OCR

Predictably the Reserve bank dropped the OCR to 2.75% - more cuts could be coming.

The economy is slowing.

This of course is great news for home buyers and it remains to be seen what the lower interest rates do to the Auckland house price frenzy. The Reserve Banks says they assume that house price inflation will ease as new supply comes on stream, but do not assume a sharp house price adjustment.

There's a few assumption sins there. Governor Wheeler talked about property investors believing that prices would rise by like 12% a year over the next 5 years. He clearly doesn't buy into that spin, but he's also clearly worried.

With house prices rocketing along there is this "wealth effect". People think they're wealthy, people don't think prices can't drop, but its paper wealth, and you usually buy and sell on the same market so unless you move its all a mind game. You can't eat your house.

Here's the flip side - anyone with deposits in the bank might as well stash it under the bed - the returns are close to zero. By the time you factor in tax and inflation, its not really called saving. It could be worse, we could be paying the banks to look after our money - it doesn't look that far away.

 

APPLE

Apple had another big roll out today - a new iPhone, iPad and Apple TV.

Apple has got to be the best marketing company in the world. When they roll out new product coverage is phenomenal. Other companies have to pay for the same exposure. When customers line up to buy your product then you know your onto something.

Apple CEO Tim Cook said "we believe the future of TV is apps". You'll be able to create your own apps. In other words, the new Apple TV pretty much allows you to do everything with a new remote including voice search. You will be able to search for a programme like..."show me that Modern Family episode with Edward Norton." Or..."what did she say " and the remote will skip back 10 seconds. Its whiz bang technology...all the games..all the gadgets...

I don't know how they come up with this stuff but there's some very smart people out there.