Average rise in US jobs; strong rise in Canadian jobs; US Fed sees growth but warns on virus risks; China virus count up; China SMEs in grave risks; Westpac says we are underestimating impact; UST 10yr yield at 1.58%; oil down and gold up; NZ$1 = 64 USc;

Average rise in US jobs; strong rise in Canadian jobs; US Fed sees growth but warns on virus risks; China virus count up; China SMEs in grave risks; Westpac says we are underestimating impact; UST 10yr yield at 1.58%; oil down and gold up; NZ$1 = 64 USc;
Heaphy Track, Karamea

Here's our summary of key economic events overnight that affect New Zealand, with news some think we are underestimating the economic risks China's coronoavirus poses.

But first up today, American non-farm payrolls grew by +225,000 jobs in January (of which +34,000 were for part time positions) and far better than the modest +147,000 rise in December. It was also better than the 2019 average of +162,000 per month but far less than the same month a year ago (+269,000). Their participation rate remains weak at 63.4%. Manufacturing lost more jobs (-12,000) while the gainers were healthcare (+36,000). In fact, the healthcare industry alone has added +361,000 jobs in the past twelve months. Also strong gains were recorded for warehouse workers, couriers and messengers, and cafe and fast food workers. Average weekly earnings rose by +2.5%, which is marginally above CPI inflation (+2.3%).

The Canadian labour data was a little better. They grew by +35,000 jobs and all in full-time work. Their participation rate is 65.4%. Average weekly earnings rose +4.6% in a year, which is well above their 2.2% CPI inflation rate.

Back in the US, their wholesale trade sales fell -0.7% in December from November (+1.5%), a decline that wasn't expected. In fact they barely reached the same level of a year ago.

The US Fed said in its semi-annual Monetary Policy Statement to Congress, a "moderately" expanding American economy was slowed last year by the manufacturing slump and weak global growth. But they also said key risks have receded and the likelihood of recession has declined. They have a caveat however: coronavirus knock-on impacts.

This data weighed on investor confidence. On Wall Street, the S&P500 is heading for a decline today, down -0.7% in afternoon trade. That follows European markets which were down about half that. Yesterday, Asian markets ended flat on the day with Shanghai up +0.3%, Hong Kong down -0.3% and Tokyo down -0.2%. The ASX200 was down -0.4% yesterday while the NZX50 Capital Index was up a strong +1.3%.

There was another large jump in the official tally of coronavirus confirmed victims and deaths yesterday, reaching 31,400 and 638 respectively. We are heading for a doubling in a week.

And in China, the economic impact of the disaster are becoming apparent. One third of SME's in a prestigious survey said they can only survive one month of this crisis before declaring bankruptcy. Another third said they could only survive eight week. Official interest rate cuts and instructions to banks to defer loan repayments are just not going to be enough to save most of them.

And more locally, Westpac economists are saying we are greatly underestimating the likely economic impact in Australia (and New Zealand).

The UST 10yr yield is at just under 1.58% and a -7 bps decline from this time yesterday. Their 2-10 curve is down to +17 bps. Their 1-5 curve is more negative at -7 bps. Their 3m-10yr curve is barely positive, now at just +1 bp. The Aussie Govt 10yr is down -4 bps at 1.04%. The China Govt 10yr now at 2.86% and also lower by -2 bps. But the NZ Govt 10 yr has risen +2 bps to 1.35%.

Gold has risen again today, up another +US$3 to US$1,569/oz.

The Fear & Greed index we follow is still neutral. The VIX volatility index is lower at 15.

US oil prices are a little lower today at just under US$50.50/bbl. The Brent benchmark has also slipped to just under US$54.50/bbl. The North American rig count is unchanged this week.

The Kiwi dollar is down -½c this morning at just on 64 USc and its lowest level since November. On the cross rates we are unchanged at just on 95.9 AUc. Against the euro we are lower too at 58.5 euro cents. That takes our TWI-5 down to 69.8.

Bitcoin is still rising, up another +2.4% at US$9,777 and its highest level since October 2019. In New Zealand dollars, it is at its highest since September 2019. The bitcoin rate is charted in the exchange rate set below.

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

Our exchange rate chart is here.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment.

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Aleady happened with logs now on to non perishables. "A Chinese buyer of liquefied natural gas and a copper importer declared what’s known as force majeure -- meaning they are reneging on deals as the virus constrains their ability to take deliveries. The cancellations are among the first known cases of the legal clause being invoked in commodity contracts due to the epidemic."
https://www.bloomberg.com/news/articles/2020-02-06/chinese-gas-buyer-cno...

