Here's our summary of key economic events over the weekend that affect New Zealand, with news China's woes are spreading and the impacts are deepening.
But first, the issue of a internationally coordinated digital tax on the global tech giants is back in the limelight as the US tries to do an end-run around the OECD BEPS proposals.
And the annual Warren Buffett letter to shareholders was out over the weekend, but this one contained no special revelations. It did report strong earnings but it didn't say who would take over from the 89 year old legendary investor. He also wants to see corporate CEO's supervised and reined in more effectively by boards of directors.
The coronavirus now seems to be spreading out of China in a significant way, and not by just travelers from China. Italy, Iran*, Japan and South Korea all seem to have a growing problem. There are now 2000+ confirmed cases outside China and rising sharply. It now threatens to become a pandemic. Inside China a topping out seems to be in place even if deaths keep on rising. Globally, there are now almost 80,000 confirmed cases and almost 2500 deaths. A week ago those levels were 71,300 confirmed and 1773 deaths. (*Iranian data is not in the John Hopkins CSSE data.)
The interconnected world of tourism and trade is the enabler of the rapid spread.
Economically, supply-chain risk is the next big concern. And in China, the existential risks to the SME sector haven't gone away - if anything they are building despite emergency loan approvals.
Car sales have ground to a virtual halt nationwide. Dealerships are closed and in the first week of February less than 1000 cars were sold nationwide. In 2019 this was a car market larger than the USA.
And China's property market has also ground to a halt. It is a nervous time for public policy officials who continue to reassure that the downturn will be temporary and there will be a strong bounce-back when the crisis passes. It is that 'hope' that is keeping commodity prices from collapsing.
However, steel production has restarted but stocks are building very quickly on weak demand and calls are being made to scale back or halt production.
The giant United States economy is feeling the impacts too. In fact, the latest PMI data for the US reinforces these risks. Their factory PMI has stalled and their services PMI is now contracting in a sharp move lower. In this survey, new orders fell for the first time since this metric began in 2009.
In fact, a Fed Governor has called on Congress to plan for a recession.
Canadian retail sales were flat in December from November and up less than +2% in all of 2019. And Canada's economy is currently hostage to a major shutdown of a key rail network as indigenous political issues come to a head.
And there is more data showing Japan is suffering from a sharp contraction.
The Eurozone has bucked the negative trend however with its latest PMI's now at six month highs, and led by manufacturing.
And inflation is rising in the EU, up +1.7% year-on-year in January, a little less for the Eurozone.
Through all of this, the IMF has again trimmed its 2020 global growth forecast, now seeing +3.3% in 2020 and +3.4% in 2021. These forecasts still rely on a sharp recovery from the coronavirus impacts starting in Q2-2020. But markets aren't convinced.
Equity markets turned lower at the end of last week with Wall Street's S&P500 down more than -1% on Friday (and a -1.3% loss for the week) and European markets lower by nearly as much as well.
Bond market yields fell sharply at the end of last week. The UST 10yr yield is now just on 1.47% and lower by -11 bps for the week. Their 2-10 curve is less positive at +12 bps. And their 1-5 curve is more negative at -11 bps. and their 3m-10yr curve has also shifted more negative at -15 bps. The Aussie Govt 10yr is lower at 0.93% and down -12 bps in a week. The China Govt 10yr now at 2.93% and unchanged. The NZ Govt 10 yr is at 1.26%and that is a -12 bps weekly drop.
Gold has also made another sharp risk-off move to US$1,643 and that has accumulated to a +$60 rise for the week, a remarkable +3.9% advance on top of the prior week's +1% rise.
US oil prices are unchanged overnight at just under US$53.50/bbl. The Brent benchmark is also lower at just under US$58.50/bbl.
The Kiwi dollar will start today at just under 63.5 USc and a -1c fall for the week. On the cross rates we have held 95.9 AUc. Against the euro we are also down -1c for the week at 58.5 euro cents. That means our TWI-5 is now at 69.6 and its lowest since November.
Bitcoin is now at US$9,889 which is a +1.5% rise since we left it on Saturday. 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 ».
99 Comments
1/3 of the new cases reported within the past 24hrs were outside of China - at the current growth rate global new reports could exceed Chinas within 1-2 days.
