Breakfast briefing: US prioritises selfishness

US homeowners jump at low rates, but house building slumps; Canada gets deflation; Japan exports slump; competitiveness slips; US dumps BEPS; UST 10yr yield at 0.74%; oil and gold unchanged; NZ$1 = 64.8 USc; TWI-5 = 69.6

18th Jun 20, 7:22am by David Chaston

Here's our summary of key economic events overnight that affect New Zealand, with news the US is moving aggressively to protect the tax strategies of the big tech companies.

But first this morning however, the Fed boss is continuing his US Congressional testimony on monetary policy, but his comments are not market-moving.

American homeowners are moving markets, moving in greater numbers to refinance their mortgages, aiming for lower risk and longer commitments from lenders. And they are doing it at lower interest rates.

US building permit levels, and housing starts have stayed low in May with permits almost -9% lower than the same month in 2019 and housing starts down a very sharp -23% on that basis.

In Canada, they are recording sharply lower consumer price inflation. They may be getting asset price inflation like everyone else, but consumer prices actually fell on May by -0.4% on an annual basis. Their core inflation was up +0.7% but that is a sharp decrease from the +1.2% rate in April.

In China, the State Council, the country's cabinet, is telling commercial banks to sacrifice more than NZ$300 bln of their sector profits by lowering margins on loans to businesses, and making loan deferrals to aid their economy.

Japanese exports fell -28% in May from a year ago, imports were down -26%, both all-time record declines.

The latest World Competitiveness rankings for 2020 are out and New Zealand has slipped further to #22 from #16 three years ago. We have held our economic performance, but slipped on the each of the Government Efficiency, Business Efficiency, and Infrastructure sub-categories. We now rank lower than China which also slipped, down -2 places over the same period, and the USA which slipped -6 places.

And it appears that the US is walking away from the effort to forge an international agreement on tax cheating by the large US technology firms. Their defence of Facebook is a key motivator.

Wall Street can't find any direction today, and is little-changed from yesterday's close. That is tamer than the +0.5% gains recorded in Europe overnight which were on top of the prior day's very strong rise. Yesterday in Shanghai, they closed up only marginally while Hong Kong rose +0.5%. Tokyo gave up -0.5% after the spectacular rise the day before. And speaking of spectacular rises, the NZX50 jumped a full +3.5% yesterday. The ASX200 gained +0.8%.

The latest compilation of Covid-19 data is here. The global tally is now 8,261,300 which is up +177,000 in a day and a rising pace. Global deaths now exceed 445,000. Beijing city is reacting as though they have a full-blown emergency on their hands. And China has banned imports of fresh salmon, a move sure to hurt some New Zealand export trade. (Evidence is non-existent however.)

Just on 26% of all cases globally are in the US, which is up +25,300 since this time yesterday to 2,148,400. Record high daily infections are now occurring in Texas, Florida, Arizona and California (ditto Oklahoma where a certain President is pushing ahead with a campaign rally). US deaths now exceed 117,300.

In Australia, there have been 7370 cases (+23 since yesterday), 102 deaths (unchanged) and a recovery rate of just over 93% (unchanged). 16 people are in hospital there (-1) with 3 in ICU (unchanged). There are now 398 active cases in Australia (+9).

The UST 10yr yield is unchanged at 0.74%. Their 2-10 curve is holding at +54 bps. Their 1-5 curve is also holding at +16 bps, while their 3m-10yr curve is unchanged at +61 bps. The Aussie Govt 10yr yield is little-changed at 0.93%. The China Govt 10yr is rising however, up another +5 bps at 2.90%. And the NZ Govt 10 yr yield is also little-changed at 0.86%.

The gold price is little-changed today, down -US$1 to US$1,727/oz.

Oil prices are just marginally softer today, slipping to just over US$38/bbl in the US. The Brent price is just under US$41/bbl. At these higher price levels, US shale producers are expected to restore roughly a quarter of what they shut recently by the end of June.

The Kiwi dollar is a little firmer this morning at 64.8 USc. On the cross rates we are little-changed at 93.7 AUc. Against the euro we almost +½c higher at 57.6 euro cents. That means our TWI-5 is up to 69.6 and similar to where it was this time last week.

The bitcoin price is still in its quiet phase at US$9,415 today. The bitcoin rate is charted in the exchange rate set below.

The easiest place to stay up with event risk today is by following our Economic Calendar here ».

Our currency charts are here.

We welcome your comments below. If you are not already registered, please register to comment

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

140 Comments

by murray86 | 18th Jun 20, 7:36am 1592422566

"American homeowners are moving markets, moving in greater numbers to refinance their mortgages, aiming for lower risk and longer commitments from lenders. And they are doing it at lower interest rates." Interesting. those banks under stress are securing the loan portfolios. This move allows mortgage holders to gain some breathing space before they go into default, and it also increases the value of those loans if the portfolio is to be sold to save the bank.

Do we see NZ banks making similar moves?

by Mike1 | 18th Jun 20, 10:41am 1592433703

Hi Murray the guy writing this article has zero clue as to the basics of the US mortgage market. The article he quotes says nothing about moving to "longer commitments from lenders" and this is not a normal behavior at all in the US. You refi one 30 fixed to a different 30 year fixed.

"The Banks" themselves rarely hold loans they are usually securitized. Banks typically originate to sell in the US. It is very unlikely people getting refis are in a tough spot currently: lending has tightened dramatically it is going to be people with currently secure incomes and good credit that will have a chance of getting a refi.

The US market is completely different unless you get the mechanics it is hard to understand motivations.

by murray86 | 18th Jun 20, 10:52am 1592434347

Ta Mike. So you're suggesting this will be about the 'safe loans' taking advantage of lower, longer term interest rates? If that is the case then won't that be costing the banks money (and going against past behaviour)? It genuinely looks like people who might be marginal but doubt that will last and are looking at some way to protect themselves if their situation gets worse. Banks negotiating for a favourable outcome allows them to keep an asset that is actually worth something, against having to foreclose on a security that may be depreciating away from the original valuation, possibly at an accelerating rate.

by Mike1 | 18th Jun 20, 11:26am 1592436413

"So you're suggesting this will be about the 'safe loans' taking advantage of lower, longer term interest rates?" Yes.

