Here's our summary of key economic events overnight that affect New Zealand, with news of spreading economic confusion and pessimism.
But first, we should remind ourselves that the sun is shining and it will again tomorrow, and that the issues du jour will pass.
However, Wall Street is still running very scared, with investors collectively consumed by a risk-off mood that is throwing up some odd reactions. Stocks are down sharply again, benchmark bond yields have reached record low levels, there is a general flight to 'safety' - but the gold price has ... collapsed.
Trading on Wall Street is volatile. The S&P500 started today down -4% from yesterday, then staged a small recovery to be down just -1% at mid-day. Then it has turned down again for the afternoon session, now down -2.2%. It is heading for a weekly loss of more than -12% so that is a major correction underway. Update: The S&P500 closed down -0.8% for the day, down -11.5% for the week.
In the real world of economic data, the widely-watched Chicago area PMI is still contracting, but less so and also less that analysts were expecting.
The US Fed's preferred measure of inflation came in unchanged at +1.6% pa, and not making the rise that was expected. The same January data showed a surprisingly strong rise personal incomes which should have been market-positive. But consumer spending dipped more than expected, indicating American consumers are fearful of the future. These are measures of actual behaviour.
But you would know that from what they tell surveyors. The latest February consumer sentiment survey rose to near a record level.
On the business side, wholesale inventories keep on falling while retail inventories keep on rising. And American trade data shows exports falling marginally in January, while imports fell slightly faster. So there was a small improvement in their merchandise trade deficit even if it wasn't significant for their economy on a year-on-year basis.
North of the border, Canada posted a better-than-expected GDP result for the final quarter of 2019 - but was still only at a tepid +1.9% pa level.
But none of this slew of basically positive data means much today. It's is all about fear and panic by investors on how consumers are reacting to the Covid-19 virus.
The WHO has still not declared a pandemic, preferring to focus on positive progress in China.
The latest compilation of Covid-19 data is here. There are now 5043 cases outside China, a rise of +780 in one day. A week ago that outside-China number was 1371 so it has more than trebled in a week. South Korea, Italy and Iran have all reported a spike in cases. Of course, we now have one too from an incoming Kiwi who traveled to Iran.
The US Fed is under pressure from the financial markets to cut its policy rate, but most governors are not sympathetic to a bailout cut right now. In fact in most countries, bankers and financial industry analysts are seeking rate cuts and other monetary policy easing measures in response to the pressures - in essence, taxpayer support for their businesses. Update: The US Fed has put out a short Statement saying they will use all their tools to act if it becomes necessary.
Part of China's response to the economic impacts is to ease up on home buying regulations. But there is no sign it is working yet.
Elsewhere, eyes are on the vast world of junk bond-financed businesses - investors seem to be fleeing quickly now and this will be existential for many if they can't roll over their debt financing.
The UST 10yr yield is now just under 1.17% and lower by -9 bps overhight - and down by a sharp -30 bps for the week. Update: The UST 10yr closed under 1.14%. And their rate curves are behaving strangely today. Their 2-10 curve is more positive at +23 bps. Their 1-5 curve is less negative at -5 bps. but their 3m-10yr curve has shifted sharply more negative at -32 bps. These are more like signs of confusion rather than indicators. The Aussie Govt 10yr is down -21 bps for the week at 0.73%. The China Govt 10yr now at 2.80% and down -13 bps for the week. The NZ Govt 10 yr is down -20 bps for the week at 1.06%. All these are are unprecedented drops.
And gold has also made a spectacular retreat overnight, down -US$78 to US$1,572/oz. And it is still falling as this article is published. The expected behaviour in the face of sudden rising rises is that the gold price would jump - but it has done the opposite today. That is a -% fall overnight and a -3.5% fall for the week, and overnight. Gold bugs will be scratching their heads. Update: Gold was at US$1,279 at 4pm NY time, down -US$71/oz.
