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US Fed signals 'lift-off'; US new home sales struggle as mortgage rates rise; US trade risk on computer chips highlighted; China faces uncomfortable stumbles; UST 10yr 1.78%; oil up and gold down; NZ$1 = 66.9 USc; TWI-5 = 71.4

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US Fed signals 'lift-off'; US new home sales struggle as mortgage rates rise; US trade risk on computer chips highlighted; China faces uncomfortable stumbles; UST 10yr 1.78%; oil up and gold down; NZ$1 = 66.9 USc; TWI-5 = 71.4

Here's our summary of key economic events overnight that affect New Zealand with news the US Fed has given its expected 'lift-off' signal.

The US Federal Reserve has confirmed it is changing its policy direction. They have signaled interest rate rises will likely start in March, their first since 2018, and they have accelerated plans to unwind their easy money policies for the US economy amid sharp-rising inflation.

Overall, this is pretty much what financial markets had priced in.

In immediate reaction, the UST 10yr yield has risen to 1.80%. The USD has firmed slightly. And the S&P500 has risen from what was already a strong day of gains.

In other news, US new home sales rose sharply in December to just over an +57,000 in the month, the fastest sales rate since September, but bringing the total actual new dwellings sold in 2021 to only 762,000 and -7.3% less than in 2020. But prices rose with the median up more than +16% to US$392,900 (NZ$585,000).

American mortgage interest rates moved up sharply again last week, back to pre-pandemic levels. And the level of mortgage applications fell at the same time, and quite sharply.

Surging imports, probably in response to supply chain difficulties because retail inventories are surging, have pushed the US trade deficit up to -US$101 bln in December on a seasonally-adjusted basis, a small increase from November. But on an 'actual' basis, the deficit went the other way, falling in December from November. Year-on-year, imports are up +19.6% and exports are up +20.3%, so minor 'progress' on their trade front in 2021.

In related news, the US is warning that the supply-chain crisis for semiconductor computer chips isn't getting resolved, and the only solution is a massive reshoring program to build most of their requirements at home.

In Canada, their central bank reviewed its policy positions, leaving its core rate unchanged at 0.25%. But they have set the stage for rate rises in March, probably mirroring the US Fed.

In China, they are having to face up to some failed ambitions in developing their semiconductor industry.

And China is looking at sharply reduced levels of foreign direct investment in 2022, promising new incentives as it contemplates a painful pullback.

In Australia, their rural sector is having another very strong season on the back of La Nina weather conditions and good rainfall. And there is a prospect that the next year will continue the good times, a very unusual three-peat on the 'good weather' front. Their rural sector could earn them AU$78 bln, mainly from unusually good crop yields. Very high shipping and fertiliser costs take some of the gloss off the trade, and Aussie agriculture is highly dependent on artificial fertilisers. But of course, rain is the key variable there.

In NSW, there were 21,030 new community cases reported yesterday, another increase from the prior day, now with 195,701 active locally-acquired cases, and 29 daily deaths again. There are now 2,943 in hospital there and a record high. In Victoria they reported 13,507 more new infections yesterday. There are now 139,562 active cases in that state - and there were 34 more deaths there. Queensland is reporting 13,551 new cases (now more than Victoria) and 9 more deaths. In South Australia, new cases have risen to 2401 yesterday with 13 more deaths. The ACT has 986 new cases and two deaths, and Tasmania 643 new cases. Overall in Australia, 52,613 new cases have been reported.

Deaths from Omicron in the US now exceed those for Delta. And the Aussie Omicron death toll is rising fast too.

The UST 10yr yield opened today at 1.78%, up another +3 bps from this time yesterday and then added another +2 bps on the Fed announcement. The UST 2-10 rate curve starts today unchanged at +75 bps. Their 1-5 curve is marginally flatter at +93 bps, while their 3m-10 year curve is marginally steeper at +174 bps. The Australian Govt ten year benchmark rate is sharply higher at 1.97% and a +2 bps rise. The China Govt ten year bond is +4 bps higher at 2.72%. The New Zealand Govt ten year is up +4 bps at 2.61%.