"If that is the case then won't that be costing the banks money (and going against past behaviour)?" The question makes sense from a NZ perspective and doesn't from a US one. The way it typically works there:

- You visit a mortgage broker or mortgage bank. This might be independent or it might look, to the consumer, exactly like walking into a bank branch here.
- Mortgage broker: does data collection like income, credit, down payment. Forwards info to mortgage bank once collected.
- Mortgage bank completes underwriting and if ok funds loan.
- Loan funding is through a warehouse line of credit. In English that means the mortgage bank does not have the money to fund loans and is borrowing from someone upstream from them in the financial world.
- Once loan is completed, and usually seasoned (a payment or two has been made), the loan is sold into a security pool (a group of usually similar types of mortgages based on credit profile, down payment etc).
- Mortgage banks are not deposit banks. Even if they are housed in the same building and the consumer has no idea they are different entities. There is no such thing as just a "bank" in the US a bank can have very different legal requirements and be very different things.

Believe it or not this is actually a simplified description of how things work! The US market is vast and has many categories and moving parts we don't see here at all.

To answer your question: "If that is the case then won't that be costing the banks money". No. The bank that originated the loan typically has no connection with the loan after it gets sold. There are cases where banks are requires to retain a small percentage of each loan for regulatory reasons but going down that rabbit hole would take days to cover.

by Foxglove. | 18th Jun 20, 8:09am 1592424598

CV19 has come to stay. Global daily infections steadily rising. The USA rises to 1.2 mill active cases. The situation in Beijing confirms relapse lurks regardless of containment. So then the answer to the problem as far of snafu, can only be if and when a viable vaccine is produced and in that regard, if is still the bigger word. Reminds me of the literature and novels set in the nineteenth century when consumption was the common dirty deed doer.

by FCM | 18th Jun 20, 7:51am 1592423491

Afraid you are right. Question is how long does NZ go down this road....Unemployment will easily reach 20% if we have full borders shut until there is a vaccine. Based on last few days I expect them to be shut at least till xmas now...

by Tom Joad | 18th Jun 20, 8:16am 1592424969

So what's the alternative?

In comparison to the rest of the world we're in a sweet spot. A functioning domestic economy and the chance to go to the footie! Germany has just banned all large events until the end of October and they are the leader in Europe when it comes to handling the pandemic.

Sit tight for the moment and carefully monitor how it goes elsewhere would be my recommendation.

by Masher | 18th Jun 20, 8:51am 1592427099

When the wage subsidy and mortgage holidays end theres many places id rather be than NZ.

Given the small NZ economy youre damned if you do open up the borders, and damned if you dont.

by frazz | 18th Jun 20, 9:34am 1592429689

Name a place you would rather be than Masher?

by Masher | 18th Jun 20, 9:37am 1592429847

Australia

by CourtJester | 18th Jun 20, 10:38am 1592433496

*laughs in Chinese*

by youngdumbandbroke | 18th Jun 20, 8:37am 1592426236

"Sit tight for the moment and carefully monitor how it goes elsewhere would be my recommendation."

Kiwis were under the impression this was already happening....

by rastus1 | 18th Jun 20, 9:10am 1592428245

This highlights what the Swedish scientist have always questioned. That being, if you go lockdown, how do you come out of it? Their approach being this virus is globally widespread and will arrive sooner or later.

This virus is only beginning, not at the end like most kiwis seem to think.

But things are different here of course.

by Independent_Observer | 18th Jun 20, 9:26am 1592429176

Yip I found it bizarre how our kiwi ego came out again at the end of lockdown congratulating each other about how clever we are compared to the rest of the world (we have a weird passive aggressive ego thing going on in NZ in anyone hadn't noticed...). But this is just starting out. Who knows how long its going to take to have arrangements in place for life to go back to some form of normality, if at all. When will the borders open - who knows....next year sometime perhaps, or not? If we don't have a vaccine and COVID is still around, how do we manage introducing our population to it without it spiking to a level that our health system can't handle? We're not much better off than we were prior to lockdown in some respects. The threat is still out there, and now given the 2 new carriers, potentially spreading around NZ right now.

by GenerationY | 18th Jun 20, 9:58am 1592431139

"how do we manage introducing our population to it without it spiking to a level that our health system can't handle?"
--> One point that people often forget is that every month the medical systems ability to cope with COVID improves. This is because (1) Techniques for dealing with severe cases are improved, (2) Existing mMedications that reduce the affects of covid19 are found, and (3) The government is investing is investing in more capacity in the health system.

We may make a decision to introduce covid to NZ in the future depending on the development of possible treatment methods and / or a vaccine. We shall see.

by Independent_Observer | 18th Jun 20, 10:41am 1592433667

Yes good points. That will all take time - months (or years).

by Foyle | 18th Jun 20, 11:13am 1592435639

Under 50's had only 1 in 2000 IFR (chance of death if infected), and dexamethasone has now reduced that to 1 in 3000. Ie about 3 months worth of normal-life risk of death. That means NZ could achieve herd immunity with less than 1000 deaths - if we instituted a careful program of only infecting lowest risk 60% of our population. Likely that taking hydroxychloroquine before deliberate infection and convalescent plasma therapy for severe cases can reduce that even further (many studies ongoing showing positive results), into the low 100's for herd immunity.

by Fishoutofwater | 18th Jun 20, 12:13pm 1592439206

OK. Good. But for how long will said immunity last?

by Lapun | 18th Jun 20, 2:09pm 1592446193

Ability to cope improves. well expressed. We now have PE or at least know how much we have or haven't. We now lnow how to test and do so more quickly. We now can contact trace or at least do so better. We even have experts finally recommending facemasks when there is a chance of contacting Covid-19. Every month we put it off is one month nearer to getting a vaccine, if one ever arrives. Every month is nearer to the virus mutating into something less dangerous. And most important if we are concerned about deaths we have finally learned the lesson from ourselves, the UK, Italy, Spain and New York that if covid-19 might be close lets lock the entrance doors to rest homes.

by Foreign buyer | 18th Jun 20, 10:04am 1592431465

.....what ever happened to being humble?

by HeavyG | 18th Jun 20, 10:54am 1592434486

Results in low self esteem. Fake it to you make it is the way to go.

by Masher | 18th Jun 20, 11:26am 1592436409

Nail on the head. That Switzerland of the Pacific suggestion has gone to peoples heads.

by Lapun | 18th Jun 20, 2:11pm 1592446276

Do we make cuckoo clocks or are we just cuckoo?

by printer8 | 18th Jun 20, 3:02pm 1592449322

FCM
Borders “shut at least till Xmas now . . “
Please clarify which Xmas are you talking about. :)
This could be just like WW1 with the troops home by Christmas.

by Masher | 18th Jun 20, 7:57am 1592423869

Then theres the global sand shortage and disrupted supply chain to manufacture the glass to hold the vaccine.

