Here's our summary of key economic events overnight that affect New Zealand, with news investors are heading for the exits today.
Markets are in full retreat. Equities worldwide are being hit hard. Bond yields are dropping fast. Rate curves have either turned negative or are quickly heading that way. Gold has jumped to a seven year high. The oil price is tanking.
Wall Street opened sharply lower and has stayed down. It is -1.5% below where it closed on Friday, and has almost lost all its 2020 gains. Overnight European markets fell even harder, down -2.5% across the board. Yesterday, Tokyo lost -2%. Hong Kong had very limited trading before closing early for its Chinese New Year holiday today. Shanghai markets will be closed all week, and maybe longer now.
We are witnessing a rush to safe havens and away from commodities and risk.
The few data releases in the US overnight weren't especially positive either. The expected pickup in new home sales in the US in December from November didn't happen and that surprised analysts. That is the third straight month they had dropped. But at least it was well above the data for the same month a year ago, an easy beat because it was so weak back then.
The Dallas Fed regional survey picked up in January but their general business activity metric is still negative, just less so. The very recent sharp fall in the oil price won't be positive here.
All eyes will be on tomorrow's release of American durable goods orders for December. Recall, they declined in November and excluding defense orders, that decline was sharp.
The China coronavirus pall is worldwide. And it won't be helped by Hong Kong research that suggests the actual number of local infections is 44,000 and far, far above the official tally.
In China, emergency measures for those not directly affected include free travel via a massive rail refund program, and mortgage payment deferrals. Some policy limits on medical insurance have been waived for those affected.
The Chinese lockdown will create many losers. It may also create winners. Some think that will include India.
When the ASX opens today, a large fall is expected. Yesterday the NZX50 fell -0.6% which in the circumstances was pretty modest. But it will be hostage to the ASX today.
The global economy was vulnerable before the China virus, and investors will now be very nervous about where to from here.
And we should note that another heatwave is about to hit Australia. Severe conditions will be widespread with extreme conditions forecast for Canberra, eastern Victoria, south-east New South Wales and eastern Tasmania.
The UST 10yr yield has dropped even further, down another -7 bps so far today and now at 1.61% and its largest weekly drop in more than six months. Their 2-10 curve has flattened to +15 bps. Their 1-5 curve is has suddenly turned very negative, now at -11 bps. And their 3m-10yr curve is much flatter at just +7 bps. The Aussie Govt 10yr is down another -9 bps since yesterday morning and now at just 0.97%, a -20 bps fall in a week. The China Govt 10yr is holding at 3.03% but their markets are closed this week (at least). And the NZ Govt 10 yr is down -6 bps to 1.40% and that is a -13 bps weekly retreat.
Gold is sharply higher, now at US$1,578/oz and that is another +US$6 gain in a day.
US oil prices are also sharply lower yet again, now just under US$52.50/bbl and the Brent benchmark is down too at just under US$59/bbl. Both represent falls of more than -US$5/bbl in a week.
The Kiwi dollar has fallen by -½c today due it its vulnerability to its China trade. It is now back at 65.5 USc. On the cross rates we are higher at 96.9 AUc because markets assume Australia has even higher vulnerability. Against the euro we down at 59.4 euro cents. The net of these shifts leaves our TWI-5 at just under 71 and that's its lowest in more than a month.
Bitcoin has moved back up this morning from where we left it yesterday, now at US$8,792 and that is a daily rise of +3.8%. 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 ».
133 Comments
Does belief, political belief influence quality of decision making?
Identity politics, it seems to be influencing what our governors are doing and not doing.
One explanation of how the COL came to be.
The virus marches on.
... the Lamington Virus claims its first victim worldwide , in Hervey Bay , Queensland ... yesterday on Austraila Day ( imaginative name , guys ! ) a 60 y.o. lady choked and died after speed eating a lamington ...
Be warned : lamingtons have been spotted ( dessicated coconut ? ) in cafes around NZ ... and in elderly ladies cake tins ...
... please be careful out there , team .... they look so innocent , but in the wrong mouths , a lamington can be deadly ...