I've found this to be the most comprehensive and rapidly updated info on cases, also a number of tabs with various graphs like growth factor etc: https://www.worldometers.info/coronavirus/
BNO Newsroom on Twitter has the most rapidly updated and reliable raw figures.
Thanks a good website. Worth reading about the symptoms. I seem to be the target: elderly, hypertension, cardiovascular problems but finished reading feeling almost cheerful because it says ""Relatively few cases are seen among children."" - I'm living with or near 3 grandchildren.
ICYMI: We are starting to hear from experts and officials who now believe a COVID-19 pandemic is more and more likely: Past Time to Tell the Public: “It Will Probably Go Pandemic, and We Should All Prepare Now” https://virologydownunder.com/past-time-to-tell-the-public-it-will-prob…
That's a really good link on practical measures to undertake now in the event of a prolonged period of "social distancing" (I like that term in explanation). What I've done is:
Started boosting the families immune systems now.
Stocked up on dried fruit, canned vegetables, crackers (to replace fresh bread), sardines and baked beans (protein) and powdered milk.
Fill up gas bottles for cooking and water storage containers for drinking water.
Stock up on over-the-counter cold and flu remedies.
In addition to getting a stock of prescription meds, if you are high risk, ask you GP for a prescription for a two-week course of antibiotics. Not that it will fight the COVID-19 virus, but in the event you get a cold/flu, it will lower your susceptibility to other/secondary infections and it will mean you won't need to visit the GP at a time when other infectious people will be seeking treatment.
And of course, as soon as the seasonal flu shots are available - get one for everyone in the family.
Haven't ever tried it as not interested in messing around with yeast :-). I do make breads (i.e., savory and sweet loafs), muffins, cakes, etc. So we're always stocked up on flours. But I prefer my PB&J sandwiches on saltine-type crackers in the absence of store bought bread. Same substitute preference goes for TOH with his sardine sandwiches :-).
Yes Jacinda is now talking about the travel ban, not preventing the arrival but to buy us time to prepare for its arrival.
But be aware that not only is this 20x more deadly than the normal flu, apparently 2nd infections are alot more deadly like dengy fever, the immune system facilitates the virus into the cell see from17m25s in the following video
Flu vs Coronavirus: Which one is more dangerous? Facts that will blow your mind https://gulfnews.com/world/flu-vs-coronavirus-which-one-is-more-dangero…
In fact, a Fed Governor has called on Congress to plan for a recession.
And yet:
DXY very nearly touched triple digits today for the first time since April 2017. A multi-year high wasn’t supposed to be possible because, we’ve been constantly told, everything started to go right many months ago. Not the least of which was because of one QE in Europe and another not-QE in the US. Link
Yes the cat is very clearly out of the bag now. The markets just need to decide on how big the correction will be. Looking at the rapid spread in Korea and Iran, it's clear the numbers out of China are complete nonsense. Iran now has more deaths than all Chinese provinces bar three. Yeah right.
Coronavirus: Wuhan to quarantine all cured patients for 14 days after some test positive again
https://amp.scmp.com/news/china/society/article/3051966/coronavirus-wuh…
Coronavirus barely trending on Granny Herald. It's Harry / Meghan grasping the consciousness. The Hosk (open to all opinion on vaping) / Ashley Church (premium on the return of National to power).
I think it's fair to say that a country's leading media (if that's what it is) paints a picture of its audience or how it shapes its audience.
The Herald's (BTW I'm a subscriber) editors ought to realise that my wife said she was getting fed up of Harry/Meghan items and she has zero interest in the other two (who is Ashley Church - I've forgotten) however she did say didn't want to fly to Europe in May because of this Coronavirus. Time the Herald gots its priorities right - what is actually changing our lives.
More or less gave up on The Herald as they have become more of a local town newspaper with little substance. Fails to report on major international issues and I simply refuse to pay for an article regarding traffic management in St Heliers.
TV news is the same here - again dumbed down and don’t seem to report on international financial issues that could effect us here in NZ. “Woman airlifted off Island with broken arm “ shows video of woman walking unaided to chopper is not headline news. Sent the SKY box back a year or so ago so don’t watch tv. Get my news off the internet and from interest.
