Here's our summary of key economic events over the weekend that affect New Zealand, with news pandemic risks have been replaced by climate risks in China.
But first in China, tax revenue is rising again, up +3.2% in June from the same month a year ago and ending a five month streak of declines. In May, the same data fell -10% so this is a healthy revival.
And the Chinese central bank has let its balance sheet shrink, with far fewer claims on it for monetary support. It shrank by -NZ$150 bln at June compared to the level it was at in December 2019. That is a -2% fall after growth in 2019 of +3%.
Meanwhile, Japan is making progress in getting some of its companies to shift manufacturing out of China based on rising strategic risks. 87 companies have qualified for Japanese support to make the move, and of course others are doing it on their own.
China is responding by sending 'survey ships' into Japanese waters and threatening to widen its nine-dash-line extra-territorial waters claim. This comes as the US makes a show of defending the rights of sea passage, but in fact is pulling back its support of traditional allies in the region.
Domestically, the floods in southern China are getting worse. The Three Gorges Dam is at capacity and more rain is forecast so downstream cities are being prepared for very major flooding. The emergency is spreading from the giant Yangtze River basin to the Yellow River basin. This is major event of global significance.
In Europe, they are trying to agree on a huge post-coronavirus economic recovery plan but it is tough going and they are now in an unscheduled third day of a testy summit in Brussels. Some member states (the North) say the proposed €750 bln package is too large and should come as loans, rather than the gifts/grants wanted by the South and East.
In the US, building permit levels in June, and new housing start data for the same month both came in pretty much as expected, up from the May levels but below the levels of the same month a year ago.
But consumer confidence is starting to waver and fall again, after a longer-than-expected positive run in June as pandemic lockdowns eased. But the new gravity of the situation is starting to dawn on increasing numbers of previous sceptics.
In five days the first of their pandemic support programs runs out and then increasing numbers of these programs start to expire. The US Congress now has only six weeks to come up with extensions or new support, but given Republican Senate reticence to act, the risks are growing sharply all Federal support may vanish.
The updated estimate for the American Q2-2020 economic change is coalescing at -35% from Q1-2020. But it is complicated somewhat because they are also to release revisions to all the data for the past year at the same time. The official report is due at the end of next week.
In Australia, they are struggling to figure out how to handle a resurgent pandemic. Decisions they are making there will impact New Zealand significantly and it seems likely they will decide they are just not up to achieving an 'elimination' strategy. If that is where they end up, the Trans Tasman bubble is toast. In fact, the risks of community transmission in New Zealand will rise.
And staying in Australia, the latest release of their Taxation Statistics shows that most landlords were running losing businesses with more expenses claimed than rents earned. "Negative gearing" is their tax rort game, much like tax-free capital gains are in New Zealand.
The latest compilation of COVID-19 data is here. The global tally is 14,356,000 and that is up +155,000 since this time yesterday. Global deaths reported now exceed 603,000 (+3,000).
A quarter of all reported cases globally are in the US, which is up +63,200 from this time yesterday to 3,833,300. US deaths now exceed 143,000 and a death rate of 432/mln (+3/mln). US deaths are rising, now running at nearly 1000 per day, after falling from April to June as the north east states got their initial burst under control. New deaths in Arizona, Florida, Texas and California are driving the upturn. The number of active infections in the US is now up +30,000 in a day to 1,944.200. US data may become unreliable as the White House has instructed hospitals not to send details to the official Center for Disease Control, rather to it and it will be the National Guard that controls the US tally.
In Australia, there have now been 11,802 cases reported, another +363 since this time yesterday, and still concentrated in Victoria but growing in NSW in Sydney's suburbs. Their death count is up to 122 (+6) and 29 people are now in ICU (-3). Their recovery rate has slipped back further to 70%. There are now 3,408 active cases in Australia (up +111 in a day).