After the Fed's review, Wall Street is up with the S&P500 gaining +2.1% in early afternoon trade. Microsoft's earnings underpinned the mood. Overnight most European markets were up +2.2% although London only gained +1.4%. Yesterday, Tokyo ended -0.4% lower, Hong Kong +0.2% firmer and Shanghai gained +0.7%. The ASX was closed yesterday for Australia Day, but the NZX50 ended+0.5% higher.

The price of gold starts today at US$1832/oz and -US$16 lower than this time yesterday.

And oil prices start today up by another +US$2.50/bbl at just over US$87/bbl in the US, while the international Brent price is now just over US$89/bbl. At these levels, this commodity is at it highest since 2014. Ukraine tensions aren't helping of course.

The Kiwi dollar will open today marginally firmer at 66.9 US. Against the Australian dollar we are fractionally lower at 93.3 AUc. Against the euro we are a little firmer at 59.3 euro cents. That means our TWI-5 starts today at 71.4 and marginally higher overall.

The bitcoin price has recovered today, back up to US$38,293 and a further +3.4% rise. Volatility over the past 24 hours has been moderate at +/- 2.8%.

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

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98 Comments

According to weather watch NZ, Alice Springs has been wetter than most of NZ, over the last month or so.

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Deaths from Omicron in the US now exceed those for Delta. And the Aussie Omicron death toll is rising fast too

Who was the commenter on here a few days ago saying no one had died from omicron?

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But it's just a little cold or flu don't you know? 

The BS level for many has been rampant. That little snippet will annoy them a lot.

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This has been obvious for some time, I can't understand why the govt has not been better prepared.

The country is in for a real shock.

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foresight isn't a quality of the current government

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Because anyone who dies with even a suspected case of COVID-19 is classified as having died from it, COVID-19 deaths are a function of case numbers, not severity. Omicron is more contagious, so more people are getting it, and we should therefore expect more people to be dying with it.

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Very well put!

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Excess deaths are a better measure, and by that metric Covid (directly and indirectly) has killed plenty, especially in places like the US and Russia.

There's also evidence that those who recover from a severe bout die at much higher rates over the next 12 months (adjusted for age and co-morbidities, so it's a real effect).

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Measuring excess deaths is problematic too, because we need to be sure that any spike in the data is actually excess deaths, and not just deaths which have been "brought forward" by the pandemic.

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What on earth are you talking about? All death is death that has been "brought forward" from when the person would have otherwise died. Excess deaths show the extra people who wouldn't have died other than the pandemic - it's not problematic at all as a metric.

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Excess deaths show the extra people who wouldn't have died other than the pandemic

No, it doesn't, because it doesn't account for deaths which would have occurred shortly afterwards anyway. You end up with a cluster of deaths occuring over a few months, which would have otherwise occurred over a few years instead.

Pharmac measure the efficacy of drugs using the "Quality-Adjusted Life Year" (QALY), which is a much better measurement, since it gives more weight to deaths which would not have otherwise been expected to occur within a short timeframe.

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Alpha and Delta yes, but Omicron is barely causing a blip in excess deaths in places it's rampant.  Australia rolling case fatality rate has dropped under 0.1% which is approximately the average fatality rate for being alive for 5 weeks.

I'm no Covid denier but Omicron is a completely different beast to previous variants.

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It's not one sided BS though, govt and media have been reporting all deaths WITH covid as being deaths FROM covid.  Which is just plain false.  The amount of gaslighting around covid, it's not surprising that so many people are losing trust and looking for other sources of information.

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I'm not saying you're wrong but are they saying that? Most if not all reports I have read say "COVID related" which can cover both dying of, and dying with... Last year the point was well debated about COVID overwhelming immune systems of people with co-morbidities (including undetected ones). A few argued strongly then that COVID didn't kill them, they just had it at the time, and seemed unable to accept that the combination was what counted not the individual illness's.

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So if I catch covid and die..its not from covid?