It's OK though, the infections growth rate is no longer increasing exponentially, just linearly so the lockdowns are doing the trick.

China will just need to stay in lockdown for another year and this should all clear up and everything will be back to normal...

Lets put this in context of one month ago.
We were watching and waiting for numerous situations arround the world to develop or not that would have had largish impacts on the economy.
Now we have something that is by far greater and it is not going to have much of an effect???
The current logic of, 'it's not going to be that bad' is lost on me.
China is not creating camps for infected people because the infection rate is dropping. 61 people infected on one cruise ship from one or two people, that speaks volumes of the real infection rates outside of Gov't controlled areas. . and now three ships in quarantine and I doubt people will be lining up to hand over dollars to jump on other ships, so the cruise ship market and the dollars it brings is going to plummet.
Keep calm and carry on....

Large populations infected in all large Chinese cities. This will become clear in coming weeks.

Yeah we've got the official stats but 90% chance that those are compleat lies.
The States would have a satellite with thermal over China monitoring the output of the crematoriums just for a start...
When the clearer idea of the real figures comes out the States as well as others knew what was going on before hand.

Who the hell would want to take a sea cruise: it's a hot-house for infection. If it's not the plague (let's call a spade a spade), then it's gastro-enteritis, a fire, a terrorist hijacking, or a capsize (as happened off the coast of Italy a few years ago when the captain became distracted while showing off to a Russian ballet dancer). There's nowhere to run to.

God awful things!!!

Agreed. If they can process raw materials they cant continue use to take deliveries. Still looking for discount crayfish.

So am I – but this isn’t helping our chances:

“A huge haul of crayfish could be released back into the ocean after China cancelled orders amid the novel coronavirus outbreak. The crayfish had been caught for sale to China but the orders were cancelled because of trade and travel disruption caused by the novel coronavirus outbreak.”

https://www.newsroom.co.nz/2020/02/05/1020615/crayfish-to-be-returned-to...

Saw a sign at the fish shop this morning : "Live crayfish was $145/kg now $99/kg".

I don't eat crayfish so I don't know if that's an actual discount or Briscoes level of "sale" though...

Briscoes for sure. Let me know when it is $20/kg.

I got a couple crayfish cheap off container door. 99 bucks for bottle champagne and 2 crays

The Westpac economists in Aus seem more downbeat than their man Zorro here

Westpac have cut New Zealand GDP forecast for Q1 from 0.7 percent to 0.1 percent. The RBNZ has already stated previously that sub 3.0 percent GDP will not generate the desired "inflation". RBNZ, like a sore thumb, meet next week .

Yep that increases the likelihood on an interest rate rise.

That's a much bigger impact than they were calling 1-2 weeks ago.

Keep going...
Knock down the 25% of current exports to China to 15%, slash tourisium by 30%, increase costs of a hell of a lot of items then and give it a good stir up. The result is still not being realised even then.

Yep, hard not to see 'negative growth' given those.
Are they wildly optimistic? We'll see.

We've lost forestry, that in itself is massive.
The freezers are full of meat and the works are turning stock away. Farmers are already doing it hard.
Baby formula is gone for China. Dairy are doing it hard but the true figures are not out yet. Maybe a lift with countries stocking up is showing higher returns.
Tourisium, people dont want to be in a plane, on a boat or spending when there is risk.
Imports prices on quite a lot of items will go up and some down as countries stock up and production decreases.
There can also be gains but I guessing they will not be enough to offset the losses.

It's interesting than an inexorable process has been mass-denied by the finance/economic types thus far, yet a trigger-event will be clung to as an excuse.

So 'global growth can continue indefinitely' will become 'global growth would have continued but for this or that hiccup'. Whatever.

It's the oil price is the one to watch. None of the new unconventional sources stack up at $50/barrel
https://www.reuters.com/article/us-canada-teckresources-cabinet-idUSKBN2...

The WTI futures curve has flipped back into contango again, reaching more than $0.60 in recent trading (out to the third month on the curve). Even as oil prices rebounded today, the difference between the March 2020 contract (current front) and the June 2020 closed at -$0.63. Link

https://www.newyorker.com/magazine/2020/02/10/can-we-have-prosperity-wit...

economists haven’t grasped “the synergistic functioning of civilization and the biosphere,” yet they “maintain a monopoly on supplying their physically impossible narratives of continuing growth that guide decisions made by national governments and companies.”

