Here's our summary of key economic events overnight that affect New Zealand with news there has been a huge change of mood in financial markets overnight.
Investors took heed of the new WHO warnings of the emerging South African variant that is probably resistant to current vaccines, and the early closing of borders again in response, and have reacted in a sharp risk-off manner globally.
Commodity prices, equity prices, and interest rates have all tanked substantially, and there has been a rush to the 'safety' of the core currencies. The NZD has not fared well.
Copper fell -3.6% in markets today to US$9465/tonne. Aluminium lost -4.2% to $2,601/tonne, zinc shed -3.1% to $3,197, lead was down -0.4% to $2,261, tin eased -0.5% to $38,600 while nickel ceded -3.7% to $19,895.
Oil prices sank much more, down -13% on the day (see below).
Countries including the US and the UK are weighing new travel restrictions. Two of these new Omicron (South African) cases have been detected in Hong Kong now, indicating broad travel spread already.
Meanwhile, at US ports, as containers of goods unload, a new logistics problem is emerging - how to handle the mountains of empty containers. The flow of full-container trade back to China is small by comparison, and the flush of imports for the holiday season is coming to an end. The numbers of empties is truly enormous, exceeding 100,000 and growing.
In China, news about the economic stress their economy is in is suddenly absent from their reporting. Even respected news sources are now featuring box-office 'successes' and dog-owner complaints. The sanitising is very noticeable.
Singaporean industrial production data for October showed an unexpected improvement.
In Germany, import prices surged +22% year-on-year in October, the largest annual increase in more than 40 years and well above market consensus of less than a +20% rise. These rises are largely driven by Russia energy prices, and given the political tussling between the EU and Russia, they may not fade like the rest of the world.
The Global Innovation Index pegs New Zealand still at #26 (unchanged) and Australia at #25 (and down from #23 last year). Switzerland, Sweden and the US were the first three. China was #12.
In Australia, retail sales jumped +4.9% in October as opening up generated a strong surge. But as ANZ economists have noted, their recovery is now "a supply side issue".
There are 5431 auctions set to hit the Australian real estate market this coming week - a new national record - but there is no sign the market is about to peak, SQM Research says.
In Australia, Delta cases in Victoria have risen again to 1362 cases reported there yesterday, its highest in November. There are now 10,887 active cases in the state - and there were another 7 deaths yesterday. In NSW there were another 261 new community cases reported yesterday, and a rise, with 2359 active locally acquired cases, and they had one death yesterday. Queensland is reporting zero new cases yet again. The ACT has 8 new cases again. Overall in Australia, just under 86% of eligible Aussies are fully vaccinated, plus a bit over 6% have now had one shot so far.
The UST 10yr yield opens today at 1.48% and down a massive -17 bps since this time yesterday. The US 2-10 rate curve starts today flatter at +97 bps. Their 1-5 curve is also flatter at just under +100 bps, while their 3m-10 year curve is very much flatter at +135 bps. The Australian Govt ten year benchmark rate is -20 bps lower at 1.66%. The China Govt ten year bond is down -3 bps at 2.88%. The New Zealand Govt ten year is down -6 bps at 2.47%.
NZ swaps rate reversed sharply yesterday as the concerns about the new virus risks started to become evident.
In New York, Wall Street has reopened after Thanksgiving and probably wish they hadn't. The S&P500 is down -2.3% at their early close at 1pm their time, taking the weekly drop to -2.4%. European markets all fell much harder, with London down -3.6% for the day (-2.5% for the week), Frankfurt down -4.2% (-5.8%) and Paris down -4.8% (-5.5%). This has been the worst week in 18 months for European equities. Yesterday, Tokyo was closed down up +2.5% for the day (-3.0% for the week), Hong Kong was down -2.7% (-3.9%) while Shanghai finished down -0.6% (flat). The ASX200 fell -1.7% (-1.6%) but these were all before while the NZX50 rose +0.2% yesterday.