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If you get shot and die, but get tested positive for covid after you are dead, then you died from covid.  I don't even know if there is any data that gives an actual cause of death.

"Deceased - Includes all cases that died who were classified as an active case of COVID-19 at the time of death. In some of these cases, the underlying cause of death may have been unrelated to COVID-19."

From the govt website

https://www.health.govt.nz/our-work/diseases-and-conditions/covid-19-no…

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Yes this is total BS and invalidates the numbers.  The quality of statistical reporting and therefore data and therefore truth has been an incredible disappointment and has made the impact of the actual science weaker as a result.

Don't get me started on chickens coming home to roost with regards to the deep, deep incompetence in mainstream media.

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MSM is a well oiled machine. 

Designed to captivate and hold your daily attention, selling advertising along the way. 

Thats the business model, profits to shareholders is the goal. They are NOT preforming a public service and they are not a formal extension of our health service.

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Which is one reason why setting up some sort of protected funding for journalists would actually be useful. I.e. protected from the foibles of different politicians. Perhaps funded by a separated body (as Parliamentary Services is supposed to be) and able to focus on journalism without clickbait. Especially as so much information hitting people now is targeted misinformation from overseas. 

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Sure if you have a massive cardiac arrest & catch covid in the emergency dept and then subsequently have a stroke in the recovery ward and die, then you could say you have died because of covid, why not.  After all it’s your death certificate and you own it forevermore.

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But this is the "science" WhiskeyJack. You are a man of little faith.

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Indeed, I feel like [The Science™] has become more a branch of the marketing division than an actual quest for truth.

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Funnily enough, whenever you dig in to the actual science there is more nuance and circumspect thinking. Because scientists know how narrow are the questions they're answering and how much room there is for further discovery.

Reporting selects a very small slice to highlight.

But we must beware of the tendency in social media these days to distrust science (distrust the practice or testing and disproving/proving ideas? why?) and undermining scientists.

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The WSJ article says peak death rates have exceeded their last peak during the September Delta wave and then goes argues that Omicron is less dangerous. I don't think I would use that article to support that sentence.

Delta will still be causing deaths now and progresses slower. Omicron spreads much better than Delta those death stats we will see in next month or two will be for well over half the population being infected by it.

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Sad about the NZD dropping continually against the AUD.  Given higher interest rates in NZ.  
More global confidence in Australia?  International students pouring back in, borders reasonably open.  

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It's a race to the bottom with USD the last one standing. Looking forward to the FED double speak.. as if they really have any choices other than to raise rates quickly?

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Any prediction for here. Annual inflation being touted as coming out somewhere between 6 & 7%.  Don’t think the transitory spin holds up now. Low & middle incomes will be hurt as usual but mortgage rate hikes even more damaging. Bit of a perfect storm gathering?

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It's taking a long time to get supply systems ramped back up. The shipping companies ripping everyone off? Demand opening the way for profiteering?

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Some inflation is surely transitory, but how long those disruptions will continue for, is hard to say.  Rising interest rates aren't going to affect fertiliser prices which have doubled, or computer chips, some of which have wait times of years!  Oil is also going up and interest rates can't change that either.

6-7% is huge but my inputs I think are around 30% on average which is insane.  Rising interest rates are just the icing on the cake as far as increasing costs.

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Got a shock buying 100l detergent the other day. Twice what I previously paid, two years ago I think.

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Yeah it's everything from glyphosate to zinc sulphate.  Contractors haven't raised by much, just covering fuel increases.  Grazing is going through the roof as everyone adjusts to the new reality of regulations.  At least the milk price covers it.

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I'm waiting for NZ covid cases to be important enough for a mention here =)

None of my staff are vaxed, but if anyone gets covid we will all be close contacts and hopefully still be able to keep working.  I wouldn't want to get tested because of all the drama that comes with getting a positive, but I guess they will want to get tested because then they get the same passport as a fully vaxed.  At least then I won't have to run all the errands for them.

I wouldn't want to be on a deep sea fishing trawler with covid, I did a couple of years on the boats and some trips the flu would just circle relentlessly through the crew, some people would get it 2-3x.  Good luck guys.

