Here's our summary of key economic events over the weekend that affect New Zealand, with news it is becoming clear that the China public health emergency is going to have widespread economic impacts.
China of course is gripped by the Wuhan coronavirus flu emergency. The large-scale lock-down now affects four core cities, travel is restricted in 16 other cities and that now affects more than 60 mln people. Beijing has announced that the week-long Spring Festival holiday that started on Friday (January 24) will be extended by at least another week. They are hoping the extra time will allow the virus to peak and wane in that period. But it is still expanding. In fact, more than 5 mln people left Wuhan before they locked down the area.
And the economic impacts won't fade quickly. Commerce is grinding to a halt in Hubei province with firms who shut for the Sping Festival week unsure when they will open. And Hubei is the 7th largest province in China from a GDP point of view.
And it won't only be local Chinese companies impacted. It is very likely to affect most imports, including food imports. New Zealand runs a huge trade surplus with China, about +NZ$3.7 bln per year - and that will undoubtedly shrink quickly now. It may recover quickly when the crisis passes, but in the meantime there will be knock-on effects, and worldwide, as suppliers scramble to offload product elsewhere.
And recall, the SARS (severe acute respiratory syndrome) epidemic wiped -1% off China's GDP in 2003 when China was a much smaller economy. Today, -1% would cost them -US$140 bln or about -0.2% of world GDP. It is an impact that may be felt everywhere and New Zealand won't be immune.
Equity markets were in full risk-aversion mode at the end of last week. On Wall Street, the S&P500 was down -0.9% at the end of the week. Prior to that European markets were actually very positive with most up more than +1% but that just made back earlier losses so they were flat for the week.
However Shanghai equities crashed -2.8% taking their weekly loss to more than -3% and pushing the 2020 levels below where they started. The Shanghai market was going to be closed anyway for this week, but it may be closed longer now. Hong Kong and Tokyo were flat on Friday and just on the positive side.
In the US, their internationally-benchmarked PMIs came in marginally expansionary. And that was the case for both their factory and services sector and both were a pick-up in activity. But the movement is small.
There were small improvements in Europe as well in the same PMIs, but their factory sector is contracting, even if less, while their services sector is expanding.
In Japan, the same PMIs are recording a rebound to start 2020. A good rise for services back to expansion is more than offsetting the contracting factory sector which also improved and is now close to a steady state.
Both the Australian factory sector and their services sector are contracting now, according to the latest PMI update for January 2020. And the rate of decline is getting steeper even if neither is large yet. Their factory PMI is at 49.1 and their services PMI is contracting faster at 48.9. (A score of 50 is a stall.)
But the China coronavirus factor undermines all of this.
The UST 10yr yield is staying lower at 1.68% and that means over the past week it has declined -16 bps. That is its largest weekly drop in more than three months. Their 2-10 curve has flattened to +18 bps. Their 1-5 curve is has suddenly turned negative, now at -3 bps. And their 3m-10yr curve is much flatter at just +15 bps. The Aussie Govt 10yr is down another -10 bps since Saturday morning at 1.06%, a -21 bps fall in a week. The China Govt 10yr is holding at 3.03% but still also an -11 bps weekly fall. And the NZ Govt 10 yr is also unchanged at 1.46% and that is a -9 bps weekly retreat.
Gold is holding higher, now at US$1,572/oz and that is a +1% gain in a week.
US oil prices are also sharply lower yet again, now just under US$54/bbl and the Brent benchmark is down too at just under US$60.50/bbl. Both represent falls of more than -US$4/bbl in a week.
The Kiwi dollar has settled back a bit and is now at 66.1 USc and broadly similar levels to this time last week. On the cross rates we are more than +½c higher at 96.8 AUc and equaling a ten month high. Against the euro we are also higher for the week at 59.9 euro cents. The net of these shifts leaves our TWI-5 at 71.5.
