Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
WBS cut its floating rate by only -51 bps to 4.99%, and the trimmed their one year fixed rate by -6 bps to 3.99%. Bank of China NZ cut its 5.75% floating rate by the full -75% to 5.00% even. HSBC also cut its floating rate by the full -75 bps to 4.49%. That means most banks have now cut their floating rates and two banks are on equal lowest at 4.40% - Kiwibank and the Cooperative Bank.
TERM DEPOSIT RATE CHANGES
WBS raised its $5000 tier level to $10,000 and cut most of its term deposit rates. It also added a two year term which is new for them.
GOOD COMES BEFORE BAD
Our December quarter current account deficit narrowed to -NZ$1.9 bln taking the annual deficit to -NZ$9.2 bln or -3.0% of GDP and that is its lowest since March 2018. We have a lower deficit-to-GDP in the period March 2015 to early 2018 and it then swelled to -3.8% before shrinking to the current level. Since then of course there have been restrictions placed on Chinese travel and students which have been an important part of keeping our current account deficit low. Without visitors and students from China, New Zealand’s services surplus for the December 2019 year would have fallen from +$4.2 bln to +$1.2 bln and as a result, the annual current account deficit for the year ended December 2019 would have widened from -$9.2 bln to -$12.3 bln and raising the deficit to -4.0% of GDP. At that level it would have been the worst since June 2009. This is an indication of what might happen when the Q1-2020 result.
ANALYSTS VS MACHINE AI
Tomorrow, the Q3-2019 GDP will be released and analysts are expecting an annual +1.7% growth rate. Q3-2019 was +2.3% pa. Massey's GDP Live suggests it will be better than this at +2.25%. After than, GDP Live suggests it is down from there.
TRACKING THE EXPORT SLIPPAGE TO CHINA
The latest update of our export trade to China shows it falling away slightly from the levels we enjoyed in 2019, but still ahead of 2018. The cumulative total value of exports to China alone from 1 February to 10 March 2020 was about $1.4 bln. In February 2020, exports were about -$144 mln less than for the same period in 2019. For the first 10 days in March 2020, exports to China have fallen in behind 2019 by another -$200 mln, to be -$345 mln lower for the whole period.
A BIG IMPROVEMENT
Fonterra has reported a big revenue and profit recovery in the half year to January 2020, but it has left its milk payout forecast unchanged and it won't pay an interim dividend. Details here. Revenues were up +7% to $10.4 bln.
HOLDING ON, JUST
The overnight dairy auction brought another overall drop in prices (the fourth in a row), led by milk powders. But the Kiwi dollar also fell and that meant that in NZD, average prices actually rose slightly.
HOW GRIM WILL IT GET?
None of this is impressing economists, (here and here) with more of them expecting a recession and our unemployment rate to rise at least 5.4% in mid 2021. And these forecasts assume the current fiscal package works as advertised. (In Australia, Westpac sees unemployment topping 7% later this year. New Zealand will do well to be hit less hard than them.) But as one said today, "let’s be honest, any forecast, in this environment, is hardly worth the paper it is written on".
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EXPLOSIVE RISES
The latest compilation of Covid-19 data is here. The global tally is now 197,100 of officially confirmed cases, up +66% in a week. There are now 116,000 cases outside China. Four European countries account for more than half that; Italy (31,100), Spain (11,748), Germany (9257) and France (7695). Also rising very fast is the USA (6362) exploding +36% IN ONE DAY! (and up from 4,661 this time yesterday.) It looks like the Americans have the worst control measures in place of anywhere. The global official death toll now is almost 8000. When we report tomorrow morning, the infection today will almost certainly exceed 200,000. New Zealand has eight new cases of Covid-19, all overseas travel related. There are four new cases in Auckland, one in Christchurch, two in Waikato and one in Invercargill. This brings our total to 20 confirmed cases in NZ and all directly overseas travel related.
MORE YO-YO
Earlier today, Wall Street closed higher in its now-regular yo-yo pattern, this time boosted by White House promises of helicopter money. The S&P500 closed +6% higher, recovering just half of yesterday's -12% loss. On the ASX, their main index is currently down -4% ignoring the US vibes and responding to tougher local rules. The NZX50 is however heading for a +2.2% rise boosted by F&P Healthcare (a Covid-19 winner) and the better Fonterra results. Tokyo is also positive, up +1.1% so far, but it is pretty lackluster in Hong Kong (-0.8%) and up +1.0% in Shanghai in early trade today.