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Yeah... I would get vaccinated... 

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I'm vaxed, but believe it's a personal choice and am happy for everyone to make that choice for themselves.

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Interesting comment. Shows the attitude of some that I have alluded to before - denial being a risk to others.

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I don't have any data to say that they are a risk to me or others, in fact I would be a greater risk to them because I can go anywhere and have a greater chance of contact with covid, which puts the unvaxed at risk.  If you feel that way, you should stay away from unvaxed, not for your own safety but for theirs.

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Yeah. I mean yay personal freedoms!

Don't get me Wrong I hate this govt, and 10 unvacd peeps won't make a material difference.

But you are much more likely to spread unvaccinates and that's both antibodies and likely attitude to following social guidelines etc. 

You also are much more likely to have an adverse hospital requirement.

So yeah, just get vaccinated. 

100% when things get overwhelmed, they will triage. 

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A lot of staff are now WFH - like a self-imposed lockdown. A few are locked inside their work office & not circulating.   A few are not returning from leave due to Vax status & workplace mandate - so even more short staffed now.  

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What country is that? Covid passport for having infection isn't a thing in NZ, is it?

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Edit, apparently not, even if you have had covid you still need to get vaccinated.  I'm not sure of The Science™ behind that, given how vaccines work and how natural immunity works, but we are well beyond the logic now.

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In the latest vid I linked below the guy says it's quite clear that we can't vaccinate our way out of this.

2nd shot is effective for 20 weeks, 3rd booster is effective for 10 weeks, I don't think we need to extrapolate to a 6th booster...

We all need to catch it and that's how we're going to get the best immunity, whether or not you do it vaxxed or unvaxxed the end result appears to give very similar immunity.  Obviously hospitalisations will be very different if you're vaxxed or not.

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Muzled , well said mate , fact---dbl vax will keep you out of hospital , but you cant keep doing boosters...we all need to get omicron...super immunity .....https://www.youtube.com/watch?v=c32vDjyNE-M&ab_channel=Dr.JohnCampbell . every kiwi should watch this

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Vaccine + infection is greater than either vaccine or infection alone
 

Also, I understand vaccine > infection in terms of immunity.

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I believe that is correct H, but the difference is so small between vax+virus vs virus only that it's virtually equal.

 

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That is not true.

Vax plus virus is 10x just the Vax alone.

and the virus is < vaccine.

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There was an article in the Herald yesterday - immunity from infection is patchy and short-lived, infection from vaccination is more reliable but wears off. Best immunity is from infection plus vaccination. 

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that's what I said above... ;)

But here is a link showing the data from California.

https://youtu.be/c32vDjyNE-M?t=1256

(that starts at the relevant point)

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Immunity from both is super-immunity

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Lol.

I've had Alpha and a couple of doses of vaccine.

I am still most likely going to catch Omicron.

The immunity is not that super.

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Fed Signals Liftoff ‘Soon,’ Sees Asset-Reduction Start Afterward

How long is a piece of string?

Well that certainly underwrote the recent substantial put seller's position.

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Really enjoying this guys breakdowns of how it actually is, he seems quite impartial and sticks to the numbers.

https://www.youtube.com/watch?v=c32vDjyNE-M&ab_channel=Dr.JohnCampbell

This one has an interesting mention of kids, if you believe the govt we're getting our kids vaxxed to stop the spread to adults which imo is unethical and immoral in its own right given we're 90+ vaxxed, but he's saying if a child is vaxxed or unvaxxed it doesn't influence their viral load if they become infected.

And he's saying that if you've had the booster it was helping with Delta, but it is not helping with omicon, and that's the BA.1 omicon variant which is now starting to get overtaken by the BA.2 variant which is even more transmissable.

 

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The media and some academia want to keep the fear factor high, offering sound bites of "50k a day, even as high as 80k day!" when nobody is showing how in the UK, Omicron seems to be peaking, hospitalisation are low and deaths even lower.