The price of gold will start today down -US$4 at US$1786/oz and getting no boost from this risk-off dive.
And oil prices have dived almost -US$10/bbl at just over US$68.50/bbl in the US, while the international Brent price is now just under US$72/bbl. These retreats will have a big impact on both the consumer and producer price impulses.
The Kiwi dollar opens today softer again, down -40 bps at just under 68.2 USc and a new 100 day low. Against the Australian dollar we are firmish at 95.7 AUc. Against the euro we are sharply lower at 61.4 euro cents and down more than -¾c. That means our TWI-5 starts today at 72.9, down -60 bps and also its lowest since the end of September.
The bitcoin price has crashed -8.2% since this time yesterday, down to US$54,227. At that level it is down -6.3% in a week, down almost -12% since the start of the month. Volatility over the past 24 hours has been extreme at just over +/- 5.4%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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121 Comments
Increased ICU/HDU staff intakes and training levels? Nope.
Increased number and preparedness of ICU/HDU beds? Nope.
Increased average staff wage levels in Health generally to ward off the drain to less clueless jurisdictions across the ditch? Nope.
Increased number of PR flacks in MoH, DPMC, and other GubMint hive minds? Yep.
That'll fix it.
When senior physicians responsible for day by day operation & manning & co- ordination nationally of ICU ‘s & associated specialist functions, finally publicly take issue with the said capacities being repeatedly overstated & misconstrued by the MoH, the responsible Minister responds with the bald confession that he has no idea where the physicians are getting their information from and the media just sucks that in with cream on top.
No point having extra icu beds if you haven't got the 5 nurses plus doctors each needs...increasing those staff numbers would take years due to specialist training required.
It would be nice if we could magic them up asap but the reality is that it takes years and often the money is better spent somewhere else. It's ambulance at the bottom of the cliff stuff
True & agreed this vital ability has been neglected long before this government. But that does not justify the government and its officials resorting to misinformation & denial in order to reduce the significance of the problem. Instead one would have thought, seeing as how Covid has so starkly identified such a dangerous deficiency in our health system, that the government would be applauded for touting a great uplift in spending in this area rather than say $ billions for a rail link of dubious viability to Auckland Airport or a pie in the sky new wide bodied jet airport in Central Otago. Ask the people what they would prefer. Ready access to professional and efficient hospitals or a train ride or quicker trip to a ski field. Priorities are all wrong if you ask me.
Could not agree more. Just like $180 million spent to buy back guns and what did we get? More Auckland shootings than ever. What would $182 million spent on Northland or East Cape Ministry of Health projects have won? Trouble with all Government bodies--especially local councils included--is that the each Agencies Budgets are Silo'd and each year they necessitate a given per cent increase, and bureaucrats seem to have much more control that the democratically elected representatives--whether council or parliament-because too few of the elected have the knowledge or stature to run them over.
$10 Billion to be spent on Light Rail is the way teenagers would spent when they have control of Dad's credit card. "Nice to have's" type of spending instead of $2 Billion spent out of sight fixing Auckland's 100 year old problem of draining sewage into the harbours and beaches.--I could go on!
I've been surfing Porpoise Bay for the last month & generally avoiding all the loser talk about Covid. Getting on with life you might say, saline sterilisation of the mind & soul.
The wee Hector's Dolphins are incredible, it is like they are cruising past & go oooh... Oooh, I know this game & they join you surfing the wave. Usually 4-5 of them beside & ahead of you riding the wave with you. Sometimes they jump out of the wave in front of you. Absolutely magical. Maybe I should ask them if they've got their vaccine passport.
I have great memories surfing Mokau on the west coast of the North Island many moons ago and we would have pods of Hectors dolphins come over and play around us. The coolest and friendliest little creatures. So sad that they are now long gone, never to be seen there again. We are so destructive.
This is exactly the sort of thing a minority of us have been talking about. Shamubeel Eaqub talked about it a week or so ago, the pain from covid is far from over.
