Here's our summary of key economic events overnight that affect New Zealand, with news our currency is ending the month at its lowest level of the year so far.
But first, the Chinese coronavirus has now spread to India and the Philippines. And Russia has closed its far eastern border with China. Vietnam is doing something similar. Many of the world's major airlines have cancelled flights to and from China. Some countries are putting cruise ships with Chinese passengers into quarantine. And new estimates suggest Chinese economic growth could drop to the +4.5% level in 2020.
The World Health Organisation's committee on pandemics is meeting today for third time in a week and has declared a full-scale emergency. That will trigger a more co-ordinated international response, but it will also isolate China.
And a US cabinet secretary is gloating about how China's struggle "will bring back jobs to the US". But some key companies seem to be moving production to other Asian countries instead. And in another oddity, the virus is badly affecting the sales of the Mexican beer, Corona.
Elsewhere, the American Q4 GDP estimate is out and has come in at +2.1% pa, right on market expectations, and exactly the same level as Q2 and Q3-2019. It's a level that is lower than the average for the past three years, held back by the tariff wars and excessive deficits. And it is well below the Administration's own 3% target.
In Europe, rising business sentiment in both France and Germany is offsetting flat consumer sentiment levels as businesses shake off their negative outlook for 2020. But these surveys were taken before the full risks of the coronavirus were known.
Equity markets are all lower today, continuing the risk-aversion slide that set in yesterday. The S&P500 is down -0.7% so far today. That follows European markets that were down a sharp -1.4% or so overnight. Yesterday Tokyo ended up down a sharp -1.7% and Hong Kong fell -2.6%. Shanghai is scheduled to open on Monday, but expect that to be delayed. Whenever it does open, there will be serious red ink everywhere.
Australia's mining industry won't get off lightly either. Not only is Chinese industry severely constrained, but Chinese ports may be closed to shipping soon and that would bring a rapid halt to their operations. Obviously, such a move will heavily impact New Zealand's growing trade with China, and that includes our tourism which will also be heavily affected. No-one is going to get off lightly here.
And in Australia, ANZ is accusing regulator ASIC of collusion and abuse of power in a court battle that will leave it exposed to reprisals when the judgement is released.
The UST 10yr yield is even lower today, down -8 bps after yesterday's fall and now under 1.54%. Their 2-10 curve is now at +17 bps. Their 1-5 curve has remained negative, now at -10 bps. And their 3m-10yr curve is still flatter at just +1 bps. The Aussie Govt 10yr is down -3 bps to just under 0.95%. The China Govt 10yr is holding at 3.03% but of course their markets are closed. But the NZ Govt 10 yr has fallen -9 bps to just under 1.30%.
Gold is up strongly today, now at US$1,581/oz and that a rise of +US$11 in a day.
US oil prices are sharply lower today, down by more than -US$1.50 to now just under US$52/bbl and the Brent benchmark is at just over US$58/bbl. Demand fears are weighing heavily here.
The Kiwi dollar has also been knocked sharply lower today by the retreat from commodity currencies. It is now at 64.9 USc, a drop of more than -¼c. On the cross rates we have held at 96.6 AUc because the Aussie is suffering the same fate. Against the euro we also lower at 58.9 euro cents. That leaves our TWI-5 at just under 70.4 and a new low for 2019.
Bitcoin is unchanged from this time yesterday, now at US$9,316. 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 ».
102 Comments
https://www.mintpressnews.com/us-announces-three-new-bases-iraq-iraqis-…
The VEmpire still needs its blood. Perhaps it's time to be disassociated.
I think making this tired and shallow claim is just intellectually lazy. The US has no need for oil. It produces more than it consumes. Arms sales are a tiny drop for a few companies.
This is a reality you might not like, but if the US pulls its overseas bases the world will be a much less safe place.
Yeah, they start a war and never actually finish it leaving the country in a mess and usually providing one or two groups with arms and then turning on them and that comes back to bite them.
I disagree, the States fuels the fire.