Weird to think that as time progresses human conflict will be over water and sand. Who would of thought?

by Foxglove. | 18th Jun 20, 8:03am 1592424192

Time to beam in such as Milo Minderbinder then?

by leila | 18th Jun 20, 8:31am 1592425904

'Would HAVE thought' .. jfc

by Henry_Tull | 18th Jun 20, 8:05am 1592424333

Looks like the PM & her dept missed a trick, in that going to military to look at the quarantine mess.

Last night msm found more mess, gang funeral runners, MoH running quarantine birthday parties, MoH turning up to funerals unwelcome after Funeral director says stay away.

Thinking about it, there is Health Minister, Clark Police Minister Nash and Immigration Minister Lees-Galloway What's missing?

PM should have put in her trusted deputy, Kelvin Davis, because they are using hotels now, and that's what's missing. The situation needs a dose of Kelvin Davis doing it magic

by Nzdan | 18th Jun 20, 8:07am 1592424459

How many of these Ministry of Health employees were recruited under National?

by Masher | 18th Jun 20, 8:13am 1592424836

Is that out of general curiousity or some kind of counter argument?

by redcows1 | 18th Jun 20, 8:15am 1592424937

Judging by a) their zeal in trying to ruin the government's good name and b) their incompetence, id suggest they came from National.

by Rosenstein | 18th Jun 20, 8:36am 1592426207

Must be Russia

by Foxglove. | 18th Jun 20, 9:56am 1592430982

Think it has now been revealed to the public in general, the incompetence of and the resultant problems, caused by administrative mis-management by the MOH, to medical staff and associates, at the coal face throughout NZ. For instance overfunding blowout of their headquarters in Wellington about $35 mill and severe underfunding and impractical short cuts to the new wing of the Christchurch central hospital. And now the latest report recommends consolidation of more power in Wellington and less representation in the communities. Go figure!

by Foxglove. | 18th Jun 20, 8:16am 1592424963

Oh we are repeatedly assured by the Public Service executive, or whatever, that they are staunchly non political (WP don’t agree with that.) Under the banner “Omnes Auctoritates Nihil Responsabilitas” The Brown Cardigan Brigade goes forth.

by Becnz | 18th Jun 20, 8:24am 1592425461

Labour failed to execute simple promises i.e Kiwibuild so they have no chance of getting us through this and even National look just as bad at moment buy maybe they will start to get traction before election and give us some hope.
Buy hey as long as world media loves Jacinda and she is selling plenty of books everything is great wonder when if she is writing a second book as we speak.

by Logicthinker | 18th Jun 20, 9:08am 1592428133

In regards to Kiwibuild, Don Brash got it right when he said Twyford was doing a great job and the real problem was the land blockers wouldn't release their land. Duncan was reeling on the AM show when Don put him on the correct page. It was obviously some time ago.
What is happening in China in regards to the pandemic. Are they playing around in labs again or have they just camouflage their initial outbreak, completely. If they have put a shutdown on NZ Salmon what will we see next, our dairy products ? If so, that could seriously damage our economy or will the white knight, Boris Johnson, come to our rescue.

by Nzdan | 18th Jun 20, 9:25am 1592429127

Kiwibuild was a good idea, just executed extremely poorly and missing one key precursor. How can you build 100,000 "affordable entry level homes" when all the available builders are employed and busy? It should have been Trade Apprentice Scheme that morphs into Kiwibuild.

This is a good start.....
https://www.rnz.co.nz/news/national/419175/government-unveils-380m-subs…

by AKLCrusader | 18th Jun 20, 11:18am 1592435881

That was pointed out to the Labour Party when they proposed the policy. It was understood by those with experience - they felt they knew better. We were just the unbelievers, apparently all it takes is for the government to direct people to do it in their way, because telling people to do things always works doesn't it?

by Foyle | 18th Jun 20, 11:20am 1592436015

Who could ever have guessed* that mouthing off about stuff during election campaigns is easy, but making that stuff happen in govt is hard.
*Everyone who has worked on delivering big projects, ever. eg no one in Labour caucus.

by Logicthinker | 18th Jun 20, 4:01pm 1592452871

There was a problem with labour being available whether it was builders or apprentices as they all buggered off after the GFC, as Chris Hopkins stated in your article. Nick Smith should have retained this talent but with his government doing Nothing for Nine Years they all buggred off to, primarily, Australia. That is why Smith had to go to Key to arrange accommodation for these families and they are still there in the motels. Now Labour has the task of building up this specific work component again. The overriding factor is still land availability.

by GV 27 | 18th Jun 20, 8:25am 1592425526

The current administration were happy to take credit for lockdown being a success when it suited. Can't have this one both ways, sunshine.

by Nzdan | 18th Jun 20, 9:21am 1592428864

The lockdown was a success. Coming out of lockdown was what has ultimately brought us new cases. Something a lot of people lobbying hard for. Maybe Labour caved in under these demands and now they have the same bunch of hindsight heroes on the sidelines making a whole lot of noise again? I reckon we could have instead come out of Lockdown in 6 months time and still seen new cases. What we haven't seen is our healthcare system overburdened with mild covid cases, putting at risk people with far more life threatening illnesses not receiving the treatment they deserve.

People just need to try look past their partisan views for a moment and take a inhale some reality.

by Henry_Tull | 18th Jun 20, 10:21am 1592432495

Are you sure?

The week of 9th March, people were petitioning to close, quarantine the border. - remember the shooters memorial.

Remember the flak Bridges got for suggesting, it's the border....

The switch to full lock down was Dr Baker putting in much work to move to elimination. The Friday dump of papers showed no cost benefit calculation was made on elimination.