The UST 10yr yield is -1 bp softer at 0.62% from where we left it last week. Their 2-10 curve is at +48 bps. Their 1-5 curve is at +13 bps, and their 3m-10yr curve at +50 bps. The Aussie Govt 10yr yield is down -1 bp to 0.88%. The China Govt 10yr is unchanged at 3.05%. And the NZ Govt 10 yr yield is holding lower at 0.90% which is a retreat of -8 bps in a week.
The gold price will start this week at US$1,810/oz which is a small net +US$12 gain over the past week.
Oil prices are a little softer again to start the week. They are now just under US$40.50/bbl in the US and the international price is just under US$43/bbl. Both levels are almost exactly where they were a week ago.
And the Kiwi dollar will start this week at just on 65.6 USc and little-changed in a week. We are also unchanged at 93.7 AUc. Against the euro we stable at 57.4 euro cents. That means our TWI-5 is now at 69.9 and broadly the level for the past two weeks ago.
The bitcoin price is unchanged at US$9,164 but is almost a -1% dip for the week. 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 ».
114 Comments
Panademic still running high but with support from QE, It seems housing market is not only active but selling at high price as is evident from data on auction result and is in all price range - Very positive :
4/89 Banks Road, Mt Wellington sold for 920000 with CV of 780000
22A Freyburg Avenue, Papatoetoe sold for 900000 with CV of 820000
51 Wordsworth Avenue sold for 685000 with CV of 550000
2/204 To Rakau Drive sold for 645000 with CV of 555000
3 Doonon close, Flat bush sold for 1080000 with CV of 990000
505 Chapel Road, Danemora sold for 1320000 with CV of 1050000
22 Walworth Avenue, Pakuranga sold for 1070000 with CV of 1000000
6 Dianne-Louise Drive sold for 1930000 with CV of 1625000
13 Karamu Sr in Re Atatu pennisula sold for 901000 with CV of 740000
5 Spore place, Henderson sold for 810000 with CV of 740000
No one can deny how strong housing market is as of now and will be interesting to see if the housing market is producing similar positive result even in October / November or......
You got up early and had this post ready to paste, correct?
A pity the same data doesn't identify the buyer and seller profiles. They wont be investors at this kind of money, unless the land is sub dividable
Agree and surprise not only with how strong housing market is but even stock market.
Government will keep printing and distributing money as keeping the bubble alive is must to avoid disaster so should expect some sort of subsidy coming soon.
we already have it in the form of an enhanced unemployment benefit, that any new unemployed will qualify for, unless their spouse earns more that 100k
You can borrow a million and pay just $500 a week in interest. You can invest a million in a term deposit and get $200 a week net of tax, or -$50 a week if you factor in inflation. That could go a long way to explaining the housing and stock markets. A utility stock with a 4% dividend looks mighty attractive right now. Speaking to two young property investors yesterday, very disillusioned with new regulations, tenancy issues, etc. Mugs’ game and as far as I’m concerned that horse has bolted, ie the glory days have, time for some hard yards. BTW, most of the property investors I know are between 35-55, def not Boomers.
Regional housing market also strong, limited listings, FHBs impatient now with 2.55% interest rates.
Yup, excellent time to take some profits off the table, if you haven't already.
Nice piece of propaganda
what about the other 300 that sold last week...
$10b of new money (wage subsidy) will do that to markets. Coming to an end in September though - that will be when the stats will get more interesting.
Would not be surprised if the subsidies are extended.
Election carrot.
The wage subsidy tries to offset the lost income for many. And one can be certain that the lost income is greater than the subsidy. So overall, the net effect is less money in circulation.
Yes, and when the subsidy drops away?
Aye, the pile of dung is fast growing. The cooling device awaits, expectantly, inevitably.
Clearly they weren't posters of Interest.co.nz!
All except 2 of those properties are located within a specific demographic area
Where the money is. It is not FHB territory. Buyers are not FHB's
Exciting week ahead of us boys & girls! Lay-offs at Warehouse and the killing of any overseas travel by means of $3000 return/arrival tax.