We couldn't even stop livestock movements across the strait when there was a serious animal health outback down south.
I heard some "educated" person on the radio news stating our geographic location would help protect us. Yeah rite. Only if we close boarders, see above.
A friend of mine thinks exponential projections are BS. I agree but I cant help looking anyway. Imagine the effect on the global economy if these projections of coronavirus are even remotely true. The next few weeks are going to be interesting.
Date / China / Rest_of_world
Fri 31 Jan / 25k / 540
Fri 7 Feb / 560k / 12k
Fri 14 Feb / 12m / 270k
https://www.rnz.co.nz/news/national/408279/wuhan-coronavirus-unconfirme…
Unconfirmed reports of infected person in Queenstown.
All I can see is a tiny touch of green on Mt Taranaki and also the Tararua ranges. Everywhere else in North Island is glowing. Just back from a couple of days in National Park and I've never seen it so dry on the ground at this time of year.
Metvuw shows brief respite on Wednesday, then nothing.
http://metvuw.com/forecast/forecast.php?type=rain®ion=nzni&noofdays=…
Should put a floor under the milk price I guess?
I can't wait to hear the dairy farmers complaining about the climate change they are solely responsible for. Nature fights back against those responsible. I doubt all the virtuous people driving a Tesla to the beach or taking an extended vacation are complaining about the lovely sunshine.
skudiv - what a load of bollocks, to suggest any one part of society is solely responsible for climate change. And as for Tesla drivers 20% of their energy comes indirectly from fossil fuels. Better than 100% but not as virtuous as a bicycle. And those on vacation will likely have driven or flown to their destination.
Surprises me , scant attention was given to Grant Roberston's $ 12 billion infrastructure splurge ... roads roads roads ... roads galore... petrol head heaven .... and a hospital ( someone's gonna crash on all those new rinky dinky roads )
... and coincidently .... its election year ... 3 years ago the Greens were dictating to us .... cars are bad , public transport is good .... we must save the planet ...
Ah hypocrisy , thy name is politics ... Taxcinda's saying to the Greens stuff off you lot , we need votes
... oooh lookie ... what have we here , a dusty old volume " Roads of National Significance " .... we'll just polish it up a bit .... " anyone got a texta ? " ... rub out " Gnats " ... done .... and scribble " Labour " over the top of it ...
No one will be any the wiser .... who's hogging the chardonnay ... share it around !
Too right! ACT’s philosophy is based on the sound principles espoused by Ayn Rand, including homophobia, tacit approval of rape, promotion of extreme self interest and the right to colonise. Great blueprint for a happy life. That could be why 99.5 per cent of voters rejected ACT in 2017!
Interested to know what others see in him - I admit I haven't gone out of my way looking for his opinions and the main thing that broke through to me was his embarrassing 'so busy telling the press of his voting intentions he missed the vote' incident. What am I missing out on?
the calibre and accompanying culture of all sides of the house makes one more than despondent. The new age of rapid quick fire communicating has not helped matters. Too easy to fire something off without having to think about it. Too many twits twittering. In the old days a well crafted telegram would count over a 100 of these sort of messages.
Kevin D Williamson: Identity politics is far easier to engage than policy - that takes Effort.....
From a purely Western interpretation, year of the rat looks like a rather apt description. China has had some set backs and internationally there has been much loss of that all important face. The Hong Kong riots, Taiwan gave them the bird and this virus outbreak, repeating far too much of Sars circumstances, asks very serious and profound questions as to the performance of the regime in controlling the safety of their food chain. Throw in the air and other pollution there is a real risky environment for all inhabitants, every day.
President Xi desperately needs some good PR. Whatever happened to those who made Tony Blair appear wonderful? When your country is growing ever wealthier and at a faster rate than others then you ought to be appearing as some kind of shining hero. Maybe PR is just not part of Chinese culture.