Weapons of mass destruction... Evil empires... lack of democracy... which box dose the US not tick for sansions and invasion....
The oil thing. They have only just started uncorking their wells, a lot of fields were paid to keep a cork in them. Run the world supply down then uncork has been their MO for decades.
Kezza and rolling on I suggest you are both correct. The issue is quite complex. The military industrial complex, which Eisenhower warned about, is even more powerful and far reaching today than it was in the 50s and 60s and Trump is stupid enough to buy into their propaganda and a part of his character will want what they offer, after all he wants to be seen as a Strong Man. But America does largely protect the west against many eastern threats, even though it is usually America's treatment of those eastern countries and peoples that created the threat in the first place. We will be tarred with America because our society is western based, based on christian culture and democratic.
It would be nice to think we will be seen differently, but in the crunch those who hate America will not see past the colour of our skin and the language we speak. That has already been proven.
Not only is Chinese industry severely constrained, but Chinese ports may be closed to shipping soon and that would bring a rapid halt to their operations. Obviously, such a move will heavily impact New Zealand's growing trade with China, and that includes our tourism which will also be heavily affected. No-one is going to get off lightly here.
The level of bank reserves, the PBOC liability Deposits of Other Depository Corporations, in December 2019 was just a hair less than the level in December…2014. Half a decade and the same amount of bank reserves. That’s a solid and alarming dimension (as is the correlation with the eurodollar system’s behavior).
That’s why so many RRR cuts, the rationale being the banking system would make up this massive and growing difference. In one sense, they’ve been successful in that China hasn’t yet blown up like a lot of people have been expecting. A mountain of debt and an increasingly dead economy trying to plod through so much waste and overcapacity. Some monetary restrictions on top is a recipe for trouble.
It has been trouble, just more of the slowly squeezed variety which is what counts as success these days. Long gone are those when 8% growth was considered recession. Nowadays, clinging to 6% would be akin to a miracle.
And, once again, that was all before the coronavirus. Link
https://goldsilver.com/blog/gdp-growth-debt-growth-real-growth-negative…
"Said otherwise, there is no growth but the growth of debt. And this takes no account of the far larger and more pernicious unfunded liabilities"
It'll be the same with China. Why is it that only the positive side of the ledger is counted? Because we'd have to acknowledge that growth is over?.
Here is a comment from an Australian shipping company to my Aust colleagues. I work for a chemical company that import goods:
The Chinese government has extended the New Year holiday until Sunday, February 2, 2020 with the first day in the office to be Monday, February 3, 2020. However, in Shanghai the local government has told companies not to send people to work until Monday, February 10, 2020 to help manage the coronavirus outbreak. Other regions could do the same.
Below are the facts that we know as of today: • Handling of cargo from Wuhan, Hubei Province and other quarantined zones will not be possible. This includes both full container loads (FCL), less than container loads (LCL) as well as air freight. • Main air and ocean terminals are still operating normally at this time. However, there are now strict health checks which could cause delays. • With the extended Chinese New Year holiday, we can expect delays in factories opening and general exports out of China suppressed. • Imports into China will be delayed due to the extended holiday which could cause some congestion. • Ocean carriers might blank sail due to lesser demand. • With the decrease in passenger demand, several airlines are cancelling passenger flights which is having an impact to cargo capacity.
We will continue to monitor the situation and advise any further updates as needed.
Goods may be on the floor at the factory ready to go but there is no transport available to get the goods to the port. There is no one at the port to load onto the ships.
We will know more next week.
No one is going to get off lightly here. Yes exactly, that is the rub. It is as sad as it is inevitable that some in the world go all out partisan a la the gloating out of Washington, but that is no doubt the nature of the beast, especially obviously within the culture created by Trump.
US GDP held back by excessive government deficits? Sacre bleu. But, but, but, excessive government spending is meant to be so very, very good for us. Does this mean that government spending often does no good? Surely not? Next you'll be claiming that central banks can't create jobs, just inflation in house prices. I mean, isn't this a form of heresy?