Happy prison island life aye.
Time they opened to the cooks then if OZ is a no go...
What does that achieve?
Economic survival for the NZ citizens of the cooks.
If im paying $3000 for self isolation surely I could do that at home and the funds could go towards a proper monitoring system to ensure compliance?
When we did have self isolation it turned out to be a disaster.
Paying for a cop/armed forces person out side your front and back door 24/7 for 14 days will cost you a lot more than $3k. Not going to happen.
We should offer tiers of isolation. Camping in a field would cost a lot less for those in financial distress.
That would be possible but they are still running arround trying to manage one system without adding to that.
Feel free to escape your "prison life" whenever you want...NZ probably better off.
Let's talk again in 12 months from now, Frazz.
Can't wait...will you still be here in Prison or hatched an escape?
I will still be an NZ tax resident for sure.
Frazz. If I'm understanding your comments correctly two weeks ago the virus was not a concern, last week it was and now it is not a concern again.
Don't now how you got to that conclusion Kezza..can you post more detail? You often get the wrong side of the comment - aka "the virus will disappear" - and you thought I was serious when I was merely quoting Trump. Sometimes its best not to comment at all.
Funny that you think I listen to what Trump says.
I don't eat yellow snow and hope it tastes like a flavoured slushy.
Nice edit Kezza
Is that $3,000 compulsory for everyone, even if you have an empty house to return to where you would self-isolate like in Level 4?
Indeed, if you have a permanent place of abode you are already paying taxes as you are still an NZ tax resident even when overseas. The $3K arrival tax is a form of double-taxation targeting overseas landlords. Gonna be interesting to see how all this holds up in court. Spoiler: it won't.
If the government want to charge you at the border - then they simply pass a law to do so? What profession are you in Guwop as you dont seem to have a grasp on NZ law?
I am just pointing out that many overseas kiwis are still NZ tax residents (i.e. with a permanent place of abode in Aotearoa) and that they are already paying tax into New Zealand.
Therefore the popular stance that 'the NZ tax payer shouldn't foot the bill for returning residents' doesn't fly.
They should be able to rely on health benefits during a global pandemic as any other NZ tax payer and therefore not be double-taxed.
User pays system?
Are they actually paying tax in NZ? A Kiwi living and working in Oz, but maintaining a home in NZ, what tax would they be paying? Or in the UK, Ireland or the US? I thought they would be paying tax in the jurisdiction they wore working in?
Ssssh some landlords think that they are owed everything at everyone elses expense.
Murray, those people are still New Zealand tax residents as they have a permanent place of abode in NZ. And therefore they should receive the same health benefits, i.e. shelter from a global pandemic, as any other tax-payer on the ground in NZ. At the very least, they should not be disadvantaged in relation to those that have remained on our islands.
Let's be kind to eachother apparently had an expiry date. Other than that NZ will be begging for any visitor in 12 months from now when the supply has run out. I wouldn't be surprised if, by that time, more kiwis have left our shores than arrived.
New Zealand's internal market is simply too small to support current public and private debt-levels. It sounds contrarian, but in a way landlords are in fact essential workers as they keep the debt-creation cycle going and this debt and availability of credit have fueled internal demand. New Zealand is a failed state without landlords but many are not ready to admit it. However the market knows no shame. You will either support quality immigration or you accept massive write-offs of debt and bankruptcy for many.
In 12 months from now, @Frazz and I will speak again. RemindMe!
Happy with the $3k fee. Better than the taxpayer funding it + There are no overseas travellers coming here so to incentivise Kiwis spending overseas wouldn't make too much sense.
Many overseas Kiwis are already paying tax when they have a Permanent Place of Abode in New Zealand. Why are you implying to double-tax overseas landlords?