The Fear & Greed index we follow is now at the 'extreme fear' side of the dial. The VIX volatility index has leaped to 47, up from just over 17 a week ago and its highest since March 2009. Both are brutal short-term changes.
US oil prices are sharply lower overnight at just under US$45/bbl. The Brent benchmark is also lower at just under US$50.50/bbl. But both represent big falls for the week. The US rig count is still stable at its new low level but is hard to see it staying at this level for much longer. A dive is imminent, you would think.
The Kiwi dollar ending the week at 62.2 USc and another -1c fall for the week. It is now at its lowest level since 2009. Since the start of 2019 the devaluation is down to -7.5%. On the cross rates we have held at 95.8 AUc. Against the euro we are also down nearly -1c for the week at 56.7 euro cents. That means our TWI-5 is now at 68.1 and its lowest since September 2019.
Bitcoin is now at US$8,538 which is more than an -13% retreat in a week on top of last week's -5% fall. 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 ».
121 Comments
Simon and Cindy's dalliances with virtue signally Paris Accords coming to bite us on top of their $5 Trillion spend on zero carbon policy. Business hobbled to "...reduce temperatures by just 0.05°C in 2100".
Activist judiciary, Greenpeace and the CO2 cult now run UK business.
Donald "Like hell it’s non-binding" Trump was right about the Paris Accord.
"Three judges found that legislation that granted Heathrow the green light ignored climate change commitments under the UN’s Paris agreement, which came into force in November 2016 and commits signatories to taking measures to limit global warming to well below 2C."
https://www.thetimes.co.uk/edition/news/heathrow-runway-plan-in-ruins-a…
https://www.lomborg.com/press-release-research-reveals-negligible-impac…
Everyone believed in climate change (even US Republicans) until they worked out how much it was going to cost.
Unfortunately scientific facts, laws of physics, maths, etc., are seperate from money and economics.
Your motivated reasoning is on full display above with that denier nonsense.
TimmyB, understand you don't like Profile. But what's your thinking.
How would you prioritize spending to the things our community have to spend on?.
Try this,
1 what actions do you want govt to take re CC.
2. What are the costs of those actions.
3 what are the benefits of those actions.
Now list those actions, and prioritise them with all the other actions the govt need do.
It will take your mind off the virus for a while.
Henry I don’t want to bore our fellow readers but a lot would come down to a definition of thriving. That for me is being healthy and enjoying a healthy natural environment. For others it may be having big houses, big cars, overseas trips, steaks on the bbq and a big family. We can’t all do the latter and expect a pleasant future.
You always sound grumpy or pissed off ...when did you last see this happening? I was at the super this ,morning and everyone was buying what they wanted as usual. People protest every day for lots of reasons but don't try and blow it up ...just enjoy your bacon sandwich and get you immunity up....you may need it.
There's a new piece of research out, which uses carbon dating to establish the source of atmospheric methane:
https://reneweconomy.com.au/new-methane-data-shows-gas-industry-can-no-…
"This result indicates that anthropogenic fossil methane emissions are underestimated by about 38 to 58 [million tonnes] methane per year, or about 25 to 40 per cent of recent estimates,” the research paper says. “Our results imply that anthropogenic fossil CH4 emissions now account for about 30% of the global methane source and for nearly half of anthropogenic emissions, highlighting the critical role of emission reductions in mitigating climate change.”
Gas is not a transition fuel – it has a huge greenhouse gas footprint, as this report shows. Leaks of methane occur all along the supply chain for gas and liquefied natural gas,” says Bruce Robertson, from the Institute of Energy, Economics and Financial Analysis (IEEFA). “These leaks make gas a potent greenhouse gas contributor. The gas industry can no longer hide behind burping cows. The gas industry is the cause of mounting methane emissions.”
Doris, this firm sell renewable energy equipment. It's like an investment bank giving a buy recommendation to a stock they are IPO'ing. Of course they are going to promote the "climate emergency" narrative, just like all the scientists who receive funding. Follow the money.