And here we have most people talking about the need to raise the OCR in an unrelenting fashion.
Not gonna happen.
U.S. 2Yr/10Yr Spread downtrend well established before today.
Alison Roe... golden girl to enemy of the state...
Looking forward to the Womans weekly hit piece
https://i.stuff.co.nz/national/health/coronavirus/300461453/covid19-han…
The sheep smell blood... yip, that's the upended world we are living in....
It is also called B.1.1.529. Let's go with Omicron.
This article in the Independent:
https://www.independent.co.uk/news/science/omicron-covid-variant-spread…
...says:
The scientists are already hard at work exploring these issues and assessing the genetic make-up of the variant – though health officials believe it’s likely to take up to eight weeks until we’re able to develop a clear picture of what’s going on, and what lies ahead.
Good point. The 'strategic reserves' and 'OPEC' spigot hype, is just that. Hype.
We are past 'peak all sources', is my take. Disguising the fact all ways we can, but that's the basic fact. It's 'less' from here on in. Probably means we will never sort 'supply lines' or any of the other manifestations (which we address as individually causal, not as symptomatic).
Evergrande debacle still ongoing. Supposedly bankruptcy proceedings are underway in the Caymans, initiated by a German investment company DMSA.
https://globalrestructuringreview.com/financial-restructuring/evergrand…
https://newsnationusa.com/news/business/global-financial-crash-china-ev…
Many countries in Europe have already closed their boarders again. Problem is that this new strain appears even more transmissible so chances are its already in Europe anyway. Already struggling with Delta caseloads you don't even want to imaging something new that's possibly worse and is vax resistant. Basically NZ needs to shut the boarders again and fast before more is known about it. We have been here before and left it to late.
I often wonder if people check their comments once they post them. Many are almost unreadable. Note boarders instead of borders and imaging instead of imagine in the comment above.
It's hard for me to read, probably because I'm a little bit 'on the spectrum' but, come on people, you can edit a comment and make it more readable if you stuff it up the first time.
And oil prices have dived almost -US$10/bbl at just over US$68.50/bbl in the US, while the international Brent price is now just under US$72/bbl. These retreats will have a big impact on both the consumer and producer price impulses.
US policy is aimed at causing, exacerbating inflation. The sooner you understand that the better. - Link
"probably resistant to current vaccines" might be jumping the gun. Might be more resistant, but the variant was only detected four days ago and nothing has been proven yet. Depends on the extent of mutations in the antigens on the spike head, and whether antibodies generated by current vaccines still bind to them. If they don't, then we do have a problem.
https://www.newscientist.com/article/2299194-b-1-1-529-how-dangerous-is…
If Omicron defeats pfizer we are basically back to square one. As we have a virus in our society that we have no natural immunity for and no vaccine for.
What to do？Change our strategy and accept a strain of covid19 we have no vaccine for or shut the border for another 18 months？
Maybe Sweden was right after all？
Our country is so exponentially out of touch with reality and everyone is thinking we are bullet proof from any shocks to impact. We are spending large and accumulated huge amount of debt. Everyday we are creating huge amounts of new money out of thin air.
What will be consequences of this stupidity? This is impact not only the stupid but also the restraint people unless the smart ones who keep their money under the mattress.
The collapse can be so huge that people might have choice but to hang themselves.
No one is thinking but just listen to the hum and noise all around, it's getting high and high. Human mind can't take it all and people loose any sense of what's normal and what's not. That causes a society to breakdown and choas follows.
Nice Comment NotGreedyKiwi.
I feel the same. I often use the analogy that the world is currently feels like a washing machine on spin when the towels are out of balance making a thumping noise. There is so much stress which leads to anger, add to that innate greed and individualism. Hopefully things will balance soon, but I suspect we have a long way to go.