The Wuhan coronavirus could blow up the game China's been playing with its economy for years
https://www.businessinsider.com.au/wuhan-coronavirus-will-hurt-chinese-…
In Limits-to-Growth and esource draw-down terms, communism is as bad as capitalism and labour is a bad as national. And 'green growth' is an oxymoron.
The problem with attempting to maintain growth, is 'doubling-time'. Very soon, no amount of centre-pivoting, palm kerneling, bitumen-covering, stadium-building or anything else, delivers the next doubling. The crowd have been conditioned to expect growth, politicians commit suicide if they don't promise it, and the media still advocate it glowingly.
But the last decade's debt increase, plus the physical indications we're pushing the planetary boundaries (from bushfires to fracking) tells us there ain't another doubling available. A senior NZ economist has suggested we're becoming a service economy - but the old tale of a village taking in each other's washing to get rich, describes a service economy perfectly. A real economy needs inputs of energy and resources. A growing one needs ever-more of both.
Robertson would be better addressing post-peak resilience, and roads-to-nowhere ain't part of that.
Even most "Greenies" wont accept the growth game is over. Just yesterday I caused a huge argument, denial and was told I was rude and not to say that having 3 or 4 children is a bad idea with respect to CC and ecological damage. So its perfectly OK to have 3+ kids and buy a Nissan Leaf (FB EV group) to salve any possible guilt, but bad to buy a Ford Ranger but have no kids. So I probably risk yet another ban from a "green" group because some people dont want to hear such things, FFS people need to start getting real.
Meanwhile in 2012 scientists knew OZ wasnt facing a drought but a permanent shift and still the Pollies deny it.
https://climatecrocks.com/2020/01/25/more-mike-maccracken-can-we-save-a…
I dont think Labour is hugely interested and in fact the core fairly anti-CC as they are seeing votes lost from the little they have done so far to the second big party who deny it altogether. This circles back to the voter getting their act together and accepting they/we all have to move and move fast.
Steven. Or perhaps their sampling processes of public opinion is showing the main parties that ever sensible, pragmatic and secular middle NZ is observing the religious fervour that typifies much of the AGW movement, causing that key voting group to become suspicious about the veracity of some of the religion's apocalyptic predictions.
If the govt stopped incentivising having more children through increased welfare payouts per child (if you qualify, of course) it'd probably have a bigger effect on reducing ecological damage than all their other initiatives.
Sadly it'd probably cause poverty and abuse to soar as well.
Alas,'fairytales of eternal economic growth' seems to be the only way forward. Keep growing that population!
PDK your post is somewhat frustrating. I normally enjoy them and have learnt a lot from you, but this is just negative as have been a few others that you posted lately. I'll ask again do you see a future without travel? If the answer is no then how will that travel take place?
My view is that NZs roads are extremely poor quality virtually everywhere. 90% of them should be at least four lane highways to support efficient travel, be it with fossil fuelled vehicles or sustainable ones. What needs to be discussed is the size of population the environment can support. and that discussion must necessarily also consider the impact of tourism.
I agree totally that unlimited growth, or for that matter at this time, almost any growth, will be unsustainable, so a reshaping of the economy is absolutely necessary. That also needs to be discussed as to how this will occur, but I do not believe it is unachievable, although I suggest some form of retreat/retraction may be necessary.
Recently took a meandering sort of a route through Mid/Sth Canterbury and marvelled at the myriad of rural roads all built to network & service our primary production. Then wondered how the heck did NZ, in its relative infancy, afford to construct these in the first place, as today we cannot even maintain them.
The same way Egyptians built pyramids thousands of years ago. Few smart people, and a very large and cheap workforce who worked very hard for very little on very dire working conditions. Such dire conditions cannot be (and are not) tolerated today in NZ. In places like China, you can still wonder how they built something that quickly! the formula is the same: hardworking people who are paid very little and if they are injured or killed, there are very little consequences to the 'project'.
Murray86 - travel is done on te back of easily-gotten energy. Leafs are totally reliant on the Fossil Fuel infrastructure being there, and roading (both machinery and material) is fossil-fuel/feedstock-based too.