Here is Dr Baker claiming responsibility.
https://youtu.be/vl9NmN1O-Po

by Foyle | 18th Jun 20, 11:23am 1592436226

Lax border quarantining was what has ultimately brought us new cases, with 3 months to institute reliable processes and endless resources to do so that failure is just govt ineptitude and nothing else. NZ can not stay locked down in perpetuity.

by Plutocracy | 18th Jun 20, 12:57pm 1592441845

What are these 'endless resources' you speak of?

by Foyle | 18th Jun 20, 2:44pm 1592448268

Have you not noticed govt plans to borrow 100+ billions on top of the 10's of billions they've already borrowed? Or that govt employs 400k people?
Do you think a bullet proof quarantining effort would have cost even $1 billion? (accommodating 10's of 1000s of travellers for a few months) remembering that the govt can pass any law they want to get things done quickly. Imagine how many billions of lock-down costs a proper quarantine system, instituted when it was needed in early March would have saved. Yes they have endless resources, but lack intelligence and will.

by Henry_Tull | 18th Jun 20, 2:45pm 1592448348

This $55 million was tipped in 20th April -

Cabinet today approved up to a $55 million investment, he says.

https://www.sunlive.co.nz/news/240300-55m-investment-contact-tracing.ht…

The Government has announced a major investment in the country’s contact tracing system to ensure they have a “gold standard response” to any future surge of COVID-19 cases.

Health Minister Dr David Clark says contact tracing is a key line of defence in the battle against COVID-19.

“It is vital to identifying the source of any cases, containing them and preventing further spread.

by Kezza R | 18th Jun 20, 8:50am 1592427026

It can't have been Natuonal that recruited them, the pro Labour bunch on here say that all National did was encourage housing.

by Plutocracy | 18th Jun 20, 12:59pm 1592441952

National did some other great things like oversaw the Christchurch rebuild, the flag referendum, asset sales, and UFB.

by Ex Expat | 18th Jun 20, 9:22am 1592428934

Probably a large cohort of Muldoon era recruits still in there. It's hard to release the grip on the public teat.

by Henry_Tull | 18th Jun 20, 9:30am 1592429424

ExE. Are you Shaw? That was 45 to 36 years ago.

Sir Robert David Muldoon GCMG CH PC (/mʌlˈduːn/; 25 September 1921 – 5 August 1992) was a New Zealand politician who served as the 31st Prime Minister of New Zealand, from 1975 to 1984, while Leader of the National Party.

And your folk would needed to survive Rogernomics

by Rhumline | 18th Jun 20, 10:20am 1592432406

Showing your age eh? I thought the last members of the Sunday Club slipped away a decade ago?

by Henry_Tull | 18th Jun 20, 9:24am 1592429064

Nzdan, difficult to see how a witch hunt is going to help you, because it looks a mess top to bottom.

Mind you if it is to be a Witch hunt, then Kelvin is the man to do it, what would the PM & her dept have to worry about.

by Nzdan | 18th Jun 20, 9:32am 1592429535

Not a witch hunt. It was just a lame attempt at poking holes in people's partisan biases. It's hilarious, no matter which direction the Government goes in it's "Blue Good, Red Bad, Ugg Ugg". You don't have to be a fan of Labour, I'm not, but I also don't let my political compass or biases cloud my judgement.

by Kezza R | 18th Jun 20, 9:57am 1592431041

Lol, it worked well.
There are a large amount of people out there who are blind to anything negitive their party is doing. They follow blindly instead of making informed decisions.

by Nzdan | 18th Jun 20, 10:01am 1592431272

Like $570,000 on a children's playground is deemed as wasteful (it probably is?) but $26 million spent on a flag referendum (with nothing tangible to show for it) to address an individual's insecurities is good value?

by Henry_Tull | 18th Jun 20, 10:25am 1592432705

Terrible comparison,
unless you are contrasting that National completed the flag referendum project start to finish, without David Clark type performance, needing the military... //

by Nzdan | 18th Jun 20, 2:26pm 1592447200

How's the RMA Reforms looking? Didn't National promise to address key aspects of it back in 2008? 11 years later they're still talking about it?

https://www.stuff.co.nz/national/politics/118223167/national-promises-t…

by Foyle | 18th Jun 20, 2:46pm 1592448403

National attempted to reform but were prevented by their coalition Maori party partners, as I am sure you are aware.

by Nzdan | 18th Jun 20, 4:10pm 1592453454

How is that any excuse? They made a promise.

by Henry_Tull | 18th Jun 20, 2:52pm 1592448742

Perfect.
RMA reform, and a child's slide.

Perfect, another terrible comparison,
unless you are comparing to contrast aspirational vision.

by Nzdan | 18th Jun 20, 4:10pm 1592453409

At least the child's slide was finished (unlike Kiwibuild), and will no doubt receive plenty of use going forward even if it involves drunk Uni students urinating on it at 3 in the morning. All for 1/45th the price of the flag referendum which might I add achieved diddly squat.

by Foyle | 18th Jun 20, 11:29am 1592436588

When we examine the prolifigate waste of coalition subsidising anything their team takes a fancy to - PGF, pretty horses, money pi**ed away on endless wasteful cultural and virtue signalling excess (all the ludicrous subsidies Greens want to chuck at their hobby horses), the (in my opinion wasteful) flag referendum would barely amount to a rounding error.

by frazz | 18th Jun 20, 12:42pm 1592440930

It's a very nice playground and I saw kids on it last Saturday. None of them were waving flags however.

by Plutocracy | 18th Jun 20, 1:07pm 1592442444

Never forget the $1,200,000,000 landlord handout (accommodation supplement). Until I see them rallying against this they're hypocrites.

by Henry_Tull | 18th Jun 20, 3:58pm 1592452705

What witch hunt.
This witch hunt!

https://i.stuff.co.nz/national/politics/121874669/covid19-border-botch-…

Covid-19 border botch not a 'witch hunt', Prime Minister Jacinda Ardern says

https://youtu.be/X2xlQaimsGg
This may not end well.

by scarfie | 18th Jun 20, 8:23am 1592425438

A vaccine won't really help as they target the immune system at the same level as the secondary stage of the virus. When it attacks the lungs. Those getting the secondary effects are those with malfunctioning at that level due to pre existing morbidity factors (lifestyle related disease). They are beyond the help of a vaccine.

Vaccines don't work at the level of those that are asymptomatic, so they won't slow the transmission.