LOCAL SWAP RATES RISE AGAIN
Wholesale swap rates have risen and steepened again today. The two year is up another +3 bps on the day, the five year is up another +6 bps and the ten year is up another +10 bps from this time yesterday. The 90-day bank bill rate is also up further, another +2 bps to 0.68%. The markets 'buy' the RBNZ commitment to hold the OCR at its new rate for a year. In Australia, their swap curve is flat and little-changed. The Aussie Govt 10yr is up +19 bps to 1.00%. The China Govt 10yr is up +2 bps at 2.74%. The NZ Govt 10 yr yield is up +20 bps to 1.23%. The UST 10yr has also risen during today's trading to now at 0.80%
NZ DOLLAR SOFTER
The Kiwi dollar has stayed at the lower level it started the day at, now at 59.6 USc and -1c lower than this time yesterday. Against the Aussie we are still flirting with parity at 99.2 AUc. Against the euro we are unchanged 54.1 euro cents. That means the TWI-5 is lower at 66.3.
BITCOIN FIRMER
Bitcoin is now at US$5,403 and up 3.5% from this time yesterday. The bitcoin price is charted in the currency set below, and today it is worth taking a look.
This soil moisture chart is animated here.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
102 Comments
Covid 19 deaths have now jumped to 0.00001% (7'940/8 billion) of the population, terrifying NOT. Yes it will increase but there will still be infinitely fewer deaths than deaths from smoking or cancer or road accidents or tuberculosis.
0.00001% of the world population !!!
Good grief. The only reason deaths are "low" so far is because China and other places shut everything down. If we don't do anything then we can expect 60%-80% of everyone to get it and 1%-4% of those infected to die. Those are very big numbers. Perhaps study up on exponential curves.
https://www.youtube.com/watch?v=Hks6Nq7g6P4
This may be appropriate for some people here. A little course language for those easily offended.
Road accidents, smoking or TB victims don't all show up to hospitals in a matter of few weeks unlike those hit with Covid-19, straining a country's medical infrastructure.
The death toll numbers out of China and Iran need to be taken with a grain of salt because overwhelmed medical facilities have been turning away thousands of patients each day without testing them, leaving them unattended to die. These deaths continue to be left out of official figures.
Also the vested interest in keeping it hush-hush for the fear of economic repercussions is high.
In case you haven't heard it yet, this is the situation in parts of Italy:
"They've told us that starting from now we'll have to choose who to intubate - priority will go to the young or those without comorbidities.
"At Niguarda, the other big hospital in Milan, they are not intubating anyone over 60, which is really, really young."
"All operations have been cancelled, GP surgeries closed so the that the GPs can come in and be ward doctors.
"The number of ICU beds has been tripled. There was even pressure to take over our Cardiac ICU."
"All the resuscitation bays are full. They’re having to triage, deciding who to intubate and who to let die."
This is a catastrophe unfolding in a modern country with good healthcare. If we don't take steps to stop the spread, this gets worse (again, only 0.05% of Italy's population has been diagnosed so far). If other countries do not act they go the same way, and far worse for countries without decent healthcare systems. The deaths from the virus itself will be accompanied by large numbers of other deaths and other suffering as the rest of the healthcare system shuts down in support.
The Government reaction is for good reason, and we should all do our part.
https://www.itv.com/news/2020-03-11/italy-doctors-coronavirus-covid-19-…
If you jump off of a skyscraper you are only doing 10km/hr after falling the first 0.5m, so that is fine and nothing to be worried about, right?
Wuflu is showing 10x growth every two weeks, that is 1% of world population in 2.5months unless you shut everything down - which is what is happening in the world right now.
I don't think Yvil is a troll. But as one of the first alarms ringing loudly within these comments about the risks of SARS-CoV-2 and therefore, demonstrably under no illusions as to the potential devastation of this pandemic, I would also like to remind everyone of the neurological and psychological differences between all of our abilities to process risk, shock and fear.
Can we please bear in mind that (as is well demonstrated in these comments over the last month) we all have different levels of capacity to adapt to this psychologically and emotionally. We will all have different processes, cognitive dissonances, denials and experiences. Different stresses and worries.
None of that matters. All that matters is that we are kind, patient and caring about each other. Whatever our political or economic differences of opinion, now is the time to put those aside and brace for impact, to focus on community and collaboration.
This will probably only ever happen once in our life times. We won't get another shot to be our better selves. Whatever money you lose now in the markets, in your career, we will all lose. We will all be in the same boat. We all have the same risks (more or less). What is important, is that we choose to be decent and kind to each other now. Because we will need that in a way that we have never needed it before.