Industrially produced methane like the stuff they use to produce fertiliser that you have dropped/spread on your farm, to help it carry a livestock load far higher than it naturally could? And thereby increase the methane production per hectare well above what would be natural, which does result in more energy trapping...
https://www.sciencedaily.com/releases/2019/06/190606183254.htm
Piss off with your denial
Calm down praggers. Ag methane in NZ hasn't increased in the last 20 years. If it was increasing you would have a point. Methane is not the same as CO2 or water vapour when it comes to warming.
"Past increases in methane emissions caused warming when they occurred, but constant
methane emissions cause little additional warming. In contrast, every tonne of CO2 emitted causes approximately the same amount of warming whenever it occurs."
https://www.oxfordmartin.ox.ac.uk/publications/climate-metrics-for-rumi…
Happens weekly at the abbatoir in Whanganui?
Te Kooti nailed it. Us meat eaters let vegans be unless provoked. Vegetables aren't going to save the world. The amount of fertiliser, irrigation and pesticide needed for horticulture is staggering. But I guess that doesn't fit your narrative lol
I’d focus on:
• stimulating demand for electric cars - Labour’s policy for this was a good start
• get the industrial users on coal to shift to gas/electricity, ideally electricity
• encourage residential and commercial solar
• if possible, build hydro or failing that batteries for grid storage.
None of that will break the bank and can be done progressively.
It was in stuff today, VS.
And a read of the Australian Murdoch press – The Australian newspaper in particular – also reveals that, while Ardern may be feted in some parts of the world, for a big chunk of Australia she is seen as a woke virtue-signaller leading a coalition government of losers that illegitimately snaked their way into power.
https://i.stuff.co.nz/national/politics/119895694/getting-a-win-from-an…
profile,
I watched the interview last night with Dr. Sean Simpson of Lanzatech. He had on a tee shirt which read, Science doesn't care what you believe. You might like to look closely at the Keeling Curve and having done so, look at the basic science governing the interaction of the greenhouse gases in the atmosphere with the energy reflected from the earth back into the atmosphere. The basics are not at all hard to understand. You might also want to ask yourself just what is causing glaciers to melt globally.
and the run begins
https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12312732
How about this headline for a bit of fun...PANIC BUYING AS LOTTO FEVER GRIPS THE NATION....Lotto shops have been over run in the lead up to tonight's record breaking 50 million dollar draw...exhausted staff have been "run off there feet" trying to keep up. Customers driven be fear have formed long lines stretching around the block.The prime minister Jacinda Ardern who is still in Australia eyeballing Scott Morrison,has called on the population to remain calm.saying that its "Only Money" and that the average house price in Auckland is still under a million bucks and why would anybody want so much.Asked if she herself had gotten any ticket's..she replied "Off course not...what a waste of money" The prime minister was latter over heard screaming into her phone at her partner Clark Gayford, telling him "To get his arse down to the local Lotto shop and to not to come home until he had a f......g ticket or else the wedding's off..
That dog in Hong Kong is a really big deal, now it's mutating they will roll out the big guns, just a bit late.
https://www.zerohedge.com/political/rabobank-so-it-was-right-not-buy-dip
Although perhaps (if this is not a lab-made virus) COVID-19 exists/existed in a number of animals undetected until such time as it crossed the species barrier into humans? What I find really odd about this epidemic is that we aren't getting updates about the world's growing understanding about the virus. It seems there is no growing understanding - which is very odd.
The Mozilo market
https://www.epsilontheory.com/the-mozilo-market/#.XllmY2YNkNZ.twitter
This whole thing feels like a slow moving train wreck.
Meanwhile, gold’s pull back reflects a sudden need for liquidity from falling stocks. Cash is desperately needed to meet margin calls and offset losses elsewhere. Gold is being sold to meet those liquidity needs.
The rumours about the gold collapse are also one around manipulation. Check out https://www.zerohedge.com/commodities/gold-tumbles-boj-back-market
Not a chance.
From what I read, in the only other deflation situation it went up.