Bitcoin has moved back up this morning from where we left it on Saturday, now at US$8,473 and that trims the weekly loss of -1%. The bitcoin rate is charted in the exchange rate set here.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
99 Comments
got to keep an eye out for 'trouble'
https://www.epsilontheory.com/a-new-road-to-serfdom/#.Xirf9bhFSKE.twitt…
Taxcinda on New Stalk ZB this morning with Mike Yardley ... guarded in her language ( not answering a straight question ) that Labour will dust off the Gnats " Roads of National Significance " infrastructure programme ...
... 3 years wasted ... but , this is election year ... screw the Greens , we need votes ....
screw the greens, we need/me need votes......
Refusing the trip to Israel the other week, looks a big miss.
https://israelinstitute.nz/2019/12/time-for-a-new-zealand-office-in-isr…
New Zealand’s import/export trade with Israel is growing. Two-way direct investments between Israel and New Zealand are also growing significantly, but they are doing so despite, and not because of, the government’s lagging diplomatic and trade policies and initiatives.
https://israelinstitute.nz/2017/09/jacinda-ardern-shows-poor-judgement/
A few days ago, however, Ardern proudly shared an endorsement she’d received that may have caused a few Jewish Kiwis some discomfort. This was from UK Labour leader Jeremy Corbyn – a man seen by many progressives as a hero of the left. But for the vast majority of UK Jews – and many Kiwi Jews too – he is seen as tolerant of anti-Semitism, if not actively anti-Semitic.
.. we're having a clean election campaign ... so those nasty Gnats can't criticize us for all the cock ups , wastage , Kiwibuild , flip flops , missed targets , U turns , measles outbreak , 100 working groups .... the litany of failures ...
Its just not nice , if Soyman brings any of this up ...
I posted this yesterday, it's an interesting look at China and trust in CCP
The Abiding Balding.
Let me explain the information environment in China during times of crises using the Princess Bride. In this classic scene the hero challenges one of the kidnappers to a battle of the wits to the death and puts poison in a glass of wine telling the kidnapper to choose one of the glasses. The kidnapper uses logic to try and figure out which glass the poison is in but ends up trapped on logical circles.
The same problem applies in China. Despite the idea that everything Chinese state media is a lie, they clearly sprinkle in a healthy dose or at least just enough truth so that people struggle to tell what the truth is. Chinese know that the government lies about an enormous amount but not everything. Why? Because if the government lied about everything just do the opposite.
·However, people generally treat the government as more of a continual liar rather than a random 50/50 chance game. Chinese friend told me a story, cannot perfectly vouch for accuracy but just the legend even if not true is revealing. After the Fukushima nuclear accident a rumor started floating around China that iodized salt would protect people from radiation fall out. The government, accurately, issued a statement that iodized salt would not protect people from radiation fall out. This precipitated rush on iodized salt in China. This drive
another less understood problem. Because no one trusts the government or state media, everyone has much higher probability to believe friend, the internet, rumors. The rumor mill in China and the prevalence of conspiracy theories is truly like nothing I could compare it to.
This happens because people are much more likely to believe a) anything from unofficial sources b) from a trusted friend or family member even if it is absolutely crazy. Finally, add in this issue of impacting health. If there is one thing the Chinese public knows it is that the Chinese government is the biggest liar ever on anything health and public safety related. Why do you think stores around the world have signs limiting milk powder purchases for Chinese tourists more than a decade later? There is zero revealed trust in government.
The Chinese public is like the Princess Bride kidnapper. Clearly I cannot chose the glass in front of me but then you know that I would know that so clearly I cannot choose the glass in front of you. They also know the game, having played before, that the government has put poison in both glasses, so they put on masks, stay in doors, and simply refuse to drink from the poisoned glass of the CCP. There are many more layers to the information than simply saying state media lies and people do/don't believe what they are told. Done.