The economy will recover again. It will be rough but we can come through it. Now is not the time for greed and competition. We can get back to that as soon as this is over. Feel free. Now we come together.
As we approach Anzac day, it's timely to remember what our grandparents and great grandparents sacrificed so that we could live in the privilege and affluence we do now. The least we can do, is socially distance, accept some economic losses and pull together.
#teamNZ
They're just part of some big conspiracy to destroy the world's productive economies. Yvil is the true voice of reason, sitting behind a keyboard in the lobby of a deserted 2 star motel. Had to apply to the bank for a loan the other day for renovations, I think the temptation of taking on emergency housing "clients" got the better of him and now some of the rooms need to be rebuilt. I don't know why he flew to Auckland to apply for a loan though? Usually that stuff can be handled on a branch level....
Italy's Covid deaths will soon match their annual death toll, all coming within about a month (currently reporting 2,500 vs road toll of ~3,300). This is with 0.05% of the population diagnosed (although I'm sure we can both imagine many more than this have actually been infected).
Imagine how high the numbers get if you let this spread unchecked. Read some of the reports from Italian medical staff, they are already swamped just dealing with these patients - other routine or emergency health issues are simply not being treated in Hospitals that have been overwhelmed.
During the SARS crisis, the WHO and all other experts also massively underestimated the fatality rate, within 12 months they had revised it upwards by more than double.
As this is a new virus strain, they can easily suggest an underestimation because that is less likely to provoke strong psychological reactions and believe me, population control is every bit as important to this fight, as respirators. If people resort to civil disobedience we are in a much worse position. The experts cannot possibly know the fatality rate at this stage. They don't even have full testing capacity yet.
Everyone just needs to focus on doing what they can to be a decent human being in this crisis.
You've jumped the shark rastus. Nobody has died of climate change. This isn't exactly unprecedented. 1-2 million incl. 100k US citizens died of the Asian Flu in 1957, Spanish flu etc. Pandemic predictions are falsifiable - unlike climate change models.
From 2007 - HT Matt Ridley. "The presence of a large reservoir of SARS-CoV-like viruses in horseshoe bats, together with the culture of eating exotic mammals in southern China, is a time bomb. The possibility of the reemergence of SARS and other novel viruses from animals or laboratories and therefore the need for preparedness should not be ignored."
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2176051/
Good interview from the guy who wrote the 2007 bat paper: "Sixty-three year old microbiologist Yuen Kwok-yung, a giant among Hong Kong's infectious disease experts, accompanied high-profile Sars researcher Zhong Nanshan and China Centres for Disease Control head George Gao on an exploratory mission to Wuhan on Jan 17 on behalf of the National Health Commission (NHC).
It was this "third expert group" that would sensationally confirm the new coronavirus was spreading between people.
Upon returning from Wuhan, the group recommended to the NHC that the city of 11 million be placed under lockdown.
...He believes Hong Kong's health authorities were brave to declare an emergency as early as Jan 4, with the only flaw in their response being deferring the decision to close borders with the mainland.
He also wonders whether the Covid-19 outbreak was spread between different locations by wild animals, as well as by human transmission."
https://www.straitstimes.com/asia/east-asia/exclusive-qa-with-hong-kong…
I recommend taking a look at the Imperial College report.
Basically it says unless we adopt full suppression strategy now until we have a vaccine, then 8-15% of over 70s will die. Globally around 90 million people, taking as little as 3 months.
I'm only 30. I don't know about you, but I have a lot of loved ones over 70 I want to protect. Working from home and making some sacrifices is a small price to pay. We must be proactive and protect.
Looks to me like 'something' is trying to hold several important psychological lines in the stock market sand 20,000 on the Dow and 5,000 on the ASX.
Aussie has had several goes at breaching that today, to see a good bounce at each attempt.
It will interesting to see what happens WHEN it breaks through.
https://www.marketindex.com.au/asx200
Meh. Very difficult to understand these markets. GDX (gold miner ETF) has exploded 25% in past two days. These are not junior miners, but the world's largest mining companies. When you see this kind of price action, it's an indicator that it's hard to know what's going on.
We have the crisis but as yet no crisis leader, of the folk that spoke in parliament yesterday to the funding package, our PM looked and sounded the least leaderlike, the least across the brief.
It's a great shame she has not been able to adapt to the changed environment, the changed requirements as a talented leader would.
Things will get worse, before they get better.
Where will our crisis leader emerge from?
Note:
Dr B laments prior isolation was not really required....