UK Daily cases (peaked)

https://ourworldindata.org/explorers/coronavirus-data-explorer?zoomToSe…

UK Total Cases

https://ourworldindata.org/explorers/coronavirus-data-explorer?zoomToSe…

UK Deaths

https://ourworldindata.org/explorers/coronavirus-data-explorer?zoomToSe…

But hey, gotta keep those viewership numbers up and vaccines coming...

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Yes, John Campbell ( not the NZ one!) outlines much evidence and research in a very non-partisan manner.  

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Its all hit and miss. Red light kids older than 8 must wear a mask, good luck there. Kid goes to play a game of rugby or touch, takes mask off, runs around for hour with other kids sweating, using some ball covered in fluids, finished game and can't shake hands for fear of passing virus on, must put mask back on walks away goes to the next class, must stay a meter away from another child (who just played sport against) for fear passing virus on. It does'nt even make sense, it's just nonsense.

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FCM . yes its all BS , gov wont to look as they are busy & putting sensible rules in place.....you can sing in church....but you cant sing in the pub..

 

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I don’t know about anyone else but I got my child vaccinated to protect them from COVID-19. A lot of NZ children have been hospitalised with COVID-19 and in countries with higher numbers of cases some children have died.

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Do you know if the deaths from Delta or Omicon Hardly?  

I've got two under 12's and I'm leaning towards not getting them vaxxed at this stage but that's mainly because it seems that omicon displaces delta and the U12's seem to be the least affected by it of all the age groups.

But I'll happily stand corrected on that if someone can point out some studies saying otherwise.

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A quick look for UK data and deaths <14 are 33 in the last year, 9 since mid December. So if anything I’d say they have ticked up with Omicron, probably because it spreads better.

Hospitalisations per 100,000 people. This is more complex but it’s an average of 3.77 per week per 100,000 for <14.

There is small uptick in hospitalisations for 1-14 year olds (around a doubling) in the weeks of Omicron.

There is a big increase for <1 year olds who went from around 2.5-3 per 100k per week to around 14 per 100k per week when Omicron stuck.

Apologies for using those age groups but it’s what they record in the UK.

There has been a lot of talk on here about Omicron being milder than Delta for kids and I don’t think that has been established. Early in COVID-19 kids didn’t tend to get it due to the factors around transmission. As the variants have change it has increasingly been able to infect kids and as that has occurred more have been hospitalised. I think it’s prudent to get the vaccine.

 

 

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Part of me says it's prudent to get it but there is the adverse reaction also needs to be taken into consideration as JJ says below.

My partner says we'd feel pretty bad if the kids got it and had ongoing affects from it, but my retort is we'd feel the same if they got it and had an adverse reaction.  And the longterm affects are unknown.  

I guess with the UK data you could also say there is some community immunity which we haven't got so omi could be worse here on that front.

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The biggest risk with respect to the vaccine was myocarditis in teenage boys. 
 

This article is a good one that covers the advice process in the US. You will see they considered the issues pretty carefully and it definitely isn’t a white wash. 

https://arstechnica.com/science/2021/10/kid-covid-19-vaccines-get-green…
 

The long term effects, there is no reason to believe there will be long term effects. But we do know about long COVID and that COVID attacks the blood vessels and organs. If I’m weighing the evidence on one side I know there are long term effects, on the other there is the possibility of long term effects not identified.

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Thanks, that's an interesting read.

With all of the uncertainty and complicated modeling data, there was clear hesitation and a lack of enthusiasm for authorizing the vaccine for all children among some of the VRBPAC members. Some advocated for authorizing the vaccine just for children at high risk of severe disease, such as those with asthma or obesity. "It just seems to me that in some ways we're vaccinating children to protect the adults, when it should be the other way around," said James Hildreth, voting VRBPAC member and president of Meharry Medical College. "So, this is a really tough one for me, but I do believe that children at highest risk do need to be vaccinated."

Overall, the committee felt the benefits did outweigh the risks, despite some of the hesitations. Dr. Hildreth, who ended up voting "yes," noted after the vote that he was swayed to authorization due to availability issues. "I want to make sure the children who really need this vaccine—primarily the black and brown children in our country—get this vaccine," he said.