Have you got an alternative? Yet you're advocating even more paved (and therefore even more maintenance-requiring) paving. Yet we're demonstrably in triage mode, infrastructure-wise, already. And travel is a discretion, not a necessity. Tourism is also 100% reliant on fossil fuels, with no plan-b in sight. Reshaping? I thinks that's a bit mild, considering the extent of the morph required.
Wow cannot believe New Zealand has not already CANCELLED ALL FLIGHTS FROM CHINA but guess what ? we are only worried about our economy and the tourist dollars ! People here are potentially going to die from this virus, how stupid are we ? You have to remember the virus is up to 2 weeks AHEAD of any information we are seeing on the news right now and its most likely that the Chinese are downplaying the number of cases.We are in the perfect location in the world to STOP this virus from ever getting in here in the first place. Personally I would be in the process STOPPING ALL FLIGHTS until it looks like its under control or there is a vaccine. Everyone coming in from China should have been put in quarantine, not let loose on the public.
Remember Carlos, stopping the Chinese flights.. means Xenophobes. You got to understand this is the year of Rat behaviour. The red carpet pathways have been laid the past 15yrs.
'Let them in' mentality is very strong for purpose. Our/NZ male populations is never recover from WWI & II - so in order to 'start fresh', we need to decimate the current whinging population. Then let this year of Chinese zodiak mentality take over. The seeds were here the past 150yrs nationwide, getting more this days and the like of CoronaVirus for the fertilizer. Before the new growth of a different nation to appear. Phoo yaa
Yip, Nat Co. seeds were long a way to JK initiatives - NZ whingeing population, need to be replaced. Nat co. future plan is to remove this union jack flag logo, then the local natives to be replaced by ever so strong marching blue voters banner, imported all from the mainland China... the bright red of CCP is different from Lab red, the red CCP will happily support by means of supplying money and their massive voters to their local blue puppet. Now you see how Nats differ, don't believe? check how the past 10years NZ as a country being sailed into.. in every facets.
This is way bigger than the Chinese are admitting to, its mega. If its not contained it could be a re-run of the Spanish flu that has worried ppl for decades.
https://www.youtube.com/watch?v=X2GZg1qzohY&fbclid=IwAR0g-wZdXpE6jo_khs…
Director of public health Dr Caroline McElnay : "We've been looking at our risk assessment ... It's not as infectious as other viruses like measles or seasonal influenza, and the fatality rate is around three to four percent. The mortality rate for the SARS virus was 10 percent. This virus doesn't have a particularly high mortality rate and it's not particularly transmissible. We might potentially see another case as a result of the first case in NZ, but we're really not looking at a scenario of a sustained community outbreak here in NZ"
there are 49,000 hospital beds in Hunan, yet they are overflowing from a few hundred cases The Swine virus has been deadly in every country it has infected. Viruses are dangerous and they can mutate we should always be cautious just incase this is the one.
It could even have escaped from a military facility, the CCP is never going to tell.
http://newshub.lk/en/2020/01/27/coronavirus-outbreak-may-be-result-of-c…
"......not that you'll ever find Middlemore hospital with 90% vacant beds...."
No, I agree Pragmatist, South Auckland's Middlemore is really more of a giant industrialised maternity hospital struggling to service the ever-increasing needs of the snowballing and irresponsible local fertility rate. Labour would never interfere with this primary role.
If the reported current figures are correct that is and I think we all know that they are not.
As I was saying yesterday is that people are on lock down. Do not go out of your house, do bot come to the hospital, self medicate.
The overnight figure of 40,000 plus revision of the infected persons is over 10 times higher than yesterday and from what I've been told by a friend from Hong Kong it is at least twice that. 80 dead... we may as well multiply that by ten as well. It is not being adequately contained and is set to grow.
How long till this is declared a global emergency and tourisium numbers drop to zero and towns like Queenstown, Wanaka plummet in land and house prices and pur exports figures down by 10% to 20%...
Can the COL be proactive and decisive and deliver the response needed if this escalates?
I certinally will not be holding my breath waiting for action, I'll be going bush for a few months.