The clear link back to recent overseas travel for these eight cases reinforces the border restrictions brought in last weekend.
‘These restrictions are not retrospective but I urge others who have arrived earlier may wish to voluntarily self-isolate and anyone who has been overseas recently and is feeling unwell should self-isolate and should contact Healthline or phone ahead to their GP,’ Dr Bloomfield says
Now, which crisis leader could help Dr B?
https://www.health.govt.nz/news-media/media-releases/covid-19-eight-new…
Here have aread up on the free market at work. While Jacinda was prepping for March 15 these chaps were getting on with it.
"How this South Korean company created coronavirus test kits in three weeks.
Before there were any cases of novel coronavirus confirmed in South Korea, one of the country's biotech firms had begun preparing to make testing kits to identify the disease.
On January 16, Chun Jong-yoon, the chief executive and founder of molecular biotech company Seegene, told his team it was time to start focusing on coronavirus.
https://edition.cnn.com/2020/03/12/asia/coronavirus-south-korea-testing…
And then we have the massive public funding of research that's helping, whether the education of folk who work at Seegene or directly to labs such as the University of Saskatchewan.
https://innovationsask.ca/news/saskatchewan-funds-coronavirus-vaccine-r…
Couple that with the fact that over 50% of scientific research in the USA was publicly funded since WW2.
Almost as if a blanket belief that private sector is always better or more efficient (or worse) in medicine etc. is not wise.
There is a familiarity about all this, ie did Christchurch, or NZ for that matter, take on all the lessons on offer from the Earthquakes. After all, if we had our emergency response packs stocked as we should post-earthquake, then we would have an on-hand decent masks, first aid kit etc.
Did the Govt. follow up on this and outfit neighbourhood response coordinators etc? To me, the is one of the main roles of Govt, ie long term planning for the day this, and other emergencies, will come.
Maybe we could teach kids the Corona version of 'Ring a Ring of roses'
NZ Super Fund has reported a 22 per cent or $10B drop in its value.
JA could include a hike in qualified age for superannuation to 67 in the next announcement - and deliver a blow to WP where it hurts.
Edit: Let's see how ACC fares after the double whammy - drop in fund value and increase in present value of future cash outflows on existing claims due to a lower OCR. I believe the euphemism for the huge funding gap is 'OCL strain'.
If there's one thing this crisis has demonstrated it's that the world jumps when old folk stand to be affected. Not so much if it's younger generations or those yet to come who will be facing dire circumstances, in which case it's back to undermining the scientific community and trusting in talkback instead.
Sadly I think for “The next interesting development” read “The next disappointing development”.
Probably too much to ask for common sense to be applied by Immigration NZ.
If ever there was a time for NZ to look after NZ and New Zealander’s it’s now.
Come on Lees-Galloway – lead, be bold, be strong – oops,hang on Iain, sorry, what was I thinking, never mind.
We will get to 7% unemployment at least.
I caught up with a mate today who is a very senior engineer in a large engineering consultancy. He said that things look grim, the land development tap is turning off, there are both liquidity and confidence issues.
Things were a bit fragile anyway, despite the building consent headline figures.
Jobs will be lost in design consultancy as well as construction.
I was a little surprised by what he said in terms of already seeing things falling away quite a lot over the last 1-2 weeks.
The big unknown is how many people are exposed but fight it off without ever having it sufficiently to even trigger a positive test. On the Diamond Princess 20% of 50+ got it, 25% of over 70's, but only 10% of under 50's. The big difference is suspicious. Maybe a whole lot of exposed people are effectively immune and never catch it at any detectable level.
PM is finally starting to talk about preparation (working from home, school closures and self isolation but is stupidly not being explicit about almost inevitable lock-down in a few weeks. Lots of people are morons and need glove-puppet level warnings of what will happen not vague mentions of euphemistic language like self isolation. Being explicit now will give everyone ample time to prepare saving panic and supermarket runs later.
I have an awful feeling that our world has changed forever. I don't think many jobs are going to come back for a long time especially tourism/ airlines. Senior management need to start looking for new work. Councils need to start cutting and cutting this is going to be long and ugly.
JBS in the States are starting to shut meat works. California has shut down, it's draconian.
I suspect movement around NZ will be curtailed very soon. Industry will start shutting as demand collapses. We will need a strong community.
Yet China has Avian flu in its chickens and AFS in it's pig herd, it's going to need a lot of food.
This flu will live in the third world and travel to those places will be off limits for a long time, a vaccine is 18 mths away, we will do two winters with it unless there is a major breakthrough.