5000 years of history and the US dollar hasn't got much. FIAT $'s only have a limited life span of which it is at the end of.
https://youtu.be/WXdOaZY6o28
Have you got a link for me to take a look at.
And gold has also made a spectacular retreat overnight, down -US$78 to US$1,572/oz. And it is still falling as this article is published. The expected behaviour in the face of sudden rising rises is that the gold price would jump - but it has done the opposite today.
Performing it's duty of collateral as last resort - I can think of many instances where hoarding of traditional collateral causes margin called investors to liquidate not so easy to repo out gold holdings.
It seems like the savage selling in markets has been broad and indiscriminate. You even see traditionally counter cyclical, dividend paying investments like utility companies being sold down as much as pro cyclical investments like banks. Normally I advise people not to try to catch falling knives but in this case I'd say there will probably be more rationality going forwards and I would expect some of those positions to be adjusted.
The reports of "panic buying" and some people's disgusted reaction to it are amusing. One minute we are being asked to build up a stock of supplies in case we need to quarantine at home for a month and the next minute we are being bitterly criticized for "panic buying".
The Chinese community are at the forefront of the sudden urge to stock up and there are a few factors why this is so. Many are naturally in touch with family and friends back in China and are aware of what city wide quarantines will entail.
There is also a widespread lack of confidence in the NZ health system being able to cope. The transparency and openness of the NZ system leads many to doubt its effectiveness which is a bit disappointing really.
This attitude is exemplified in our local frequent commenter Xingmowang. NZ and freedom is great when everything is running smoothly but when a crisis emerges suddenly all confidence goes out the window. It is a sad reality of globalism where people aren't really all that loyal to the institutions of their new countries or willing to make sacrifices for the common good. A certain societal robustness is lost.
This was actually the main purpose of the push for globalism and diversity that people wouldn't be able to unite for a national cause of any description. The 'steering committee" decreed that Nationalism is a very bad thing and shouldn't be tolerated. Maybe we should welcome these current events to review whether or not this is such a great idea.
Well Zach, diversity should be nurtured, encouraged NOT being eradicated/push out. The radicals should be toned down but the moderate voices of differences should be encouraged & explore each others view. Borrowing the current resident Xingmowang rants, means that follow China in term of curbing it's own diversity, to make it cohesive. So in his own exposure view past of theoretical/practical results? - there's a school of thought to make it global. By the looks of it, world major power started to see that the dynamic should be there as a force of balancing nature, all should be helping each others, collaborative. The thinking process that is must change; just imagine a simple of NZ nationwide rubbish collection scenario? if decided to be cost efficient? (rubbish collector in NZ is too costly, the workers are all bludgers, renters, dumbkoft would never be able to own multimillion dollar property, all their kids also dumb, would have no rights to attend school of medicine etc), then we out-source it to China's company - years we depend on that method, until we sanitised to it, then suddenly? China decided to stop the service - what would happen then? - by then all of NZ no longer understand the value of rubbish collectors, their life contribution, their dignity, bring on Technology? ha ha - In life cycle, we should realise this; beautiful life is interconnected, interdependent, collaborative, share the burden.. and 'wealth/health' - the last one is the most difficult.- Imagine if NZ in future? those young healthcare professionals still renting, paying debt & being coerced to stay here, if you are on their shoes, would you? - well, the stat is there.. a lot of my young Jedi's moving out from this country. Soon will be us, but hey - you can still visit us for consultation, it's.. just may not be here ;-)
I don't know anything about the WHO's corruption, but the fact they still haven't declared a pandemic is farcical. Once this is over we should look hard at our funding of the WHO. They sound no different to the talking heads the hedge funds send to bloomberg to calm the markets. And of course their line is, "we should trust the experts, we should trust the WHO, it's not that bad". Convenient.
WHO is a Dangerous “Corrupt Mess
https://www.youtube.com/watch?v=u1wJchL9jXI
Go to 1 min so you miss the ad.
