nov last year

Clothing Stores, Department Stores, Furniture and Appliances Stores all down more than 10%

Interesting breakdown -

In store sales down 3.8%
Online domestic down 2.4%
Online offshore up 8.9%


Online is 16% of total and offshore 55% of online

[Basil]

https://www.scoop.co.nz/stories/BU2412/S00179/retailers-feel-christmas-cheer.htm

RBNZ to cut another 50 bps in mid February and fixed rates on mortgages are coming down, that'll help.

[Stoploss]

https://www.scoop.co.nz/stories/BU2412/S00179/retailers-feel-christmas-cheer.htm

RBNZ to cut another 50 bps in mid February and fixed rates on mortgages are coming down, that'll help.

At the short end Basil,but 5 year swap rates are still 20 points higher ( Trump effect ) than the Sept lows ...
https://www.interest.co.nz/charts/interest-rates/swap-rates

[Basil]

Thanks, Stoploss, good point but I read quite recently, most people are now fixing mortgages for 1 year.

[Stoploss]

Thanks, Stoploss, good point but I read quite recently, most people are now fixing mortgages for 1 year.

yes correct 6 months and one year to capture the cuts . But with most of the market sitting in short term lending if longer term rates don't go down from here and they sit short ,it could get ugly if rates rise ....

[Basil]

10 year rate in the U.S. since Chump got it seems to have settled at about 20 bps higher.
A lot depends upon whether the inflation Genie is back in the bottle to stay.

[KW]

In store sales down 3.8%
Online domestic down 2.4%
Online offshore up 8.9%


Online is 16% of total and offshore 55% of online

The only place people can afford to shop these days is Temu and Shein. 

[KW]

Thanks, Stoploss, good point but I read quite recently, most people are now fixing mortgages for 1 year.

According to the C71 data showing new mortgages taken out in October, some 27% (nearly $1.5 billion) of the $5.335 billion for owner-occupiers was in floating. 
That was a very sharp rise up from just 20.3% in September and the 27% figure is the second highest percentage for floating since the start of the data in April 2021 and it was only bettered by the March 2022 figure of nearly 28%.
Since pretty much the start of this year borrowers have been going shorter and shorter with their terms in anticipation of Official Cash Rate (OCR) cuts from the RBNZ - which subsequently began in August.

This trend among the borrowers has seen the previously unfashionable six-month term rise to prominence, peaking at a 37.6% share of new owner-occupier mortgage money in August. The share fell to 33.4% in September and then to 20.6% in October.
As the six-month term has declined in popularity, then so the more traditionally-favoured one-year term has stormed back to prominence. In October the one-year term took 41.9% of the owner-occupier mortgage money share, up from 28.2% in September.
The $2.234 billion worth of owner-occupier mortgage money put on one-year terms in October was the highest monthly tally for this term since July 2021. 
Some 89.4% of the owner-occupier new mortgage money in October was either floating or for a one-year or shorter fixed term duration.

https://www.interest.co.nz/personal-finance/131165/latest-reserve-bank-figures-show-sharp-rise-amount-new-borrowing-floating

[Stoploss]

KW, a lot of people when purchasing we are having to settle the mortgage on a floating rate then get pricing and refix post settlement.
It differs from bank to bank with policy , some will give you the better rate if they cut and you have signed up for a higher rate . Problem is the policy says 'advertised rate " So right now say the advertised rate is 5.79 % and they are discounting to 5.69 % or 5.59 % for 1 year . So if they cut the rate 5 or 10 points you might not be able to get the benefit.
 If the settlement is 2 to 3 weeks from an OCR announcement many people are not wanting to document a month out expecting cuts from the RBNZ , so this would have pushed up the floating portion .
 This strategy has worked all year until the last cut , we aren't quite back at that 5.59 % 1 year ANZ special from Sept...

[Waltzing]

thought this was retail but the thread is now a broad mixture of bond yield to mortgages to anything related to OCR cuts.

But how much pain has the consumer been put through and OCR cuts dont trickle down the consumer who need time to heal.

mean while some retailers in the states are not blooming. Shows just how good HLG is and how under estimated its desire to grow.

Reeves documenties in south america has show a rubbish tip with expensive clothing thrown away. The amount of clothing dumped each year in britain might show that the RAG trade may meet a crunch point .

Consumers may rebel but they havnt yet...


https://edition.cnn.com/2024/12/10/business/macys-real-estate-investors/index.html