Junk science & a false hope.

by HeavyG | 18th Jun 20, 9:06am 1592428013

Link to the science/analysis please.

by scarfie | 18th Jun 20, 12:52pm 1592441566

"A decrease in adaptive responses means that cells that create and hold memories of pathogens die off without dividing. This limits our body’s ability to respond to new infections like this novel coronavirus. This also limits our ability to respond to vaccine as we age."
https://www.buckinstitute.org/blog/covid-19-and-the-aging-immune-system/

Best solution is to get off your backside and do some exercise, get outside and get some vitamin D, and convert to an anti-aging diet. This is all well known science, I grew up with it.
https://www.drmichaelcolgan.com/blog

by scarfie | 18th Jun 20, 1:41pm 1592444488

Something I missed in the first reading of that link is that the people we are saving are the ones in which immunity won't last. Looks to be the case anyway, so they'll remain vulnerable to catch it and spread it again. They are also the vector for any new virus.

by rastus1 | 18th Jun 20, 9:14am 1592428499

I also ready (sorry lost the link) that vaccine required for this DNA type virus will need to be stored at below freezing levels ((unlike most at fridge/chill bin). Let that sink in.

by Pragmatist | 18th Jun 20, 9:33am 1592429638

sounds like pure speculation.. until somebody comes up with a vaccine we wont know what the storage requirements are.

by murray86 | 18th Jun 20, 9:29am 1592429353

Had a chap I know say the only thing left to happen this year of for the aliens to arrive. Told him they're already here. We call them Australians! (A'lians). He said he was struggling to disagree.

by Foxglove. | 18th Jun 20, 9:57am 1592431052

Been a hell of a first twenty years of the century hasn’t it. 9/11, 2008 GFC now CV19 & for Canterbury/Christchurch, you can throw in EQs, wild fire, terrorist.

by NevilleC | 18th Jun 20, 8:09pm 1592467782

You have missed World War. Maybe the Chinese/Indians will oblige.

by Masher | 18th Jun 20, 8:12am 1592424755

Well there you have it folks. All for a mongrel mob tangi.

The family needs to be charged.

by Andrewj | 18th Jun 20, 8:41am 1592426499

China has start to make lobster meat, onto a winner
https://www.scmp.com/lifestyle/health-wellness/article/3089259/chinese-…

The bottom
https://wolfstreet.com/2020/06/17/this-better-be-the-bottom-for-the-goo…

by Independent_Observer | 18th Jun 20, 8:47am 1592426823

The "perfect storm of stupid" theory

Basically, Americans are super-bored. They're at home. Sports are canceled. The kids are screaming. The casinos are closed. And around 800,000 additional people have decided to plop down money on the biggest roulette table of them all: the stock market. Bloomberg columnist Matt Levine calls it "the boredom markets hypothesis." Business Insider columnist Linette Lopez calls it the "perfect storm of stupid." Shiller didn't shoot this theory down. "This is just speculation," Shiller says, "but it seems like people want to do something."

https://www.npr.org/sections/money/2020/06/16/877410547/what-is-the-sto…

by Masher | 18th Jun 20, 8:57am 1592427470

Thats true. With no sport betting, and no casinos most forms of punting at the moment is in the markets.

Maybe Goldman Sachs might offer 7 leg multis on something their trading department has shorted?

by youngdumbandbroke | 18th Jun 20, 9:34am 1592429662

I thought trading was sport betting??

by Kezza R | 18th Jun 20, 9:49am 1592430589

They had the ingredients in spades beforehand, all they needed to do was add spare time.

by Mike1 | 18th Jun 20, 10:50am 1592434255

Kezza the average Kiwi is at least as dumb as the average American. I've spent a lot of time in both countries the NZ certainty that they are smarter than Americans is very misplaced.

by Foxglove. | 18th Jun 20, 11:50am 1592437803

Agreed no difference in intelligence levels. Would say though from my experience of running a company over there that NZrs work at a greater pace and application. Spent a bit of time observing and thinking about that and concluded part of it might be the long hours. Like Saturday mornings are often in the week, two weeks annual vacation, 5 or 6 statutory days (not one day off at Easter) all that attendance tends to dull and protract working into a slower paced activity. Also add that the Americans mostly go about their work and interaction with a great deal more tolerance and civility than in NZ.

by Kezza R | 18th Jun 20, 11:56am 1592438176

Yes and no, I've met a hell of a lot of young US soldiers and man they didnt know much. 21 and going into their second marriage with a chick they knew for three weeks, 6 months before on their last trip back State side. Kiwi's are easerly led and a subservient bunch that fully believe that NZ is a bigger player than it is but what NZ dosen't have is a population of 300 million plus that is the largest consumer of goods in the world which effects the global economy. Our stupidity is a speck of dust and irrelevant on the global scale.

by Mike1 | 18th Jun 20, 1:10pm 1592442654

There are definitely vast numbers of dumb Americans. Also very true here. NZ is definitely delusional that anyone cares the country exists outside of being a tourist destination. Honestly I'm surprised at the tiny reaction of NZ beating Covid (mostly at least) outside our borders. Its impressive you think the rest of the world would care more.

by Kezza R | 18th Jun 20, 1:40pm 1592444448

By pointing out NZ's success, they highlight their own failure. That's not going to happen.

by Foxglove. | 18th Jun 20, 2:04pm 1592445869

Soldiers will fill the ranks from dunces to academics. whatever the case may be, in terms of discipline and reaction they are trained more to obey than to think. so it comes down to the capability of the officers in command, but more important than that, the NCOs. My father was a professional soldier and he often referred to the old adage that you could always tell the capability of one of His Majesty’s Ships simply by the calibre of the petty officers mess.

by frazz | 18th Jun 20, 12:43pm 1592441031

At least we can find USA on a map.

by Mike1 | 18th Jun 20, 1:06pm 1592442389

frazz if your self image is that you are smarter than every American you are welcome to your view. I have yet to meet a NZer that is not staggeringly ignorant about almost every feature of US life. I was when I first went there I believed all the myths. I genuinely believed poor Americans died on the hospital steps because they didn't have a health care card in their pocket.

by RickStrauss | 18th Jun 20, 1:11pm 1592442693

That's because it's on the maps in the first place.

by AKLCrusader | 18th Jun 20, 11:29am 1592436596

If you can borrow money at 0% interest and dump it in the stock market where it grows really fast, and you bank all the profits, who wouldn't do that? This was one of the problems in the '87 crash, people got carried away, leveraged to invest in shares, and lost their house on the margin call.

I sat on a Jury where a person tricked the broker into purchasing shares for him, to margin trade. But he bought the day before the crash. He never had the money to buy the shares. Silly broker, fraudulent client.