Lian Dann:
"First, it's important to pause and emphasise that, while the recession is a risk, it is still highly unlikely".
Is this a typo?? Unbelievable from a business reporter. It was likely before the pandemic...but now there is no question.
https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12…
It’s called positive spin.... don’t say anything that might stop people taking on huge debt so that they can buy an over priced crap box to call home..... Do not mention that it is possible for NZ to have a recession - any such talk must be Dismissed as impossible. We are immune, we are not connected to the rest of the world through the highly leveraged derivatives and international debt markets. Neither can the pumping of billions of dollars everyday into the debt market and so pump stockmarkets to ever higher levels effect us in any way no, no, no repeat after me “We are immune, it won’t happen here, we have a rock star economy. We are invincible”.
MSM is 23yr old media graduates who are typically 'creative' types with almost no knowledge, experience, technical understanding or judgement outside of gossip mags, reality TV and other airhead pursuits. They are heavily biased in favour of their advertisers (tourism industry, airlines, banks, car dealers, real estate, retailers) who are all petrified of a recession or downturn and do not want the sheep scared. Govt in an election year are terrified of doing anything that might hamper their re-election, so will likely default to inaction for weeks after the need for action becomes apparent (inaction being less embarrassing than making a bad choice).
mortality rates:
80+ years old 14.8%, 70-79 8.0%, 60-69 3.6%, 50-59 1.3%, 40-49 0.4%,30-39 0.2%, 20-29 years old 0.2%, 10-19 years old 0.2%, 0-9 years old no fatalities.
We need to establish ability to quickly isolate large numbers of potentially infected cases for 2-3 weeks. And we need to prepare to build thousands of critical care beds. Commandeer campervans, caravans and shipping containers on quiet roads. Long-drops dug next to them and emergency power from power lines. Oxygen systems in irrigation tubing for intensive care. Can put tent over any confirmed and heat to 60°C to sterilize.
Schools and many businesses likely closed within 1 month. Good chance it is in NZ and spreading already given large chinese population.
IMHO - the plan that needsto be prepared should be (a) close schools (b) prepare schools as emergency hospitals. We should be training non-medical laymen in basic care of flu victims now and that means getting full body suits prepared now and mobile decontamination units for actually putting them on and taking them off.
It does not have a lot to do with China now. Other 20+ countries have found the confirmed cases. Koreans, italians, japanese etc..... it's a common human issue now. Ironically, the Chinese coming to NZ might be the safest right now, since China has put a lot of measures in place, others are only catching up.
Chinese govt have proven themselves entirely unreliable through this whole episode, attempts to hide it and stop information about the problem being public increased the rate of spread and made the problem worse. Number of infected in China is 10-100x higher than claimed. Obviously can't trust a thing they say, so no, Chinese arrivals are not safe, they are incredibly unsafe coming from a country where the disease is now everywhere.
Allowing people to come from a country where 0.1-1% of population are infected, and infected can spread disease for many days before knowing they are sick into our country where there are possibly no infected is just insane. At minimum we need mandatory 2 weeks of quarantine for every arrival, including everyone on the plane and everyone who services the plane, baggage and everyone who comes into contact with them. It's the only way we can stop it killing up to 50k NZers.
Dont think we should trust the official numbers in China. Think about what's happening on Japan's Diamond Princess Cruise Ship, today it's reported 691 infected, total number of peope on that ship is 3711. So the infection rate is 18.6%. The first reported case in China was on 8th of Dec, yet China only started taking action from late Jan. For almost two months, people who protentially got infected can freely be in and out Wuhan.Not even Despite the virus' complex nature, I dont think the sitution is under control in China at all until there is cure or vaccine's ready.
How many hospital beds does NZ have? Best guess 14,000 (based on 2.8 per 1000 (2013) x todays population of near 5 mill). If virus here now and keeps doubling could be in the '000s heading into winter. If it keeps doubling we could have hundreds of thousands in winter. Best get in early if you want a bed.
My daughter is in hospital - fortunately rather minor issue 10 days after giving birth and she and baby are doing well however if on Saturday there had been no beds, no nurses and no doctors available then we would be back to the pre-modern age mortality rates for child birth and I might be buying one or two coffins. The govt should make plans that do not involve flu victims displacing other patients.