It's hardly a tax - you're getting a discounted rate for a service (food + accommodation + everything that comes with). It's the individual's right to choose where they want to live however to disregard responsibilities (in this case their responsibility is ensuring the safety of us) is ridiculous. And furthermore, I'd argue in most cases the reason these people live this way is because it makes economical sense - I doubt it's not financially viable.
It is an arrival/departure tax.
Youre saying landlords should be exempt from tbe $3k charge?!?
as essential workers
Indeed Ham n Eggs, New Zealand would be a failed state without the likes of Yvil, TTP, Houseworks and The Man 2.
Show some respect people.
The Warehouse is a dinosaur and was in the s**t well before Covid. They’ve been laying off staff for some time. I was a shareholder, then took someone’s advice to physically check on what you invest in. Went in a Warehouse store, sold my shares next day. Too many other chains sell better crap at better prices. Buy once, buy right, never on price is the way to go.
The cost of tunnel vision. "Three million people have missed vital cancer screenings, tests or treatment since the start of lockdown as experts warn that deaths caused by delays in care will exceed coronavirus casualties."
https://www.thetimes.co.uk/edition/news/extra-cancer-victims-may-reach-…
405,000 deaths from Malaria in a year, 228 million cases.
This is never reported in the news?
Where's the political advantage and advertising revenue in that?
Can you tell me how many malaria deaths took place in Western world in the last year?
700,000 deaths a year from HIV/AIDS. There’s a lot of encouraging news re Covid, vaccines well along the way, new drug treatments, declining death rates.
Indeed - in fact, many accounts I've seen suggest people avoiding hospitals where they face a chance of being infected by COVID in addition to their preexisting ailments, as they're immunocompromised.
Keep an eye on the major risks hovering over the big 4 Australian banks. It could present major implications for their NZ subsidiaries if things go bad.
Good point. I suspect there will be a lot more problems there, and by association here, by year's end.
I saw this on Sydney rentals. I’m no property person but I do see often commented that NZ housing patterns, especially Auckland, follow Sydney.
https://youtu.be/dU3luSrWiI4.
I live in Northland, still plenty of houses being built, very little resale stock, but our new residents are generally ex-Auckland, made their pot o gold and retiring up here.
Used stock or whatever you call it is well down. Close friends been trying for 3 years to buy their first home (Late 30s). They just get close then a new import out prices them. It’s quite heart breaking for them, so if we do follow Sydney and rents fall, it would be nice to see that flow on to FHBs getting a chance. Either cheaper rents so they can save more or retirees holding out for a bigger price. Interesting times indeed.
Actually about 440 people died in OZ yesterday, and about 440 died there the before and 440 will die today and tomorrow and every other day of the year. But only the 6 who dieed of CV are worth talking about.
Just wait until one of those 6 is your wife, or your child. You'll be talking about it.
Of course it'll be terrible but there is still 73 times (440/6) higher chance my (or your) family member will die of another cause
First time I appreciate your posts Yvil, first time.
It's only 6 -- because extraordinary measures are being used to control it.
That is the point.
"Just a flu"
By all means, if you'd prefer to be there - go. Meanwhile 0 people died here yesterday because of COVID.
But 96 die here every day, did you not hear about them? Silly me, of course not, they don't count
I read interesting article over the weekend that said 34% of of US mortgage holders in the US missed their June payments. Banks must be bracing for major defaults - Fed to the rescue with bank bailouts.
JP Morgan and Bank of America enquired with Perth Mint in May about ordering as much silver as possible.
And declined from what I heard. JPM and the COMEX are struggling to keep their game under wraps. JP had a 20% share of the silver market and could spoof it and make good money every month. They had to hand over a portion of their stach (actually located in a COMEX vault) in the last COMEX delivery round. They are receiving a bit of heat from their activities and they are now at a cross roads of 1, continue to spoof it and make money every month. 2, let silver go and make on their stash.