It resonates with me now, I think that the musical chairs will continue as long as interest rates are down low, then the collapse........I've moved to more conservative investments, but who really knows?

by printer8 | 18th Jun 20, 8:51am 1592427090

Trump's rally in Tulsa in a couple of days. Officials estimate about 100,000 people will descend on their city for the rally. Tulsa has just recorded its highest number of new cases. So far one in 150 Americans have had the virus.
All looks fine.

by Kezza R | 18th Jun 20, 9:53am 1592430806

And every anti Trump activist with CV19 is heading there to prove Trump screwed up by holding this.

by RickStrauss | 18th Jun 20, 1:11pm 1592442718

This the new talkback talking point?

by Kezza R | 18th Jun 20, 3:34pm 1592451293

I'm not surprised. The Democrats will stop at nothing to get rid of Trump. They haven't got a plan of what to do after that or someone capable to run it for them but they dont get that yet.

by Independent_Observer | 18th Jun 20, 9:05am 1592427905

DEBT

Australian has a private debt bomb just waiting to cause a problem.

Household debt is already six times bigger than Government debt even with the coronavirus spending.

Australia's private debt levels, mostly in mortgages but also credit cards and car loans, have hit an eye-watering 190 per cent of GDP.

For those who lose their full-time jobs and find themselves re-employed as a casual with just a couple of shifts a week, or who take a pay cut to keep their jobs, the bills can overwhelm them.

There has been a brief reprieve during the coronavirus emergency with energy suppliers and landlords exercising compassion and setting in place repayment plans to get people over the hump, this largesse will soon end.

A recession can drag on for more than a year.

If people are unable to make their car repayments or house repayments over a long period, they will lose their cars and homes.

https://www.dailymail.co.uk/news/article-8383895/From-cost-living-prope…

by DoTheMath | 18th Jun 20, 9:15am 1592428505

The debt bomb will be cured by asset price inflation. If everyone can subsidise assets enough that will fix the debt ratios and ensure wealth and prosperity for all with assets, which is the key to financial stability and reelection.

by bw | 18th Jun 20, 9:22am 1592428925

I sense your sarcasm because in all likelihood, as you probably realise, exactly the opposite is about to descend on us.
The days when 90% Debt/Household, or even National, Income was considered dangerous are well behind us. 190%? Not a problem! And the Days of Yore, when 30% was 'the norm' have been dismissed to the garbage bin of sensibility.

by Independent_Observer | 18th Jun 20, 9:30am 1592429449

Yes and for asset prices to rise, that ratio needs to keep climbing. But how does it climb...well interest rates need to go lower. But they're already at zero. If interest rates can't fall further, then wages need to increase at the rate of price appreciation, but that doesn't seem likely nor possible. How can we raise wages if companies are defaulting on debt and releasing employees. And if we hit stagflation, which many economists think we will, then we have rising consumption costs - what is left to pay more mortgage debt?

by ham n eggs | 18th Jun 20, 10:22am 1592432526

"what is left to pay more mortgage debt?.."

Government subsidies & handouts in all forms
thats the only card left

by RickStrauss | 18th Jun 20, 1:13pm 1592442781

Investors will not be happy if everyone receives subsidised housing wealth not just them.

by Houseworks | 18th Jun 20, 9:17am 1592428644

Forget Auckland rental listings, they are starting to decline after a peak earlier in the month. Look at Dunedin, rental listings for all homes has exploded since early May... due to dramatic loss of students I guess. Also note that Qtn rentals have not increased as predicted but have actually declined in the last month especially 2 bedroom rentals are down by one-fifth

by Foxglove. | 18th Jun 20, 9:21am 1592428894

What’s your take HW, as a general rule of thumb, as to the percentage of renters that might be highly leveraged, ie dependent on the rent coming in, covering the loan repayments?

by Houseworks | 18th Jun 20, 9:34am 1592429648

No eye dear exactly how about you??

by bw | 18th Jun 20, 9:25am 1592429108

Probably a bit dated now - it's 4 days old.

Rents at some Queenstown rental properties have been slashed by half as landlords try to pay bills and entice tenants.

https://www.stuff.co.nz/life-style/homed/real-estate/121771292/queensto…

by Houseworks | 18th Jun 20, 9:33am 1592429633

Them the stats bw. If you like I can keep a closer eye on it and let you know what I find out. In the article I like the statement from the leveraged and desperate landlord "I have dropped.. by 50 per cent, so I am getting some bookings coming in there. It's a year of no profit, but the mortgages are covered."
Lol. Not exactly struggling.

by Pragmatist | 18th Jun 20, 9:39am 1592429945

A (presumably) formerly profitable business that's now not making any profit is not struggling? okay.....

by Houseworks | 18th Jun 20, 10:23am 1592432602

Spin doctor pragmatist, the guy said he is able to cover his mortgage which for most is far and away the biggest expense. If he is able to cover that and break even from a tax point of view (remember that mortgage payments also include principal as well as interest) then no he is not struggling. Not living the life of luxury either. Enjoy

by bw | 18th Jun 20, 9:49am 1592430553

As one who dropped the rent on our property in QT from $450 pw to $50 pw ( when the filming of 'White Fang' ended and the crews left town) just to get it secured to save it from being stripped (as neighbouring empties had been) I know how he feels!
Queenstown is reliant on a very narrow field of income. When it stops - it really stops. The question this time is "Will it ever gets going again?" I guess we are about to find out, as is the whole country.

by Independent_Observer | 18th Jun 20, 9:49am 1592430566

Yes I think its possible that we don't have international tourism back until mid-late 2021 or even 2022. How can we open the borders until there is a vaccine or a safe way of introducing herd immunity? Either process is going to take time. Heck it could be 5 years before international tourists are back if no vaccine and it takes years to get safe herd immunity. Otherwise it will be borders closed and living in our little bubble.

by alittle | 18th Jun 20, 10:26am 1592432784

'Tourism is New Zealand's biggest export industry, contributing 20.4% of total exports. Tourism generates a direct annual contribution to GDP of $16.2 billion, or 5.8%, and a further indirect contribution of $11.2 billion, another 4% of New Zealand's total GDP'

229,566 people were directly employed in tourism (8.4 percent of the total number of people employed in New Zealand) and if take indirect employment / business will be much higher.

So can imagine the damage to econony which will happen just by one industry and not to forget, International student, immigration.....

by Independent_Observer | 18th Jun 20, 10:33am 1592433230

Yes so that combined indirect and direct is around 10% of GDP.