Farage exits EU
https://www.youtube.com/watch?v=LIgmfpHBiDw
Stuck in the middle with you
https://www.epsilontheory.com/stuck-in-the-middle-with-you/?utm_campaig…
It's becoming quite clear that the economic impacts of the virus will be very significant indeed. Is this one of those black swan events that the minority such as myself thought would happen in the next two years to tip over the economy?
Will this prompt ocr cuts to zero?
How will NZ fare given how reliant on China we have become (eggs in one basket)
I was saying it was an over-reaction in terms of its human health impacts, and I maintain that view.
It's worth listening to virologists - you know, the experts - on these things.
I haven't heard any saying it's likely to be a doomsday virus.
I heard one reputable virologist saying it would likely kill 1000-2000 people. Of course, not good, but far from doomsday.
I've NEVER said the precautionary measures won't have a significant impact on the economy etc.
It would be foolish to think other wise.
Quite a few saying 'nothing to see here, storm on a tea cup'. I'm guessing that the finicial stats aren't hitting the streets yet. China is in holiday mode and that was planned for and stock piles were created but what happens when those dwindle when no one is going back to work...
A few days ago I questioned what impact the virus would have on Chinese student enrollments. Someone suggested not much impact, as it could be seen as escaping from the hotbed.
I am thinking now as travel is restricted that there could be a lot of enrollment cancellations, February is of course the month they come over.
WHO declare public health emergency
The WHO have declared a public health emergency because of the spread of the virus outside of China, describing it as an “unprecedented outbreak”.
The total number of cases outside of China has reached 98 across 18 countries. Eight cases had spread via human to human contact, in Germany, Japan, Vietnam and the US.
However, there were no deaths outside of China.
The organisation congratulated China, saying the declaration was not a vote of no confidence in the country, on the contrary, “the WHO continues to have confidence in China’s capacity to control the outbreak”.
https://www.theguardian.com/world/live/2020/jan/30/coronavirus-live-upd…
This is zero hedge so not always accurate.
https://www.zerohedge.com/geopolitical/citizen-journalist-exposes-bruta…
Never believe Chinese state statistics. If there were only 170 fatalities I struggle to see how some of the images of overcrowded hospitals have come about.
The WHO stating they have faith in the Chinese response just means they're another corrupt organisation. They should've declared an emergency a week ago, but didn't out of fears it would impact trade. Hello? You're the WHO, not the WTO.
The upto 14 day incubation period is the hammer. Sure the death rate isn't up there but in terms of stopping the world in its tracks financially it could be a extream event.
In turn we could and increasingly so will have very harsh issues developing from the financial side of things.
China is lying about the disease spread and numbers - their hospitals are just turning away and unable to test or treat people who are sick: https://www.latimes.com/world-nation/story/2020-01-28/fear-and-panic-gr… This graph reveals the lie: https://en.wikipedia.org/wiki/File:Log-linear_plot_of_coronovirus_cases… First case was start of december, but extrapolate this very linear 'data' back and you get patient zero start of January. There is a missing month of spread which means real numbers are likely 100x higher.
... relax ... every year or 3 there's another panic demic popping up somewhere ... bird flu , SARS , swine flu , head shrinking African flu , Ebola ....
But the fact is .... no one here at interest.co.nz has contracted any of these , and even fewer of us have died from them ...
... join the dots : blogging gives immunity ! ... stay here , buddy ...
Correct that no one visiting interest.co.nz has died from any of these viruses BUT they have felt the effects of it financially in either a plus / minus in their investments.
It is not the virus / death rate that is the concern. The very high potentially devastating decline to stocks / GDP, other investments etc is where interest.co.nz readers will feel the effects.
1'st priority ... wake up not dead ... TICK ! ... a good start to the day ....
2'nd priority ... lamb tikka masala for lunch , garlic naan ... YUM !