No coincidence I'm sure, that the YHA decision to sadly close all of their hostels came the day after the govt announcement on border re-openings. No long haul international visitors until after 30 April next year, and even then they will have to self-isolate for a week. So that's yet another tourist season written off. Locals and a few Australians won't be enough and they must have debts to service - that big new Tekapo hostel is lovely, but it would have cost a bomb.
Makes me wonder how many more accommodation, hospitality and tourist attractions will go to the wall in the coming months?
In the Cabinet paper from August and publicly released this week, the Ministry for the Environment succinctly pulls together advice the Climate Change Commission gave the government.
https://www.1news.co.nz/2021/11/26/scale-of-change-needed-to-cut-emissi…
""By 2035, wind will have to have increased 360 percent, while solar will need to increase 2200 percent to make up the 6 percent share of total energy needed."" 14 years and achievable especially if solar becomes ever cheaper. However what point is there in targeting 6% of total energy if our population grows faster than that?
And beef up transmission capacity generally because both wind and solar are inherently distributed and have to join the grid if an overall contribution is to be made.
And beef up interisland transmission capacity as a particular case of the above, because it is severely limited compared to demand especially in the N of the NI.
And beef up backup power generation, because the wind does stop and the sun does set and clouds do cause massive swings in solar output.
And beef up local voltage control for solar, which in concentrations can play havoc with local voltage regulation and cause spike damage thereby.
And beef up remote control of both solar and wind installations to avoid the issues that excessive variance in either, or in the case of solar, just too much at the wrong times, can and do cause.
Because generation is only one of the many parts of what is a complex and interdependent system.
True words Waymad. We should boost the solar as a quick easy thing to do.
But yes we do need to organise around it. Like, you know, think out something practical and economical and then do it. Fast.
But that needs the word 'organise'. And there we have little hope.
much better to look at additional hydro options -- as we can more effectively store that energy with less impact than solar and wind -- even looking at major large new builds and using deep underground water lakes - to cool buildings in summer and heat them in winter -
Forget everything else. Forget dollars and cents. There is only one thing to focus our attention on and that is closing at once all incoming flights from South Africa and other South African countries until the situation regarding the new, possibly untreatable, Delta variant becomes clear.
Remember, it took only one infected incoming person to NZ ( the Devonport tradesman from Australia) to set off a cascading spread of the Delta virus throughout Auckland and to a lesser extent elsewhere.
This is no time to allow sentiment to take in arrivals from those South African countries with the new strain.
The Government must act now!
If you go back to early 2020, I was the first poster on this site to predict the gravity of what was almost certainly in store for us with the global Covid pandemic.
It always pays to forestall the worst case scenario.
The Ardern Government would be toast if it failed to head off another incursion by a deadly virus variant.
Patently incorrect. Fortunately the Lancet and BMJ are open access for COVID-19 related topics. When you hear of reduced efficacy ask yourself what is being measured? PCR proof of infection, symptomatic infection, hospitalization, ICU stay or death. In the last month the Lancet published a paper showing very good efficacy (hospitalisation or death) at 6-months against delta with Pfizer vaccines
Another delicious parody of Germany's fuel crisis. Keep liquids away from keyboard as you watch.
Spoiler alerts:
- 'Fegelein has stolen the fuel and used it to fly billionaires into space...'
- 'Get the army to fart in front of the wind turbines to make them spin faster'.
So. Key is backing Luxon - for ~5 years in Opposition!
I'm shocked, I tells ya, shocked! But would it be would be worth it to him, just to get a line filled on his LinkedIn page - "Leader of The Opposition, New Zealand : 2021 - 2027"? Of course, he might spit the dummy after the 2024 vote and do something else, but what?
Suggests the corporate world is starting to rumble into gear with a select & weighted group ready to pull the levers of the heavy duty crane. For that to function, that body needs both a respected and influential convenor & a trusted potential skipper proven to be likeminded. Perhaps long ago those succinct words of Mike Moore “don’t piss ‘em off” are now starting to resonate in the echo chamber.
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