If we lose that for a couple of years or at least a signficant part of it, which I think we could, its will have a noticeable impact on all parts of society.

by frazz | 18th Jun 20, 9:48am 1592430537

Rates ..insurance..maintenance...kick it down the road..sounds like a loss for the year to me.

by Audaxes | 18th Jun 20, 10:40am 1592433602

It’s Never What They Say, Pay Attention To How They Behave

Ironically, it was Buffett who in 2011 had been among the more vocal bond bears. Not realizing the implications of what he himself had done with his business, and misunderstanding what the Fed hadn’t actually accomplished with their monkey business, the Oracle of Omaha strayed too far out his equity comfort zone.

"I would recommend against buying long-term fixed-dollar investments. If you ask me if the U.S. dollar is going to hold its purchasing power fully at the level of 2011, 5 years, 10 years or 20 years from now, I would tell you it will not".

Nearly ten years after his prediction, the dollar’s not dead instead zoomed into a much higher part of the stratosphere while record high prices for all those safety instruments Warren still loves to use. All these things are connected; a high level of liquidity preferences, the low level even lack of economic growth to provide opportunity, and therefore the seemingly unstoppable rise of the dollar and Treasuries (prices). But you can’t see it if you think the Fed is a(n effective) central bank.

Whopper NZ Government bond of $7 billion issued after $14 billion worth of bids, annual Government Bond Programme size increased by $4 billion to $29 billion

by Mike1 | 18th Jun 20, 10:56am 1592434585

There are an incredible number of off market listings in Queenstown. None of the properties I have been shown there are on TradeMe. Also close to the entire market there is currently fake: your taxes are paying the rent. The majority of these places are full of foreign workers and the government is directly paying the landlords. They said they will keep doing this until September.

by Houseworks | 18th Jun 20, 11:24am 1592436261

Have you ever heard the saying... The more things change the more they stay the same. That's because nothings changed with off market properties for at least the last 25 years. Have you attended many open homes there?

by Mike1 | 18th Jun 20, 11:29am 1592436577

Rentals Houseworks. You were making a statement about rentals.

by Houseworks | 18th Jun 20, 2:40pm 1592448006

Well I thought you were confused referring to 'off market listings' so I just went along with it hahaha. To me there is no need to have off market rentals

by Kezza R | 18th Jun 20, 12:00pm 1592438450

Dunedin. Houses are selling fast in the better areas. On the way home from the schools drop off one street had three houses for sale. My saved watch on TM adds another 5 houses per day.

by Houseworks | 18th Jun 20, 2:52pm 1592448749

Dunedin rental numbers have gone from 280 ish to over 550 kezza in just a few weeks while other areas are dropping.

by Kezza R | 18th Jun 20, 2:58pm 1592449097

Just spoke with the one of the best people you can yarn to that hears the real sentiment of the people, the barber. I asked what the sentiment is like out there as you talk to a lot of people. CRAP, CRAP AND MORE CRAP. basically everyone who comes into here has been effected quite badly. He has had to start diversifying into selling second hand records and CD's to try and stay afloat.
The amount of houses for sale is getting huge. Three on one street that I'm guessing are rentals judging by the location. I thought that Dinedin was going to weather this out fairly well but see it differently now.

by richard1965 | 18th Jun 20, 9:34am 1592429695

One should beware of countries that believe in : Physical war to expand territory be it land or sea, Economic War, Biological warfare and also cyber warfare.

https://m.hindustantimes.com/india-news/china-steps-up-cyberattacks-int…

Countries which does not seem to be a threat (Mostly small countries) - use money to make them dependent on them or Debt Trap.

Debt Trap Diplomacy : https://youtu.be/QgXLfDApqR0

Must Read anyone looking for so called Rock Star Economy :
https://www.trtworld.com/africa/how-china-s-debt-trap-diplomacy-works-a…

by Kezza R | 18th Jun 20, 10:06am 1592431614

From memory in the crash of 2008 we were screaming out that this is all the banking sectors fault by creating debt bubbles. The bubbles were there before the Wuflu but now somehow the banks are not at fault this time arround and they should carry on encouraging more debt.
The Fed and all the others keep on printing and no one gives a toss.
Am I the only one not getting this?

by frazz | 18th Jun 20, 10:22am 1592432576

The banks were bailed out in 2008..we never recovered just kicked the can down the road with more printing and less regulation. I think we all get it by now. By continuing to add debt and kick the can the governments and banks have prevented some of the small fires - in most cases the pain of restructuring and killing of zombie business and banks. That just leaves the future inferno in front of us growing bigger by the day.

by antonymouse | 18th Jun 20, 1:34pm 1592444079

Perhaps George Gammon explains it well in this wee clip:

The Real Reason They Want To BAN CASH!
https://youtu.be/o48-_fY58jg

Most people believe they understand why governments and banks seek a cashless society, however, most of the reasons why people think they do it, are wrong. Starting from the belief government and central banks want to generate a booming economy, to believing it’s because Uncle Sam wants to have it all together in case he needs it.

These commonly discussed reasons are quickly eliminated by the explanation of Richard Werner, Economist, and international banking expert who believes the reason they want to go cashless is so they can implement negative interest rates.

The shocking part is that the real reason behind the intention to ban cash looks more like George Orwell’s' 1984 novel than our desired progress paradise.

Unfortunately, it's far more diabolical. According to Richard Werner, a cashless society with negative interest rates is a plan to put the small banks out of business and consolidate power with the biggest banks in the world. And this isn't where the plan ends.

by Independent_Observer | 18th Jun 20, 10:20am 1592432453

This is why I'm getting to the point where I don't believe central banks are acting in the interests of future generations and current non-asset owners. Significant moral hazard in what is going on - especially Fed buying junk bond etfs. That is keeping zombie companies alive and will encourage inefficiency, incompetence...why work hard to relevant in a competitive free market, if you know you can just fail and allow the central bank to buy your bad debt?

by frazz | 18th Jun 20, 10:28am 1592432934

Agree - the Fed just seems to be propping up Wall Street and the Asset owners..

by murray86 | 18th Jun 20, 10:31am 1592433117

I agree IO. I suggest that the root cause lies with our successive Governments. Both the Treasury and RBNZ proffer advice to the Government on their policies and effects. The governments then do what they want irrespective of that advice (possibly influenced by outside forces), and the RBNZ gets left to deal with the situation that ensues, the best way it can. Consequently it is trying to prop up a system that should have, and been allowed to, collapse years ago because of Government incompetence. Add in the fact that we are at he end of a long piece of rope that is the rest of the world's economy that we must respond to/endure, all of which has its own impacts.