Make the plans now, train the staff now and then with a little luck they will never be needed.
The govt should make plans that do not involve flu victims displacing other patients.
Yes, if such an outbreak here coincides with our seasonal flu season, people who get the flu need to stay home, as opposed to seek medical attention/tests etc. to determine whether or not their flu is COVID-19 or not. Best just to assume it is any flu and self-isolate and treat in home. The folks on Healthline should increased and be skilled up now in advising people to self-isolate and how to treat in home - and when/what symptoms are severe enough to warrant calling an ambulance and/or heading to hospital. One should almost need to have a Healthline assigned number, prior to ambulance services responding and/or a person being able to be admitted to hospital - we really may need to strictly manage flows of people seeking/accessing medical attention.
Seems the worst place to be is in amongst other carriers, as has been the case on the cruise ship and in Wuhan hospitals.
MOH are already onto it - see Healthline number as first point-of-contact on their COVID-19 website;
https://www.health.govt.nz/our-work/diseases-and-conditions/covid-19-no…
They just need to make that suggestion and the service more visible. I imagine we'll have TV and other media advertisement/instruction in the event of an outbreak.
That's pretty dark. Likely 10's of millions dead in next 6 months, probably 10-20% of 10-20-person extended families is going to have someone die.
That said: mostly kills boomers, enriching their kids and grandkids who will suddenly be able to buy more house. 1% dead means maybe 30-40000 houses come onto market, and huge global recession. Expect house prices to fall, a lot.
The media and property industry in this country are so busy frothing about the property market they are oblivious to whats rapidly coming over the horizon.
The global economic ramifications of trying to contain the spread of the virus and dealing with the sick are going to be staggering.
What can happen if coronavirus hits the local economy, and impact on the local property market?
The coronavirus has stopped people going out to inspect property in Hong Kong. Property transactions in the ownership market have fallen significantly, and some urgent sellers have cut their asking prices by 10-15%. Real estate agent businesses are losing money.
Here is the countries that will be worst affected as their more susceptible older population will quickly overwhelm hospitals: Japan, Germany, Italy, Greece, Austria and Hong Kong (all >44 median age) are screwed. NZ at 38, one of lowest in west, will be relatively better off.
https://en.wikipedia.org/wiki/List_of_countries_by_median_age
I suspect the age factor is actually a measure of underlying health. Having just finished a 'senior activity' class I suspect it is not the median age of a country but its facilities to keep the elderly fit and healthy. I've never been to Japan but they seem to have a healthier than average set of over 65s - I suggest looking for countries with severe air pollution and heavy use of public transport.
Listening to ZB this morning, it sounds like the government is likely to continue the mainland china travel ban, but might offer some kind of exemption to the international students. It sums up the struggle - we require the isolation to help to contain the virus, while we need people flow to keep the economy going. The same struggle goes to China too, after spending nearly a week to build this "everything-is-under-control" optimism, the media did an expected u-turn during the weekend, reminding people how severe the problem is still. Also I'm wondering if NZ will ban Korea (Israel has done so)...
that would be nuts, the outbreak in Italy has been traced back to a university.
you are just asking for trouble surly forgoing some income for our universities is far better than the cost to our health system and companies when it gets here if before a vaccine.
best to delay that as long as possible
As will quarantining - we are damned either way, but if we quarantine we will lose a lot fewer loved ones. Cost of enforcing 2-weeks quarantine might be 10 billion (no tourism), but might save 10's of thousands of lives, and might allow us to continue living as usual - a month after instituted we could be pretty confident that we kept it out Might even get some wealthy tourists coming here to ride out the pandemic in a low risk environment.
Yip, our door is always open.. money is more important as it's promote growth!, allow us to afford more masks, medication etc. Our Unis already bleeding as it is, so please - JA, all those beautiful full paying fees students are badly needed, down here.. in cold Dunedin. We are ready Covid19 - you're going down.. Students? please, come.. we need you please, please, please,
The data out of china has always been lies. Patient zero in early december, uncontrolled spread for 6 weeks (other countries show how fast it spreads) does not match their claimed infections even remotely. A super spreading event at Chinese new year (millions of people fled Wuhan before lock-down). All non-political epidemiologists put infected and dead at 10-100x reported. From 1 to 1million in 3months. Whole of china will have been exposed within next 3 months with millions dead. Party desperately trying to stall truth coming out as is likely to cause a revolution.