Still sounds like he thinks only high risk kids need it?

And that article is from 3 months ago, things have changed quite a bit since then with Omi according to Dr J Campbell in the vids linked who is saying if a child is vaxxed or unvaxxed it doesn't influence their viral load if they become infected.

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Mortality rates around the world are back up to levels last seen in 2002-2005.  They are not super high from covid.  Even in NZ we had 4,500 more deaths in 2020 with all the lockdowns than we did during 2015-2019 average.  Note well that only 32 of these were covid related.  Hospitals were never overwhelmed during this time and this is before vaccines so it's unclear why 4,500 people died in 2020 above and beyond the 5y avg mortality.

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Of course we had less deaths in NZ, basically nobody died of COVID here thanks to our response.

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Whiskey good work , couldnt be from cancelled surgeries & treatments , but hey the gov & there media dont wont to know..

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Hardly -  UK family member has 2 kids waiting for booster - they can't have it until 12wks after their 2nd vaccine dose, but if they get covid in the meantime, the clock resets to 12wks before they can get the booster.  UK has had some very sick kids who had the booster before 12wks, since getting covid or last vaccine.  So those high hospitalisation rates for kids you are showing needs to be understood in context. How many did it take to become very sick after getting the covid shot <12weeks after either having covid, or having had their 2nd vaccination, before health authorities picked it up and changed the advisory to 12 weeks after either infection or vaccination?

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It was a dilemma we had recently. TBH I can’t see any health reason to get kids vaccinated, to me the low risks of the vaccine outweigh the very low chance of them having a bad case of covid, and with omicron it doesn’t even prevent them getting it or passing it on. But we ended up getting it anyway just because the government would no doubt use it against them (and it takes 8 weeks for them to get double jabbed). I am not anti vax at all (I’m triple jabbed) but I’d really like to see the reasoning from health department for kids, especially with delta almost gone. 

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This is the real issue!

Taking a medical treatment because of fear of the backlash from govt. or "society".

If you choose this as an adult, fine, but what are we teaching our children?

The govt. doesn't fear any backlash from the citizens. Why is that? 

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Many thought the dollar’s full and complete demise not just inescapable but imminent – especially as it was, right then, falling in exchange value. We’d be lucky to escape with just Great Inflation 2.0, with, many reasoned, risks of Weimar 2.0 rising with every month.

Bitcoin, like short run TIPS breakevens, soared.

But then a funny thing happened to both of those assets. Even as CPI rates accelerated into the back half of last year, as noted above TIPS expectations have dropped despite oil which actually corresponds (loosely, but reasonably close) with the trend in BTC, as well. Link

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These predictions of 50k to 80k Omicron cases a day by Waitangi weekend, when we all know the testing system will break down past 5k a day, because the government just hasn't prepared for that (if they haven't even got enough RATs or have not bolstered the hospital infrastructure to cope).

Also, all this talk of high number of cases, when a simple check show hospitalisations and deaths are low for Omicron... No mention of THAT fact.

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No point in having  the vaccine here because they hadn’t organised where, who or how they were going to the job. Remember all those that handle flu jabs, GPs etc were ignored. Same here now. What’s the point of RATs being here when the pharmacies are still trying to find out how exactly they are to perform the task of testing that has been dumped on them.

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Great to see more Covid experts on this site daily...reassuring to have some many experts giving us the real data and info here. 

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Experts belong in the medical journals' websites. Interest.co.nz is for ordinary Kiwis to be able to discuss and share anecdotal information. Conversations are important for society. Sound bites and 140-character posts do not a conversation make, so a place like the comments section offers a platform for wider (respectful) conversations.

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Really? and I thought this was a finance site, which seems to be have been hijacked by the commentary stream from Stuff.

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Frazz - No Covid expert, just someone who listened to many sources and POVs, including professionally qualified ones, such as Dr Paul Offit. 