I suspect that most of the RBNZ/Government communication is secret or not recorded so we'll likely never really know the true scope of this. And blaming Orr is just too easy, when it really is not his fault, just the hand he is dealt, and to some extent that goes for the current Government (any Government) too.

by Independent_Observer | 18th Jun 20, 10:26am 1592432778

I agree with Dalio and think we could be at the end of this (long) debt cycle. As you are saying, the central banks think that we need more debt to rectify our debt issues. But that won't work as if you don't have the confidence that the economy will be able to generate goods and services to pay back the interest of the new debt (on top of the moutain of old debt we have), then companies, governments and households will have to start playing a game of hot potato with bad debt. And we may witness this later this year between say banks and landlords. The landlord will say its not my fault the tenant can't pay rent because the government wage subsisdy has stopped and they're unemployed, but the bank won't care. They'll tell the landlord to sell the house. But that might be happening across tens of thousands of contracts and mortgages and prices may fall. The banks may not get their money back and it the whole ponzie of debt collapses on top of itself.

by Kezza R | 18th Jun 20, 10:29am 1592432976

And the middle of the road person is stripped of their wealth and we all become slaves. Jacinda will need very long arms to hug the 99%.

by Independent_Observer | 18th Jun 20, 10:37am 1592433429

Yes this is why it pisses me off that middle class pay PAYE and savers pay RWT, so that government can give tax benefits to property speculators who generally pay minimal taxes (or for years had be negative gearing) and benefits/accommodation supplements for renters that end up back in the hands of landlords. And we now have a property bubble that if it bursts, will destroy our economy. And if it doesn't, the inequality will destroy our society.

Its just dumb, dumb, dumb! But everyone is just worrying about themselves and not seeing the big picture. Very painful to watch and be apart of.

by frazz | 18th Jun 20, 10:49am 1592434148

Finally this year Rent-lords cannot offset negative losses against their income (rather accumulate the losses). I assume lots of accountants will have lots of squealing rental clients to try an calm down. I have battened down the hatches mostly, but feel for those blindly thinking the leaders have our back this time.

by Mike1 | 18th Jun 20, 11:00am 1592434825

The government is paying the rent for the majority of properties in places like Queenstown. The migrant workers there don't seem to have any clue they will be eventually asked to move on. Every group I walk past is talking about extending their visas it would be news to them if they get denied.

by RickStrauss | 18th Jun 20, 1:14pm 1592442882

As wealth transfers go it does seem to be the most immoral. Foxes guarding the hen house, perhaps, considering the constitution of wealth portfolios of those in central government and banking over the last decades?

by Henry_Tull | 18th Jun 20, 10:29am 1592432940

Dr Ash may not be a hugger.

But he said there was fleeting physical contact, not a hug and a kiss.
"There were not hugs and kisses. There was a very fleeting arm put around the woman," Bloomfield told RNZ.
He told The AM Show this contact was fleeting enough that the women did not consider it material when first talking to the Ministry of Health about their travel south.
- who is contact tracing who!!!

https://i.stuff.co.nz/national/politics/300037261/coronavirus-ashley-bl…

by Houseworks | 18th Jun 20, 10:50am 1592434257

Turners automotive group announced NPBT inline with pre-covid guidance. Resumes dividends with 6cps final after suspending Q3 dividend. Good sign of better things.. Thank you Turners

by taimaiakka0 | 18th Jun 20, 10:54am 1592434489

Read as it may not just be Fed but many reserve banks facing the same problem :

https://www.ccn.com/federal-reserve-trying-to-talk-out-prison-created/

by Masher | 18th Jun 20, 11:34am 1592436895

The longer the party the bigger the hangover.

by Independent_Observer | 18th Jun 20, 10:56am 1592434597

Mohamed El-Erian, chief economic advisor at Allianz, says the stock market is in a "win-win" mindset as the Federal Reserve provides continued stimulus. He warns of distorted "zombie markets" and explains how some sectors will benefit while others will miss out during the economic recovery.

Beware not just of “zombie” companies but of “zombie markets” as asset prices become distorted and detached from fundamentals, warned Allianz chief economic advisor Mohamed El-Erian.

“I think we’ve got to be careful about zombie markets,” he said. “We’re not there yet, but we’re starting to get close.”

“Zombie” companies continue to operate by borrowing money, even though they are unable to pay off their debts. Record low-interest rates have contributed to a growing number of such firms over the past decade.

“They eat away at the dynamism of an economy, they misallocate resources and they eat away at productivity,” El-Erian said. “So you may be keeping them alive today, but it comes at a cost.”

El-Erian said “zombie markets” might occur when central banks like the Federal Reserve continue to prop up assets, destroying the market’s ability to allocate capital efficiently.

“Zombie markets are markets that are completely mispriced, they’re completely distorted,” El-Erian said. “Why? Because there is a policy view that you need to subsidize everything in markets for now.”

The Fed has taken extraordinary steps, including pledging to buy corporate debt and unlimited amounts of Treasurys, to keep the financial system running smoothly during the coronavirus recession. On Monday, the central bank said it would expand its purchases in the credit market to include individual corporate bonds.

The Fed’s aggressive actions have helped stocks recover from big losses earlier this year when the coronavirus pandemic started to spread across the U.S. The S&P 500 has surged nearly 40% since March 23, when the Fed first announced it would buy corporate bonds, even as parts of the economy came to a standstill and unemployment surged.

El-Erian said the Fed’s actions have created a “win-win” mentality in the stock market, as many traders expect the central bank will continue to buy assets including equities in order to prevent a financial crisis.

“The mentality of the market is if they’re willing to do high yield, they’re willing to do equities, because after all, the last thing the Fed wants is a financial crisis to make the economy worse,” he said. “The market feels very strongly that it basically is holding the Fed hostage.”

by Mike1 | 18th Jun 20, 11:04am 1592435073

It must be weird for people like El-Erian. An entire career of gate keeping who is likely to pay or not but now those skills are worthless. I do the same thing the only difference is if I don't get paid back the Fed doesn't want to buy my notes.