Tucker Carlson on the WHO incompetence and corruptness.
Closing bell time. Tourism and its contribution.
https://www.mbie.govt.nz/assets/tourism-satellite-account-2019.pdf
Your headline regarding the oil (drops hard) and gold (collapses) price changes doesn't reflect the true reality. The WTI oil price went down by 4.29% whereas the gold price went down by 4.11%. This means that oil is now at the same price it was in December 2018. Whereas gold is back to the price it was in early February 2020.
The UST 10yr closed under 1.14%. And their rate curves are behaving strangely today. Their 2-10 curve is more positive at +23 bps. Their 1-5 curve is less negative at -5 bps. but their 3m-10yr curve has shifted sharply more negative at -32 bps. These are more like signs of confusion rather than indicators.
Who is confused?- https://www.bloomberg.com/markets/rates-bonds/government-bonds/us
Moreover,:
A major part of any yield curve is inflation expectations. Nominal growth particularly toward the longer end of curves sets the agenda for trading. But further out there are several confluences that may cause distortions. For Economists, these are conundrums.
There are times, however, when curve dynamics remain pretty simple. These are not usually the best of times. As my colleague Joe Calhoun points out, it’s backward in convention. In other words, what Wall Street may call a bull steepener case for the bond market is actually bullish only for those bonds contained within the curve. For everyone else, particularly the macro economy, this change works out over time decidedly bearish.
This bear steepener in reality (bull steepener in bond trading) is perfectly clear. The short end drops quickly with the long end following if at a slower rate. Nominally, the whole curve shifts lower but because the short end is moving fast the curve steepens while it shrinks. Traditionally, this is the recession signal. Link
Rational advise
Covid-19: Q and A with Virologist Chris Smith https://www.rnz.co.nz/national/programmes/saturday/audio/2018736344/cov…
Another of our educated immigrant skilled workers. Been through our tertiary education system? We can sure pick 'em.
https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12311225…
THE FACTS:
NZ's first Coronovirus patient didn't feel well and actually wore a face mask on the Emirates plane from Bali to NZ as the last leg of his flight from Iran.
Nobody at the airport challenged him as he made his way through the airport terminal's usual checkpoints to private transport which then drove him home.
Nobody from Emirates challenged him or reported to airport authorities of his feeling unwell on the plane.
WHAT SHOULD HAVE HAPPENED:
Emirates, in the prevailing climate of heightened concern around Coronovirus, should have had the nous and responsibility to notify the airport authorities in advance of the plane's landing.
The health and airport authorities should have had access to the information that the passenger/s on that flight had boarded initially in Iran, a known hot house of the virus. Also, Emirates should have fowarded that info to the airport authorities.
All passengers on that flight should not have been allowed to leave the plane and ALL of them placed in strict quarantine ( at the Whangaparoa facility I presume) for however many weeks were deemed necessary.
From then on all inbound overseas planes should have been banned from discharging their passengers until verification was established of the initial boarding location of all passengers.
PUNISHMENTS TO BE METED OUT FOR THIS GROSS INCOMPETENCE:
Health Minister, David Clark, to resign.
Those responsible for health security at the airport to resign.
Emirates planes banned from using the airports in NZ for at least one year.
All other airlines that allow what has happened by Emirates to be banned from our airports indefinitely.
Read past the headline, read the detail.
This is poor optics and poor comms.
https://www.odt.co.nz/star-news/star-national/ardern-urges-calm-over-co…
Little suggestion get the telephone numbers email from the arrival cards, have all the passengers quarantine. The contact tracing is useful if done PDq.
And someone explain to MoH how the air supply in a passenger jets works, how it circulates.
Or
Confirm a 2 meter in plane radius of the x passenger is the only risk zone.
Makes Sth Korea and Singapore look foolish.
And for contrast. Peak Prosperity
https://youtu.be/wsJCiZTt3uc
Recent graphic evidence :
USD
Gold
10yr UST
The real economy needs (euro)dollars only the private system can provide.