This is shaping up to be Spanish flu 2.0. Seriously check out this semi live website of confirmed cases. It's actually growing exponentially! Hopefully that trend doesn't continue otherwise there will be hundreds of millions of infected people (outside China) in the next couple of months.
Always in the back of the mind is the overarching fear that one day an exponentially contagious and un-treatable virus will be the trigger to humankind's final demise.
the stock market and equities in general are at their all time peaks after 10 years of run-up and a rising tide of voices shouting "bubble, bubble" but no-one really understanding what might be the catalyst to burst the bubble, endless (mindless) Government liquidity creation in the vague hope of a solution down the road, but none coming.
Could the tiniest organism on the planet be the sharp instrument that pierces the unnatural bubble.?
Keep refreshing this link to find out
https://gisanddata.maps.arcgis.com/apps/opsdashboard/index.html#/bda759…
Yeah, not appropriate ....Princess Bride quote :-/
This corona thing seems a bit more real/worrying than anything else in years. Just trying to lighten up
Hoping it doesnt like summer. As the flu and cold viruses dont. Mebe it could struggle to get a foothold here simply down to weather. Darno.
Anyways I am sure you are right. SARS had quite an effect on meat values back in the day. I had an impressive profit heading my way that year. It turned to sh@t.
I don't think it will be a big problem here. Summer time as you have mentioned, low population density. People here actually wash their hands, and the mortality rate is very low (reports so far). It is not anything like Spanish flu, only really dangerous to the elderly and those with existing compromised health conditions
The hysteria around this one is massive. Because of the general distrust of CCP infection figures, it may lead to disproportionate reactions out of fear the threat is being swept under the rug. Cases now confirmed in US, Europe and other Asian countries. The lunar new year commences this week where millions will travel to and from China. This has some serious potential to blow the SARS fiasco out of the water
Expert says it could have been 44K as of 25 January:
https://edition.cnn.com/asia/live-news/coronavirus-outbreak-01-27-20-in…
If this is the case, why are all the recieving countries so relaxed?
NZ govt reaction is so sleepy.
Why are they blind is grass roots pleas
https://www.change.org/p/airports-new-zealand-start-screening-in-nz-for…
Its a waste of time screening for it. Infected individuals can be contagious and asymptomatic. Latest data out of Imperial College suggest R0 is ~2.6 so it's far more transmissible than the common flu. Early findings here in the Lancet based on the first 41 infected patients indicate that 32% of patients were committed to ICU and 14% died. Pray that it mutates to a less virulent less lethal form.
Yesterday the consensus was screening by temperature was of less value. And anyway it's easy to surveillance/scan for TEMP plus you do get the hot ones.
We also went thru the Imperial research then too.
However a traveler vetting/stand down was useful in the present period where nobody knows.
Any barrier to arrival here is useful in this period. And would seem to compliment the leave restrictions on the other side.
Already there are sniffling wee chat users proudly claiming to have made to Beijing.
The url was to demonstrate the point that grass roots are worried, and Govt messaging/management/actions not known of or understood.
You gotta keep up.
Death rate from the Spanish ( thought to have actually started in the US) flu varied widely. Ethnicity based vulnerabilities, sanitation, previous exposure to strains of H1N1 and access to health care delivered widely varying mortality. In India the death rate was 8% while in European Low Countries about 1%. The number of deaths thought to be between 50 and 100 mil. Estimates of SF deaths if it occurred today are 250ml.
Not really - seems to be working itself out with common sense prevailing. Just seems some colonists have a bee in there bonnet about returning stolen land to the rightful owner.
This land is strategically located only a few miles from Auckland International Airport and should be considered as a very promising location for a world class visitor, research, education centre, working farm and open green space.
Not sure. The Shelly Bay dispute in Wellington had similar attributes, I think. Even though the officers of the Trust, or similar, disobeyed the quite clear instructions of the body of owners, the court held that as those officers were legally entitled to sign, the sale was never the less binding. That probably is short on all of the detail involved admittedly, but the point is any contract for sale as such is a rather profound and absolute document for each and all of us, and any precedent at all, be it for historical, moral or whatever reason, that would weaken or undermine that, would be both highly undesirable and dangerous.