#1. Could play out very bad as they risk the lowering of their percentage of the entire market which will result in less ability to manipulate and also risk prosecution for that. #2, is the safe game.
This explains it, long winded.
https://youtu.be/9EOPKizJ_Y4
Hmmm ... that suggests something is brewing in silver.
Take a look at the YouTube link I posed above.
Teetering in a knifes edge at present. Very little down side and a hell of lot of upside. In your hand silver or reputable mining companies are best.
Very long winded explanation, but made sense.
Yeah hard to keep focused but it isn't something that you can just say quickly. As always now days do your homework and take a punt or not. I see it as an insurance. Not much else out there to invest in, unless you want to play the stock market, that's not me at present.
australia have another breakout in NSW , holiday destination for victorians whom will fiqure.
VIC have made marks compulsory
queensland struggling to keep border hopers out and NSW refusing to move to the tweed river to help , time they reclose the border all together to NSW they are heading the same way as VIC
some states VIC and NSW are showing how not to handle it, the others WA NT SA are showing what to do
two strategies at play ,
I'm picking it is winter that caught Ozzy on the hop. The Nth hemisphere is in for a kicking in a few months if that is correct.
when will labour get rid of phil twitford, out announcing projects that started a year ago as new?
https://www.stuff.co.nz/national/122175605/government-announces-182-mil…
"The four projects are the Puhinui Interchange and Stage One of the Ferry Basin Redevelopment - both already under construction"
maybe if he had announced they were upgrading it to run a rail link to the airport that would have been something big
Didnt they promote him up recently. He is one of the best, best at telling porkies
How amusing - the "experts" commenting here tell us how insignificant the pandemic deaths are, and criticise the response to it, while sitting in what is currently the safest place on the globe!
Would you rather we talk about the Kiwi build failure that has allowed house prices to continue to increase in times when the are fewer jobs?
Your reply.. National at fault this and that... blar.
Me. Labour had a go at fixing it and failed miserably and now they have thrown in the towel.
Can't build houses in a country of trees... Couldn't organize a piss up in a brewery is what comes to mind.
The elephant in the room and the reason that Labours handling of the situation is a topic is because of their historical mismanagement.
What has kiwibuild to do with a world pandemic? You might also like to reflect on how you live now, and how it might have been for you if the government's measures here had failed. You appear to be rather bitter...
Mismanagement OB1. We do not and can not trust Labour to manage any given situation well.
Who do you want in charge?
Loaded your team v my team question.
We need to move away from the media driven (int.co not included) your team / my team thinking and into a team of 5 million that dose not accept failure with little to no accountability as we do at present.
But here we sit with more attention on mindnumming Tic toc, how to store Avo's better and cats videos going wow that is so amazing, than the real world.
No it's not, I'm genuinely curious to know your thoughts. At the moment which other political party do you think would do a better job of managing the situation?
If the answer if none, what should we do?
As above.
When I engage someone to do a job, I expect results and I am sure you do as well.
What I do not want to hear is, 'I gave it a crack and it didn't go so well but I did it better than the next guy maybe'.
Somehow we are sold PR spin to explain away failures, I find it stunning that as thinking humans we actually swallow that.
Oh did you vote Labour?
Lol good one.... My name is Willy, not silly.
I'd like to see the Opportunities Party (TOP) (or something like it) establish a base over the next few elections and eventually start to influence some decision making.
It will take a decade or two to shrug off the Gareth Morgon association.
Strange comment coming from a builder? Have you thrown in the towel as well?
Yes I have, I've had a guts full of building at present.
Happy to go back on the tools for myself when it will bring good bucks.
Nice place to be..hunting, fishing, and no mask to boot...
Yes it's a nice position to be in. It's comes from breaking my ass to get there. I'm hard on myself that I could have done faster and better. Much the same as Labour could have done with their management of the virus but I only have to answer to my wife and myself.