I'm with you, I was just reading an article about the Spanish flu my Grandfather wrote. He drove into a small rural town in HB, the Postmaster yelled at him from across the street to go home, they had just buried three men that morning, he was to go home and stay there.
Agreed Mike, we cannot be a Xenophobes country. The Chinese has been given a green light by CCP no 1, courtesy the recent visit by ANZ/JK (assuring his no.1 buyer of his mansion purchase?) - to start the buying frenzy again all over NZ - We need to increase the GDP by means of strong export based productivity - in this case flurry of exporting local land ownership activity to the more needed country. Well dun nusilah!
Its way bigger if the pictures/videos are any indication, this isnt a small event. https://www.youtube.com/watch?v=pTWZPGzvJIo
Coronavirus Update: Following the money
Whatever else is going on, however real or otherwise this “outbreak” proves to be, “if the WHO declare a global health emergency”, some people are going to make a lot of money.
In some places, good decision making is important. People spend time getting the structure of a group right, so as people have the best chance of making a good decision.
“They [the Ministry of Health] have an executive leadership team which has got about 10 people on. It's quite big, but the director of public health is not there. So, you can see the amount of priority, the Ministry is giving to public health.”
The executive leadership team has 16 members. There is deputy director-general population health and prevention on the team, but the director of public health is not included.
https://www.newsroom.co.nz/2019/04/16/531451/nzs-deadly-public-health-b…
Yes, good decision making is important, I wondering where they get their information from, hopefully not the media.
Reminded about Y2K. Did it never eventulate because of all the precautionary work done, or was it never there to begin with?
You can't measure what you can't see.
Even the measurement of the size of the Aussie fires by the media was laughable. One map showed a not for scale icon for every fire that had happened this season (still going or not) which made it look like a quarter of Australia was on fire NOW. Then some other media organisation had taken that and rounded of the edges and overlaid that map onto to USA so it looked like a third of Australia (and by comparison USA) was on fire now.
And this is for the stuff you can measure.
Who are you going to trust?
With an IT degree behind me, including some programming Dale, I can tell you it was both. That is some software and possibly hardware would have hiccuped big time when the date rolled over to 00 rather than 2000. But a lot of software would not have. It comes down to how the coding recognised a date or a date format. But the media never missed a chance to get every ones attention so I did get overblown just a bit. By how much is any ones guess, and the effects in many cases would depend on perspective.
Starting to look rough. https://www.youtube.com/watch?v=pTWZPGzvJIo
And in reality it is even rougher than that. No room in the hospitals so people are told to stay home and self medicate. They have no idea of how many people are infected in their own homes. How do they get food and pay their Bill's when they are not working? Over 60 million on lock down with Mortgage holidays, that can not continue, someone has to pay the interest and food costs eventually.
Despite the Fed pumping billions into the US economy to calm an already unsteady market it is still slipping. It is a major event that has no end in sight. FYI I purchased some face masks on TM and one of the three firms had already sold out. I wouldn't play the wait and see game.
Hey, the local bureaucrats need catered lunches and new office furniture, so you'll have to wait. Also, they are battling on the frontlines of climate change, attended countless climate change meetings funded by us. This is because, as we all know, people in suits having meetings is how things get done around here. Us regular folk could learn a thing or two from our benevolent leaders
I useta maintain County roads (Wallace, early 70's) with a Cat 112 (D4 motor, all mechanical blade controls - the gear can last forever) - it's not a hard job. Occasionally heated cab in Southland winters. But now nothing less than a $400K articulated all-hydraulic, electronics everywhere, fully air-conditioned machine will do. Local knowledge? Goneburger..... You'd be better off acquiring a 112 and taking the occasional swipe down the highway.
It's human nature, same when you hear about that recent US-Iran tension, Chch or Kaikoura E/quakes, Chch mass shootings,.. more than this, even just saying.. multiple over and over.. Kia kaha Chch, Our tears etc. - Look how many comments? for the good news of property price increases? - not many eh? - just a radar blip, such a nature of people.
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