I guess that if I was mentally incompetant and sold our family home to the postman for $5 then my wife and children might have some form of legal redress.
A Maori told me that they have a tradition similar to the Anglo-Saxon squatter rights that still apply in England (valuable London houses being successfully claimed by squatters who have lived in them for many years without any protest by their original owners). Maori also had property rights by conquest. The entire concept of property rights is a legal minefield (for example various East Europeans living in land confiscated from Germans after 1945 and the Red Indians in America who have been consistently protesting the loss of their lands in Dakota ever since they were taken) so it is probably best not to create new common law precedents and add extra difficulties.
The simplest solution - be like the communists and nationalise all land - it really isn't anything like other capitalist items with more being created via the law of supply and demand.
New Zealand guidelines for a pandemic.
https://www.health.govt.nz/system/files/documents/publications/influenz…
At least NZ seems to be doing something about tackling the potential spread of the virus here. I wonder whether they're going to fully try to track down arriving visitors from China considering that the coronavirus has a two week incubation period, to check that they're ok?
NZ Herald article: Coronavirus: Health workers to meet passengers arriving from China https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12303521…
I am going to use that word facetious again. I hope you are being that. Cos really NZ is doing something? So friday the health minister says not necessary. We get 30 plane loads a week from China I believe. Saturday aussie has 4 positives. Sunday night um yes NZ will screen. Monday Jason? Somebody on tv3 alerts us to the fact that NZ and Oz are island nations. We could stop this. But tourism is more important.
Helloo even China has over 50 million in lockdown on their one and only holiday per year. What bigger hint do you want?
Aussie reporter Jason whatever his name is stated the obvious. But 'lets do this' Ardern and 'lets do this in Hawaii' Morrison have no balls.
Systemic Risk of Pandemic via Novel Pathogens –Joseph Norman†, Yaneer Bar-Yam†, Nassim Nicholas Taleb ∗‡
†New England Complex Systems Institute, ∗School of Engineering, New York University ,
Coronavirus: A Note
Conclusion: Standard individual-scale policy approaches
such as isolation, contact tracing and monitoring are rapidly
(computationally) overwhelmed in the face of mass infection,
and thus also cannot be relied upon to stop a pandemic. Multi-
scale population approaches including drastically pruning con-
tact networks using collective boundaries and social behavior
change, and community self-monitoring, are essential.
Together, these observations lead to the necessity of a
precautionary approach to current and potential pandemic
outbreaks that must include constraining mobility patterns in
the early stages of an outbreak, especially when little is known
about the true parameters of the pathogen.
It will cost something to reduce mobility in the short term,
but to fail do so will eventually cost everything—if not from
this event, then one in the future. Outbreaks are inevitable, but
an appropriately precautionary response can mitigate systemic
risk to the globe at large. But policy- and decision-makers must
act swiftly and avoid the fallacy that to have an appropriate
respect for uncertainty in the face of possible irreversible
catastrophe amounts to "paranoia,"or the converse a belief
that nothing can be done.
A bit of advice on increasing your survival chances if the reality backs up the rhetoric.
Eat well and lower your stress levels. Get plenty of sleep. Exercise regularly. Forget your investments, they are no good to you if you are dead. A diet rich in organic whole foods, primarily fruit and vegetables. Sugar will half the T-cells active in your blood, vitamin C will double them. Vitamin C is really only of use if you follow the other advice first. The correct level for immune system boosting is to bowel tolerance.
A healthy immune system will deal to any virus.
If you don't catch it, you can't spread it.