The real problem that Twyford struck was land availability. Brash has mentioned this several times and that he had done a great job. Collins won nothing concerning Twyford, it just made Nick Smith look incompetent. Collins couldn't remember Jack's name on Q & A yesterday morning,she must be suffering from the Muller disease.
She sounds awfully flustered...."Jame". I saw the interview doing the rounds on Facebook, the video was framed with "Jack Lame crushed by Judith". The comments were filled with fanboy comments such as "She did extremely well and knows her stuff". I must have seen a different interview though, because I saw a Collins backed into a corner, crushed under the weight of her own half baked policies.
Suppression strategy is not viable
If the evidence is that it is seasonal then we don't have an epidemic. Therefore there is no evidence that supports activation of emergency powers under the Civil Defense or Epidemic Preparedness Acts.
AJ, blow your mind Monday.
Its turtles all the way down
https://youtu.be/UJukJiNEl4o
Agree with below that currently housing market is holding upward and the article shows concern about future when the wage subsidy ends.
https://www.rnz.co.nz/programmes/two-cents-worth/story/2018755288/what-…
Seeing how the market is perfomining now will not be surprised if it continues to hold itself even after the various subsidies ends though should fall fundamentally but if one goes by fundamental even now, the market should have been subdued and not buyoant so anything is possible in future.
The article appears to be written by someone who's been told to go and write an article about house prices without wanting to write about house prices and no idea about what drives house prices. Even high priestess Bindi identifies drivers for high house prices as low interest rates, wage subsidies, and mortgage holidays.
Only in NZ would the media be promoting a house price boom on the verge of a global economic depression.
So a student whose course is cancelled or someone who has lost their job and has no access to a benefit will have to pay 3k to self isolate? Don’t mind the charge for those who have a choice, but it’s unfair on those who don’t. More ill thought out policy. Redneck stuff by both sides.
It is a preemptive election vote gathering strike to take the wind out of Nationals sail. Nothing more, nothing less.
National is actually holding Labour to account, that is the story here.
Added edit.
National is actually writing Labours policy at present.
From what I read this morning...
"Each person entering New Zealand costs the taxpayer roughly $4000 on average. The Government have forecast the total cost of the scheme will be around half a billion dollars by the end of 2020."
"National announced on Sunday plans to charge Kiwis returning $3000 if elected, with a narrow provision for compassionate exemptions."
I agree there should be room for exemptions such as a student who has course - but large majority of returning people will be able to afford easily.
The so called V shaped recovery is going to more like a W shaped recovery. Watch this space - there’s more to come.
GR (gravel road) recovery in an old Holden. Sure there are a few out there that could drive it well but very few. Keeping it going without over capitalizing on keeping the car running is another story.
To any disbelievers:
Hunger in the Tron: 'Crazy' demand sends house prices to new level, All things property, under OneRoof
https://www.oneroof.co.nz/news/38169
REA come in above sex workers and politicians lol. It's easier to check REA claims these days through the power of the internet but when they say "I have a buyer for your property" that's not something you can double check.
REA, Politicians and sex workers. Two deal with your two most prized assets and the other has you by the nuts.
Took a look at the property today.
House is worse than expected. Could spend $30k and resell and make $50k on top of tax. A no go for a rental or FHB untill fixed up.
Nice little private spot. Work on the road, new builds, Reno's in progress, pub / cafe's not far, primary school close. The kind of area that will see a substantial price increase in the next 10 year bubble.
Ticking a few boxes for me and has a plan A, B & C and a chill zone for the family along the way.
Getting keen.
Buy under 100k if vendor is keen seller. Bought my first boat in the 80s called RugRat, my mate unbeknownst to me called up the seller and offered a stupid price. Then my mate told me what he had done. When I made a bit higher offer the vendor accepted, I think my mate had softened him up first by the low ball offer. The boat was fun but even so I should never have bought it.
Husband died a few months back, it was their crib for fishing.
I'll check the land prices arround there.
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