Now we're talking.

We have closed our border re China but there are plenty of backdoor routes via Asian countries who are still open with China.
Our NZ Chinese neighbour came home yesterday after 3 weeks in China for CNY. Self quarantining- no. Uber from the airport then down to the takeaway....

Yes, one of my friends came back last Monday. He flew Korean Air from China to Seoul and then to Auckland. He is in self-isolation right now. You need to call MOH to talk about your neighbour. 08003585453 is the number...

Somewhat surprised that Australia has 15 confirmed cases and meantime we still have none – are we the new “Lucky Country”?

I hope it's because we are truly blessed. My friend told me he was screened extensively before he could leave China (and enter and leave Korea), while there was not much check in Auckland. The screening and general self-isolation measurements on the Chinese end have been beefed up a lot since the early days. So it might help us unintentionally.

I am not surprised.
They have a much bigger population, including a much bigger Chinese population. And a lot more flights to and from Asia.
Coronavirus is very much maths at play in the real world.

You have changed your tune Frtitz since last week..and Gumy has clamed up? Admit you got it wrong?

He said yesterday that this is getting bigger than he thought. It's not a subject that is easy to get your head arround. China shutting down??? Yeah right not in a million years.. but now it is more than a remote chance.

Yep I think the health impacts are a bit bigger than I originally thought, but I still think it's going to be relatively contained outside of Asia.
I would say the best bet is somewhere between my optimistic view and your guys' pessimistic view...but let's all be a bit more modest, no one really knows do they?

Way higher than you will admit too...and the unintended consequences will be pilling up.

I just suggested we might all be a bit more modest...
You seem to be 100% sure that this is going to be a major killer.

Dont put words in my mouth Fritz...just said you and Gummy sound naive when comparing it your common flu. I will take your apology any time your ready.

We're all intitled to our own view. Fritz said it's worse than he thought, that's more of enough. It takes a big person to rethink your position and own it, that is what he's done that.
Good on ya Fritz, I like the 'let's be modest' call.

Thx Kezza!

For a start this is an order of magnitude more deadly than influenza. Huge cover up in China re infected and dead. I'm starting to think the Black Swan is circling and ready to drop it's load.

Me as well but this is NZ Fritz is intitled to his own view. Our own position/ exposure to effects influences our view of what is coming.
He / she sounds like a good bugga that I'd gladly have a beer or three with after this crap is over.

My neighbor who has friends inside of China says that they believe a quarter of a million are infected and thousands dead...

Who knows? but at the moment the infections and dead being reported seem to still be escalating.

Its only a matter of ti,me until it gets here

I'm sure Fritz was crowing that we were all fearmongers for saying the virus is an epidemic....

Custard - The title "Lucky Country" was actually an insult by the author who felt that although Ozzies are probably thicker than bat manure or Americans they still struggled thru due to all the assets the continent was blessed with.
Who would have thought in this day and age the LNP would get in by promising to support the coal industry and even a new coal fired power stn in Qld. Thick as and then theres Barnaby Joyce.

It is your duty to report them to the relevant authorities.

Latest update from Chinese consular briefing
http://www.chinaconsulate.org.nz/eng/fyrth/t1742022.htm.
And nation in mourning for the young Doc, who died , recovered and succumbed .
https://www.chinadaily.com.cn/a/202002/08/WS5e3ddb45a310128217275eb9.html.

Peak Prosperity guy.

https://youtu.be/ir79nIFbobA

And our comms
https://www.beehive.govt.nz/releases

Q:Is there a govt point person? comms wise.
Practical consistent comms needed to start last week.

I thought NZ comms was your job?

You see the contrast.
4 weeks ago activists and activistpolitians were "smelling the breath of Australia" "telling kids to eat less meat & dairy". Massive messaging.

Contrast now. Background to the risk management practical measures, tasks to conduct, all helpful. Not silence.

Second Ozz evac plane delayed leaving china.
https://youtu.be/CzDDxvxnPyg

There is science-backed fact, to anthropogenic climate-forcing.
There is science-based fact to resource depletion.
And there is science-based fact to the Limits to Growth - the biggest existential problem facing humankind.

But there is no reliable science yet, about this virus. So some of us refrain from commenting. It's very simple.

It is likely, however, that global collapse will be triggered by a tipping-point event, and that just which one was the tipper, will only be seeable in the rear view mirror.