3'rd priority .... portfolio OK ? ... shares still up ? ... YUP ... back to 2 , then ...
Life is good , and simple , in the Gummizone ...
.. if only the media and the WHO were as hysterical over the greatest threat to humanity ... the deadly killer that weakens , debilitates and destroys .... millions upon millions die yearly ... not the virus .... no ...
A deadly white powder which has stealthily infiltrated our lives .... SUGAR ! ...
Mr 'Black Swan' Nassim Taleb's take on why precautionary over-reaction to chinese coronavirus is best:
https://twitter.com/nntaleb/status/1221486205847646208/photo/1
"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 belief that nothing can be done."
... if you're the owner of a vacant property around Orc Land , be afraid ... be very afraid .... Mayor Phil has you in the crosshairs of his slug gun ...
Goofy is lobbying the government to allow him to utilise some of Orc Land's 40 000 unoccupied houses and apartments for public service workers , and for the needy . .
... in other words , your property rights are out the window .... the Goof aims to turn the Queen City into a communist state ...
and look at the result
https://www.theguardian.com/commentisfree/2017/sep/24/germany-elections…
A lot of the long distance flights I've been on I have come down with something but now the quack at Air NZ says they have amazing filters that stop this.... Utter BS.
A flight I took last year had a very sick person on board. We were met by the full RACAL suited team and after the patient was declared non contagious we saw a full team of security had been ready to put us all in a "holiday" camp.
True story; a worker at Auckland Airport in contact with hundreds of passengers a day, gets fever of 40, coughing, bedbound.I contact Public health doctor; does not meet criteria for testing. Needs to have been in contact with proven case of Coronavirus to get tested.....we are in safe hands indeed.
Talks to capacity & resources available.
My understanding is test need go to Melbourne, can anyone confirm this please?.
The ANZAC evacuation looks to have fallen apart to boot
Note to self: press release is not related to satisfactory completion. Infrastructure Projects.
NBR online headline yesterday.
Controversial Chinese Billionaire get oio approval to buy Hamilton Stud far.
Apparently connected to the Nats somehow.
He and his mates will be safe from the virus hanging out in Hamilton.
I thought that the COL were going to stop this type of thing.
China knows that shutting down will be painful, but is doing it anyway.. so this must be serious.
It does not take many patients [that need to be kept in isolation] to clog a hospital. I wonder how prepared we are? This maybe a good exercise in our ability to "shut down". All flights would be suspect and all passengers would need to be held in isolation for a period if we could not check on arrival. That would take resources and governance i don't think we have. Did i mention chaos?
From CNN
'We'll admit them if they're dying': Virus outbreak pushes China's stretched health care workers to breaking point
https://edition.cnn.com/2020/01/30/asia/chinese-health-care-virus-intl-…
Friday Funny : the SFO have charged Jamie-Lee Ross and three others , after ex Gnat Ross tipped them off about political donation illegalities by the Gnats ...
... Soyman Bridges and the Gnats have not been charged ...
Ah ha haaaa .... lawdy lawdy .... weeing my Gummy nappies ....
https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12…
Air NZ cutting some flights to Shanghai after Mid Feb. ( Due it seems to reduced demand only) What is wrong with these people? Close the gate now.
I'm surprised at this line of reasoning. Just legalise and tax both, if folk are worried about health outcomes from marijuana. Surely having both legal and taxed makes more sense then having one illegal and generating tax-free income for organised crime.
Why would you propose having one legal and taxed, and the other illegal and tax-free?
With our govt such a reactive lot, we can only guess what might really happen here. We have multiple links with the middle kingdom so to say we're going to by-pass this is folly. It's when & how bad, rather than if or where?
True story: I was in a my favourite coffee shop yesterday when 3 Chinese ladies (from 3 generations actually) came in & stood right next to me (behind me). Good, bad or otherwise, I ordered, then quickly moved away & consumed my drug of choice on the outside tables. And even though I say I don't believe most of what I hear & read, you never know, they might actually tell the truth one day.
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