"Dr Paul Allan Offit is an American pediatrician specializing in infectious diseases, vaccines, immunology, and virology. A Professor of Vaccinology, he is the co-inventor of a rotavirus vaccine."

Here's his interview by another doctor:

https://www.youtube.com/watch?v=wkz1ln5AJ5Q

The gist of it is that there is no clear evidence that a booster gives you any protection from Omicron compared to not having a boost for anyone 18-49 years of age. Mainly for 65 and over, there is some protection because at that age, your immune system is weaker than anyone else younger anyway, so a booster is recommended.

But for young healthy adults, there is no clear advantage to having a booster (CDC, EU health agency and WHO, look it up), yet is is mandated by so many countries and not reported by media...

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You missed the point  - I come here for finance news ..not a endless Covid vaccine debat!

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LOL! No one's forcing you to read the comments! Take a chill pill, dude!

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Who predicted that?

On the presses conference they said it was mathematically possible to go from 10 cases a day to 1000 in 6-10 days. That wasn’t a prediction, in fact they are still hoping their stamp it out strategy will be effective - that’s a vain hope but it’s nice they are still trying to save lives unlike some people on here.

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well there were only 15 yesterday so I think it will be lucky to be 2k a day by end of next week.

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FCM , Omicron numbers dbl every 2-3 days , l think there will be more than 2000 reported daily cases by sun 6th of feb , maybe 3x more not reported..

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Tig , nz 5 weeks behind QLD . We hit 25k omi cases a day...l would suggest there is about 75k a day not reported , so all track & trace/signing in will be a complete waste of time by next week . John Campbell (uk) is well worth checking out , highly recommend 

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JPow is live. Lets go!

Edit: No surprises at all. Actually more accommodating than many thought. Who could have guessed..

Edit2: Got less accommodating at the end.

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I think it's appropriate because there is no way raising interest rates can solve most of the causes of inflation.  They could be the first FED ever not to cause a recession by raising rates.  If rapidly rising costs can't act as their own negative feedback on pricing, then a marginal increase in cost of capital isn't going to get the job done either.

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Agree.

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Most of our inflation is supply-side.

The RBNZ will probably make a symbolic 50 BP hike in February, then potentially one or two more 25 BP hikes.

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They should do by 50 BP but will they?

No Never

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Potentially they might use omicron as an excuse and only do 25.

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You confuse inflation with price rises. Beef goes up, so you buy an alternate. Same $ spent, because that's all you got. No inflation, just change in spending choice.

But that changes when you increase money supply. That's inflation - and inflicted upon us by CB's.

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Subtle comment from him that gives him the option to not go too hard with the rises.

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Surging imports, probably in response to supply chain difficulties because retail inventories are surging, have pushed the US trade deficit up to -US$101 bln in December on a seasonally-adjusted basis

US citizens still financing China's Belt and Road Initiative?

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New Zealand CPI stats will be released today. I'm looking forward to seeing how RBNZ are doing at keeping inflation within the target band after six months of embarrassing miscalculations.

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What is the target band

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https://www.newshub.co.nz/home/new-zealand/2022/01/covid-19-omicron-out…

They are mostly wrong as go overboard but what if is true !

US stock market fall continues after Fed press briefing :

https://www.youtube.com/watch?v=iJ1gA4qnJcU

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Just had an interesting discussion with a colleague. We work in a vaccine mandated work place. He arrived at work yesterday to tell staff that his wife was sick at home and going to get tested. He was sent home (correctly in my view). He went with his wife to get tested, but DHB staff refused to test him, pay $150 and he could get it, as he was not displaying any symptoms. He does need a clear test before the weekend, but they still told him No, come back tomorrow for the test for the week end. Nuts!

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Wow the FED not moving until March, talk about slow reactions. Typically if you want to seriously control something you move immediately or if the system is smart you move before. This just gives the RBNZ another excuse to just "Wait and Watch", man is it going to get ugly by mid 2022.

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NZs inflation is not Labours fault - according to Stuff! 
https://i.stuff.co.nz/national/politics/300505574/labour-to-come-under-…

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