There's this new thing around, they call it "talking to each other face to face" or something like that, I was thinking of overlapping circles as a means of making such information known, a bit like spreading the virus. Authorities may be able to keep a lid on something like this for a while, but they won't be able to altogether. The news will spread in much the same way as the virus, what will be needed is it being believed once it gets out.
China has shut off internet to heavily affected areas, and their great firewall screens everything - vpns are only tolerated and permitted with back channel consent of govt there (and bribes, and likely some degree of oversight by PRC) - easily turned off. Watch this (from 10 days back) compiled by a chinese immigrant american reporter, then tell me if PRC are remotely credible: https://www.youtube.com/channel/UCVWMVBg1RPrDlakdmbyTKBA
France on the verge of civil war (just as their interior minister warned)? Riot police clubbing firemen is a very bad sign. A civilised society just does not do that.
https://www.theguardian.com/world/video/2020/jan/28/riot-police-clash-w…
Riots in Iran and 1500 dead, officially, so who knows how many really. Wuhan flu rampant and uncontrolled.
https://asiatimes.com/2020/02/irans-holy-city-qom-sends-sos-as-virus-sp…
All of China now under martial law, not just the outer regions like Tibet and Xinjiang ("lockdown" in Newspeak only).
Lebanon about to default.
https://asiatimes.com/2020/02/switzerland-of-the-middle-east-unravels/
Trump the sanest man in the room (scary, or what, Spengler is not a lightweight commentator)?
https://asiatimes.com/2020/02/common-sense-trumps-the-national-security…
Crikey, what is going on? Glad I live in NZ.
For what it is worth, here’s the MSC report. Only two sentences would be enough to give away the MSC game:
“In the post-Cold War era, Western-led coalitions were free to intervene almost anywhere. Most of the time, there was support in the UN Security Council, and whenever a military intervention was launched, the West enjoyed almost uncontested freedom of military movement.”
There you go. Those were the days when NATO, with full impunity, could bomb Serbia, miserably lose a war on Afghanistan, turn Libya into a militia hell and plot myriad interventions across the Global South. And of course none of that had any connection whatsoever with the bombed and the invaded being forced into becoming refugees in Europe. Link
Pepe Escobar is always fun, but he is a bit too much of a loose cannon for my taste. All of Europe has been pillaged, along with nearly all of the US, in the corrupt bloodlusting, wealth and power grab of the elite caste of global enarques. At least the French have a word for them.
We seem have rather copied the French system, with weak politicians and a supporting caste of all powerful senior civil servants all telling us what is best for us and what we should think. Meaning what is best for them. Newspeak is everywhere, it seems.
All of what is going on is actually existential, has little to do with what political leanings anyone or any country has, it is people knowing somewhere deep inside them, on a collective level, that these are end days for the status quo. It is inequality, overpopulation, the end of growth and the advance of climate change, that manifest themselves into a whole lot of things, some negative like racism, homophobia, religious zealotry, climate science denial, plain old fear. It is within our ability to do something about this that does not look like something out of a Mad Max movie, but I am wondering if we really can be arsed, to be honest.
Covid19 Real Beast Causing Dangerous Pandemic – Chris Martenson
Chris Martenson is futurist, economic researcher and holds a PhD in toxicology from Duke University. So, Martenson has a unique perspective about the coronavirus and what its effects will be to the global economy. Don’t believe the mainstream media. Things are not getting better....
More: https://usawatchdog.com/covid19-real-beast-causing-dangerous-pandemic-c…
Another island nation is the UK. It only took one case to spread to a number of other people. It is highly infectious and carriers may not be showing any symptoms.
https://www.theguardian.com/world/2020/feb/10/super-spreader-brought-co…
The case in South Korea is also illustrative. A single elderly woman infected the congregation in her church community.
Also a single case may have been the cause of infections on that cruise ship in Japan that was quarantined.
they couldn't stop the Spanish flu and that was a simpler time without all the globalisation of today, im not holding out much hope.
https://www.britannica.com/event/influenza-pandemic-of-1918-1919
And do it now!