And that private system consistently wants only UST’s and the like, the world’s safest, most liquid assets. Even during the “best” of times, the interspersed reflation episodes that also last for years, the constant demand for safe assets during them tells you all you really need to know. Link
In other words, as Treasury or bund yields plummet (again) they take inflation expectations down with them. Supposedly that would be gold negative, at least according to the mainstream convention. Yet, the more yields fall the more gold goes up.
Both markets are saying something, the same thing, about monetary policies, economic risks, and broad uncertainty. It’s not inflation. Link
What a liar, Jacinda! Playing 'find a scapegoat' for your own incompetence. No photo opportunities here!
https://a.msn.com/r/2/BB10x0yU?m=en-nz&referrerID=InAppShare
I'm beginning to agree with Trump on Iran. And Trump is showing the way when it comes to banning flight passengers from certain countries.
Take note Jacinda!
Yep, could only watch upto the 2 meters in front, 2 meters behind.
Yes as I expected she us not prepared and can not use logic.
Test the whole bloody plane. He didn't apear out of thin air in that apot, he walked past others, went to the toilet, stood in lines with others, walked down tunnels, aircraft air systems are notoiriois at spreading the flu.
A confident logical manager that listened to advice would have recived and had a good think tjemself and seen logic.
so a dog caught it in Hong kong, actually thats a big deal it's called 'reverse zoonosis'. Thats is why authorities in HK are taking pets away from infected people. I'm sure the PM is getting some good advice but playing the nothing to see here card, rather than the running around screaming help help one.
"Companion animal species living in very close proximity to humans and other domestic and wild animal species provide an exquisite environment for viral recombination, evolution and emergence. Every interspecies transmission event increases the probability of a high impact evolutionary event and contributes to a broadening diversity of influenza A subtypes and dynamics of viral transmission globally. Halting transmission events is the primary solution to the escalating risk of evolution of highly pathogenic emergent influenza A viruses and thus immense morbidity and mortality in multiple species on a global scale. Our current study to molecularly characterize viruses circulating in companion animals is the first step to monitor and ultimately control transmission."
https://www.ijidonline.com/article/S1201-9712(12)01083-1/fulltext
“We worry a lot about zoonoses, the transmission of diseases from animals to people,” says Christiane Loehr, an associate professor in the OSU College of Veterinary Medicine. “But most people don’t realize that humans can also pass diseases to animals, and this raises questions and concerns about mutations, new viral forms and evolving diseases that may potentially be zoonotic.”
https://ivcjournal.com/reverse-zoonosis/
Correction is 3-4 yrs overdue
Pumping money by central banks exploded stock market to historic record heights
Bubble just got pricked & markets burst by a flu virus possible pandemic
What does that tell you about the strength of conviction behind positive market sentiment analysis ? The VIX wilts against a flu epidemic
On a completely unrelated topic....or is it?
https://www.odt.co.nz/star-news/star-national/mt-roskill-shooting-3-vic…
In my day we used to go down to the Manurewa bug-house (cinema) on Saturday afternoons to watch the cowboy shoot-outs in the "Western" films.
The lucky Manurewa kids of today don't have to waste the current equivalent of 1 shilling and sixpence going to the pictures when they can see the real thing from their front window.
What does Jacinda make of all this? Perhaps she's too rapt up in admiring her image on the front cover of "Time" magazine to make anything of it.
from a guy I follow on twitter
'Popped in to a pub for lunch. End up chatting with the guy next to me.
Runs a shipping business. Takes shipping containers coming from China after they’ve been unloaded; reloads them with his clients’ products; ships them around the US.
He met with his suppliers yesterday
By mid-March, they will have no empty containers for him.
Nothing coming in from China.
Which means no empty shipping containers.
Which means nothing to ship his clients’ products in.
My terminal in the Port of Los Angeles had a meeting Wednesday and informed us that they were gonna lay-off 40% of their steady longshore workforce due to ship cancellations.'
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