Here's our summary of key economic events overnight that affect New Zealand, with news bad corporate behaviour is in the news today.
But first in the US, there more evidence that American are restraining their spending. May consumer credit balances fell more than expected and taking the consecutive declines to three months. The May -5.3% drop has compounded to -30% in the past three months as wallets remain closed. This will is a core contributor to the US and worldwide recession and indicates it will be very deep and longer lasting than some analysts have assumed. While the June data is likely to show the decline hesitated, July data will almost certainly show it retreating again.
The OECD released updated corporate tax tracking data overnight and they say it shows there is a misalignment between the location where profits are reported and the location where economic activities occur. Revenues per employee tend to be higher where tax rates are zero, and in investment hubs (where the predominant business activity is “holding shares and other equity instruments”). On average, the share of related party revenues to total revenues is higher for multinationals in investment hubs. Visa and Mastercard are the icon businesses that show these traits.
A new report, which Facebook itself commissioned, says the social media network has not done enough to protect users from discrimination, falsehoods and incitement to violence. The findings come as the company gives a free-pass to the US President to post any false narrative and amplify divisive and unfounded rumours, and it will add to pressure on the company in the midst of an advertiser boycott which now is up to more than 900 major advertisers. There is little evidence however that New Zealand companies are boycotting the platform, despite one of the worst uses originating here (the Christchurch mosque shooting livestream). Basically, Facebook doesn't care. Facebook is also a company that uses the tax avoidance strategies identified by the OECD.
In Australia, regulators and bankers are colluding to sanitise bank financial results. When a customer can't pay a debt, it is impaired. If they can't pay when it is due, it is past due. But the ABA is extending the pandemic deferral program for many customers who can't pay by another four months. And APRA, in conjunction with ASIC, is actively encouraging the move, giving cover to bankers not to provision such loans. It is a twist on 'responsible lending' both regulators would prosecute if they weren't party to it. Deferring loans might be a good moneymaker, until the customer can't pay. Then the regulators will expect the shareholders to take the loss which will be much larger than it if was just recognised when it first occurred. It is amazingly irresponsible regulation - and banking. Both just recently signed up to responsible lending practices. You do wonder what the auditors will think.
Wall Street is pretty much unchanged today, up just +0.1% in early-afternoon trade. They follow European markets which were quite negative overnight, all down about -1%. Yesterday, Shanghai firmed sharply at the end of its trading day, up +1.7% to continue its heady bull run. Hong Kong up +0.6% but Tokyo was -0.8% lower. The ASX200 also had a down day, dropping -1.5% led by investors downgrading banks. Meanwhile the NZX50 Capital Index fell -0.3%.
The latest compilation of COVID-19 data is here. The global tally is 11,892,400 and that is up +244,000 since this time yesterday. Global deaths reported now exceed 545,000 (+5000).
A quarter of all reported cases globally are in the US, which is up +58,600 overnight to 3,120,500. US deaths now exceed 134,300. The number of active infections in the US is now up +22,000 to 1,613,100.
In Australia, there have been 8886 cases, another +131 since this time yesterday, and still concentrated in Melbourne which is now in a new lockdown. Their death count is unchanged at 106 and 8 people are now in ICU. Their recovery rate has slipped back further to 84%. There are now 1293 active cases in Australia (up +100 in a day).
The UST 10yr yield is marginally softer at just under 0.65%. Their 2-10 curve is unchanged at +49 bps. Their 1-5 curve is soft at +13 bps, and their 3m-10yr curve firm at +54 bps. The Aussie Govt 10yr yield is unchanged at 0.89%. The China Govt 10yr is up again, up another +3 bps at 3.12%. And the NZ Govt 10 yr yield is also unchanged at 0.98%.
The gold price is up by another +US$14 to US$1,811/oz a new nine year high and now within 5% of its all-time high.
Oil prices little-changed. They are still just over US$40.50/bbl in the US and the international price is still just under US$43.50/bbl.
And the Kiwi dollar has stayed firm at now just over 65.7 USc. On the cross rates we are unchanged at 94.2 AUc. Against the euro we hanging in at 58 euro cents. That means our TWI-5 is still at 70.3 and its highest since January.
The bitcoin price firmer overnight, up +1.4% to US$9,419. 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 ».
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