Entry permitted if you are a Kiwi and a dollar figure a of mill for 6 months entry after quarenteen of one month for anyone else.
This is something that Jacinda can not put another minister in charge of once they fail...
Instead there is a mention about allowing Chinese students in. ????
We're screwed with our current Government if they continie with their heads in the sand.
TV1 at 7.30 last nigh.. NZ preparedness.
Yep after watching that, I have even less faith.
Don't know if it was bad reporting or just usless.
Andrewj
Not quite correct regarding lack of globalisation and simplier times. Remember that the Spanish Flu occurred in the later stage of World War 1 - a global event in which 32 nations were involved.
Over 70 million served in the War and by 1918 over 40 million were still involved. At the time of the outbreak of the Spanish Flu in 1918, it is estimated that nearly 5,000,000 returned to the UK in 1918/19, the US had mobilised 1,000,000 in 1917/18, 400,000 Australians returned after the war, over 60,000 New Zealand troops returned, over 250,000 to Canada, over 250,000 South Africans . . . . . let alone Germans and her allies . . . . and the many smaller countries including Pacific Islands such as Samoa, Niue and Cook Islands who sent troops as part of the New Zealand contingent.
Due to the stress of the front lines, and poor conditions including malnourishment, overcrowded hospitals, and poor hygiene experienced by soldiers at the time, they were more prone to the Spanish Flu. The extent of the Spanish Flu and the mortality of soldiers was largely censored and down play for morale purposes.
So it was definitely not a simpler time and nor was it a time without globalisation.
Slower is better - saves 50-100k lives in NZ. More time for treatment capacity and vaccines to improve +immune recovered to help sick without protective measures. Death rate several times higher if hospitals overwhelmed. Self isolate as long as you can - all retirees/economically inactive to self-isolate at home to hugely reduce the hospital demand during outbreak. Work from home if possible, close schools and non-essential factories, malls, gyms, pools, churches, clubs, bars, fast food and restaurants, no sports, internet shopping only (including groceries). Unemployed tourist/hospo people do distribution and health work.
Strongly agree that slower is likely better. Is sooner, in summer better also? What are the chances of getting the best people in war room (capable, practical, rational etc.) free from unhelpful political interference? (Is that already being done, I hope so). If we have un-diagnosed cases now it seems possible the virus will be hitting its straps in winter. The hospitals will be overwhelmed (5 mill people, half get infected that's 2.5 mill, even if only 5% hospitalised that's 125,000. If the cases go through a period of doubling each week a big portion of those could be wanting to share the 14,000 hospital beds (can someone check that bed number). Fortunately we have had Bovis to practice on......
My guess is a vaccine will be found; initially available to politicians and a few doctors, then the rich, then the middle class in countries with plenty of money and eventually and probably too late available for anyone in the OECD but not the 3rd world (even if given to such countries the problem of distribution in countries where rumours travel fast would stop effective vaccination schemes). Best if NZ can struggle to contain the virus until a couple of months after a vaccine has been discovered, manufactured and distributed. Lets hope we can delay it until November (I'm pessimistic).
It's going to get worse..
https://www.odt.co.nz/star-news/star-christchurch/skinheads-abuse-child…
BREAKING: South Korea's Kospi Index plunges 3% as coronavirus spreads https://www.bloomberg.com/news/articles/2020-02-23/hong-kong-hit-by-tsu…
And this: New Zealand's Ministry of Health preparing for pandemic situation:
"Although the World Health Organisation has not yet announced a global pandemic, Ministry of Health Director-General of Health Dr Ashley Bloomfield said they are preparing for it.
“We are moving to plan as if a pandemic had already been declared,” he said at a press conference in Wellington this afternoon."
https://www.tvnz.co.nz/one-news/new-zealand/ministry-health-preparing-p…
Calm folks, Every news out from China stating that they're winning this war, already find the bile upon bile of antidotes, NZ will be safe as we're the benefactor of China strength in the West/OECD, China will not share this recovery, solutions with the US, Russia, UK, France, India & any Nations on the planet which is not being friendly towards China.
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