How is this related/helping.
You are not a governing politician or in the administration.
And being selective about science too.

For example.

https://www.civildefence.govt.nz/cdem-sector/the-4rs/readiness-and-respo...

It is what it is, some bits last updated 2006.

https://www.health.govt.nz/our-work/emergency-management/pandemics
Govt plan last version 2017.

New Zealand's pandemic planning includes the Epidemic Preparedness Act 2006 and other amendment Acts.

https://www.health.govt.nz/your-health/healthy-living/emergency-manageme...

The one Govt minister that can actually get things done is busy.
I'm not expecting anything to be done in the near future and by then it'll be too late.

"The World Bank’s $320m 2017 catastrophe bond issue backing its Pandemic Emergency Financing Facility. The two tranches of PEF bonds were originally scheduled to mature in July of this year. Thanks to 2019 nCoV, they are teetering on the edge of default.

“...China is a 21st century economy with a 19th century pattern of food consumption,” says Mr Woo*. “Any kind of emergent infectious disease comes from the mixing of wild animals with domesticated animals. China is the world’s biggest reservoir for the creation of new viruses. For example, the Sars and Mers viruses came from bats.”

“...Nothing is uninsurable; you just need more data. And life risk gives you more data than earthquakes.” The real problem with underwriting pandemic risk, he thinks, is that it tends to be correlated with financial markets. “You don’t get the diversification offered by hurricanes and quakes.”
https://www.ft.com/content/3935ab5f-c6d2-4a91-ab98-f04b0a75da31

Just to clarify a bit, SARS host known to be Bat, MERS host know to be Camel.. this nCov19 genome host isolation process, probability so far pointed to the Snake (but off course that fresh live cut meat market in Wuhan, will deny this-it's been closed already) Authority is busy to contain the spread now. But here's a legit voice, that can be verified. Someone predicting this event to happen in the future (now), after the SARS, bird flu etc. - It's a voice from China, from Wuhan itself from their world re-known center for the virology studies: "...it is highly likely that future SARS- or MERS-like coronavirus outbreaks will originate from bats, and there is an increased probability that this will occur in China." - Peng Zhou (Wuhan Institute of Virology, China) - It's known now the current nCov19 is RNA class, corona virus/mutated - fascinating when you guys able to see how adaptable this little bugs; bats-->camel?-->snake, bats infected/mutated virus then hop to human (SARS) - the correlation with Camel geographically make it to be exempted, bats to snakes? mutated then hop to human (nCov19). SARS attached to human receptor protein ACE2, MERS attached to human receptor protein DPP4, this nCov19 shared about 68% similarity to SARS/bats.. but sadly the 30% differential is already subjected to genetic mutation/typo error on their S/spike/attacking gene multiply mechanism (hence the RNA class virus, not the easy DNA class virus such as Flu etc).. the race is now identifying the common human receptor protein that they able to attach, thus develop the barrier/vaccine/inhibitor - But alas, all of these? cannot be that all important as the RE market right? - Health is not as important as Wealth. Tui ads

Has Bindi Norwell or Tony Alexander put out a puff piece about how coronavirus is amazing for the property market yet?

I think I read him say that it might support the market because NZ will be more attractive, and interest rates may be cut.

So who's the DGM now.....

Just reminder to put into mind: The nCov19 virus is Corona variants, mutation. So it's RNA class. Transmission method similar to Flu & Hep. Best current method to avoid spreading are hygiene practices, isolation & containment. No specific inhibitor/vaccine can block the virus attachment to human protein receptor to date. The 2003 SARS victims spread over 9mths (also RNA class virus), been eclipsed by this nCov19 victim numbers in just about 1mth. Most not yet dead patients in more advanced care facilities, still in ICU. Some already been released after their own body able to fight off the bug. China is doing everything they can, spare a thought that they're in the epicenter of this outbreak. (Every countries will struggle when any major force hit them), this one of them, the ripple effect could be prolonged, slowing the numbers is the key. I would categorised what happened to NZ is just that 'lucky'.. but if you all willing to see the epidemic with pandemic distribution live growth map? knowing how close of people movements, business ties etc. I would say.. those 250 million peoples population, above OZ, spread with 3 time zones, consist of more than 16,500 islands (Bali is just one of them) - they are all in lucky miracle status,.. for now... no case yet being reported there.

Could be argued you'd be better to catch it first, then you will get the best medical care.