The immune system works on broadly 5 levels. It looks to me that the transmission routes for HIV and Ebola bypass the first one or two levels of the immune system. I guess they don't know yet how this new one spreads. I still suspect the risk mortality would be greatly reduced if my advice is followed :-)
. . I read that we weaken our resistance to cold and flu bugs if we sleep in unventilated rooms .... had the bedroom window open all night ... frosty in winter ... no Gummy bugs for 3 years ....
Lost the wife though .... she shifted to a warm enclosed room ... she gets cold bugs every winter ...
This Virus outbreak is a Black Swan event and it will be the final nail in the Coffin for the Global economy that pushes the already fragile economic situation over the edge. It will be interesting to see how restrictive migration and travel from China may be over the next few months if this outbreak turns into a pandemic.
Insider info from a mate from Hong Kong.
This has been going on since November.
Number of infections vastly higher than stated.
Total lock down, no work, no food, no room in the hospitals so dont bother turning up here, selftreat, call for body removal.
People with no contact to anyone still getting sick and may have become water born.
He says 90,000 infections was only the start as no one is allowed to come to the hospitals now.
4000 infected.... but somehow with this very small amount of people infected we are getting cases of it in quite a fee other countries. I'm calling BS on the 4000.
until people start to die, then they get held to account.
https://twitter.com/i/status/1220814002894360579
It is OK, we can build a Housing Corp Fix Hospitality Hospital Unit in the next 40 years and house all the sick and entitled survivors away from their cars, sheds and door steps. I do believe they have started talking up the Labour side of things, but that was only a whisper in the Rental Entitlement League of Gentlemen and Ladies Mixed Blessing Import A Lot Brigade 2020 Voters Benev-e-lent Societies Package, Chinese Yaun Key Division.
(A National Party follow my Lead Grant a wish Financial segment , not with standing).
Sick Joke....but way too near the truth...... Better FLAG IT.
China says 4000 infected but of those 4k have traveled and infected multiple countries.
I'm calling BS on the 4000.
Imagin if all the people on Balclutha (population 4000) caught this virus. How far does it spread arround the world?
Not far at all.
Build a 1000 bed hospital in 5 days because there are 4000 infected people??? BS! The city is bigger than London..
For every person carrying the virus they pass it onto 2.5 people. 10 infected becomes 25. 25 infect 62.5. X 2.5 156.25 ......
4000 current cases is set to become 10,000 x's 2.5 25,000.... 62,500... 156,250
Hong Kong Journalist
https://www.lbc.co.uk/radio/presenters/nigel-farage/accuses-hong-kong-g…
http://newshub.lk/en/2020/01/27/coronavirus-outbreak-may-be-result-of-c…
Always think the israelis have the best intelligence, confirmed by a friend in UK intelligence community a while back.
Yes I am getting stock away. Slowly slowly. The lamb schedule dropped another 30c this week I think. Lots of standing hay on the hillsides to keep everything going. There might be some rain on wednesday. If we could get 10 ml it would hold off the worst for a couple of weeks. But I think we are at a turning point this week. I am reserving the right to buy some pk. But I really dont want to go there.
Of course the schedules will cave a lot further if this virus gets a grip. Orders for meat will disappear. What a way to start a new decade.
Yes, many do revel in it, for some reason. Must be something in the human psyche. And the media feed off that.
My wife and I had a strong debate with our 12 year old daughter today on coronavirus. She is convinced that the black death is on its way, I think this will end up not dissimilar to SAR - a significant disturbance, but nothing too major.
She also thought Iran was the start of WW3
Naah, year of the pest Rat infestation.. very good sign ahead. By any worldwide historical event, none what so ever gave a NZ economy a big impact, it's just nudging a little. NZ is far away & isolated from any other world event shock that usually affecting badly into the economy. But we're just lucky here in this strong immune little country.
very good sign ahead. By any worldwide historical event, none what so ever gave a NZ economy a big impact, it's just nudging a little. NZ is far away & isolated from any oth https://www.rajeevyasiru.com
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