I know there’s no real comparison – but this for me is the closest I could imagine those generations going into war time must have felt – WW1 and WW2.
Into the complete unknown – except knowing it will be bad – there will be loss of life and lives will be changed forever.
Again – there’s no real comparison with the horrors of war I know – but it just gives me a little taste of what our parents, grandparents and others at the time went through.
Was having the same thoughts last night. If we go into lock-down for the rest of the year, the financial hardship will be extreme. Depression/suicide for those who find themselves in significant financial difficulty. I understand we need to look after those who are most at risk of becoming very sick as a result of this virus, but is their health more important than the global economy? These are very tough positions to make a decsion or have a hard view on.
The history of all species has been evolution and the survival of the fittest, but now it would appear that we're willing to sacrafice the health/wealth of many, for the possibility of saving the lives of the weakest? I make these comments with the greatest compassion to those at risk - but the question will become, how long will the many be willing to stay in lock down if their kids are going hungry and they can't pay their mortgage?
I hate to break it to you but for humans, 'survival of the fittest' actually favored groups that worked together rather than the individual. That's why we've evolved to be capable of advanced social interactions and societies (and why we're even capable of having this discussion now).
to quote the late Jack Bogle (as cited by Faber):
“My rule — and it’s good only about 99% of the time, so I have to be careful here — when these crises come along, the best rule you can possible follow is not “Don’t stand there, do something,” but “Don’t do something, stand there!”
Lol - they bought the top - best to never get involved.
The value of the NZ Super Fund, which was set up to pay for future superannuation payments, has fallen by $10 billion or 22 per cent since the start of the year as a result of coronavirus market downturn.
The fund boasted less than a month ago that it had started 2020 with $47b in the kitty after recording a bumper 21 per cent pre-tax return on its investments in the 2019 calendar year. Link
Gotta love Climate Experts - not, not even ISIS are leveraging coronavirus.
Climate experts say coronavirus could help the global fight to reduce emissions.
https://i.stuff.co.nz/national/health/coronavirus/120301221/coronavirus…
Makes you wonder how expert climate experts are.
https://www.nydailynews.com/news/world/ny-isis-warns-terrorists-europe-…
Fact - this ignorant/arrogant species was on the way to killing itself off by altering the climate. It was doing so by digging out and burning carbon which had been locked in-ground longer that it (the species) had been around. Surprisingly they had evolved in the non-carbon habitat. Who would have thought?
In answer to that question, clearly some folk don't. It's a serious 'win' that has the potential to do more good for our species than if there were no virus doing the rounds. Try dispassionate thinking, apples with apples, always good.
And stop the 'fanatic' crap, eh? Take a good look at why it is that you need to avoid your responsibilities to others. Do you have offspring?
And the inevitable has occurred.....
The UST 10yr has also risen during today's trading to now at 0.80%
What's going on with this website's information sources? - UST 10 year yield quote
Catch sight of the US 3 month TBill
Is GFC2 Over?
The China experience with the virus just seems to have too many question-marks to be considered the gold standard response.
I look forward to a European country exiting the crisis (as I imagine they do to) then having a meaningful and verifiable data set – enabling some sort of quasi reliable road map that can instill a level of confidence in terms of what to do and what to expect to get through this.
Currently it’s not overly reassuring with what seems a “making it up as we go” strategy.
Makes sense I guess:
Credit extended to primary dealers under this facility may be collateralized by a broad range of investment grade debt securities, including commercial paper and municipal bonds, and a broad range of equity securities including, but not limited to, toilet paper.
Not a big deal. Didn't realise Switzerland had a military, but they're using it now.
PUBLISHEDMAR 18, 2020, 12:43 AM SGT
ZURICH (REUTERS) - Switzerland's health-care system could collapse by the end of the month if the new coronavirus keeps spreading at current rates, a government official warned on Tuesday (March 17).Daniel Koch, head of the Federal Office of Health's communicable diseases division, said the rapid rise had outstripped the state's ability to record new cases in real time.
"People who become infected today will only hit us in 10 days from now," Koch said at a news conference.
"We have to make sure the infection rate goes down today, because otherwise, in 10 days (Swiss hospitals) won't be able to handle it."
Switzerland has mobilised up to 8,000 military members to assist civil authorities and medical personnel.
https://www.straitstimes.com/world/europe/coronavirus-swiss-hospitals-f…
If you haven't already read this it provides an interesting critique of the government's recent CV package
Other counties packages compared.
Some up to 14% GDP.
https://youtu.be/kDFgO_TZEoc
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