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Economic consequences of the virus emergency bite viciously; unemployment soars; huge bailouts inadequate; US now the global virus hotspot; China recovering; UST 10yr yield at 0.89%; oil sinks and gold up; NZ$1 = 57.1 USc; TWI-5 = 64.9

Economic consequences of the virus emergency bite viciously; unemployment soars; huge bailouts inadequate; US now the global virus hotspot; China recovering; UST 10yr yield at 0.89%; oil sinks and gold up; NZ$1 = 57.1 USc; TWI-5 = 64.9

Here's our summary of key economic events overnight that affect New Zealand, with news we are going into a week where the economic fallout of the global shutdown will really start to bite viciously at the local level.

Wall Street ended last week in sell-off mode, with the S&P500 down -4.4% on the day on Friday. For the week that is a cumulative dump of a huge -15%. For the month of March it is down -22%, and since the peak on February 20, it is down -32%. We are down to levels last seen at the beginning of 2017.

In the minute-by-minute battles in the liquidity trenches, the NY Fed supplied US$67 bln in repo funding on Friday. On Thursday it was US$88 bln. For all of last week it was US$609 bln of activity with the most, US$206 bln, on Tuesday alone. Some of this is rollover of course so not all is net-new, but much of it is. They had to put out another Statement earlier saying they are now up for another US$½ tln in ongoing support.

And they put out yet another Statement saying they are going to buy US$100 bln in mortgage-backed securities in the coming week.

The NYSE dive means asset backings are highly dubious and liquidity has dried right up. There are sellers, many forced, but no buyers without the Fed. Even though the Fed will bail out the largest financial institutions, widespread bankruptcies and closures look across the whole US as the shutdowns spread fast.

Boeing said it is at risk of failure and shutdown. But the US Administration also said it will bail them out.

And staying in the US, the Trump Aministration is taking a leaf out of Beijing's paybook, trying to manipulate down the data for a tsunami of jobless claims. They jumped +33% last week to 281,000 but state-level anecdotes suggest jobless claims could hit more than 2 mln in this coming Friday's report. (NZT)

And Britain is joining in the subterfuge, telling companies not to publish updated earnings guidance despite legal and listing rules that they must. Transparency is an early casualty of this crisis.

In Canada, sudden unemployment is at crisis levels. In fact almost 3% of their entire workforce has lost their employment in the first three weeks of March. That's more than ½ mln people.

Back in Britain, it is so sudden and so extreme, the Government there is promising to pay wages of laid-off workers up to NZ$5,000 (£2,500) per month. That is sure to cause a cascade of further layoffs as employers hand off the liability to the taxpayer.

Every country has put in place huge economic bailout measures, and adds to them almost daily.

In Australia, landlords are under extreme pressure to give rent relief, possibly up to six months deferral of rent payments. It is a development that will unstitch investor returns in residential and commercial property, potentially causing a valuations crash. Australia also raised its debt ceiling by +25% to AU$800 bln. And their Government seems to be announcing economic bailouts every few days - a third one is expected later today of tomorrow. So far, their bailout programs have amounted to 10% of Australian GDP.

China, South Korea and Japan all seem to be on top of their outbreaks, even if the West isn't. This should be as big news as the failures, because it probably involves herculean public health leadership that should be celebrated.

In China, big car makers and electronics chip firms are all back working as their supply chains restart. But that doesn't necessarily mean all will survive. Part of that is because international orders are drying up fast. But there are solid signs that China's housing market is recovering. After a February wipe-out, sales are up to half the normal rate in the first half of March and rising.

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The latest compilation of Covid-19 data is here. The global tally is now 319,000 of officially confirmed cases, up +90% in a week. There are now 237,200 cases outside China and almost all of them are in five core countries. Italy's cases have doubled in a week, both Spain and Germany are up 4 times in a week, France might be plateauing but is still up 3 times in a week. But the USA is up by a factor of 8 times in one week, now with 27,000 cases and the global hotspot. Mismanagement of the crisis in its early stages is a key cause. The rest of the world is up 4x of reported cases on one week. The global official death toll now exceeds 13,000. Twenty seven new cases of COVID-19 in New Zealand have been confirmed in the past 24 hours, bringing the total number of cases here to 66.

Large parts of the developed world are now in complete shutdown. More than one billion people are in these lockdowns.

In Australia, they are saying most of their Covid-19 cases are coming in from the USA. Cases there doubled over the weekend. And Australia now has more cases (1314) than Japan (1086), a country that got it early but where their curve just didn't steepen. At the end of February, Japan reported 240 cases - the fifth most in the world at that time - when Australia had only 25. Now Japan is a minor infection site, which is probably why they want the Olympics to still go ahead. (And Japan has five times Australia's population.)

The UST 10yr yield is falling again and still on its wild ride. It is now at 0.89% but that is actually higher than this time last week. In between it hit a high of 1.27% and a low of 0.68%. Volatility like this is rare in this core benchmark yield. Rate curves have moved sharply positive as short term rates have collapsed. Their 2-10 curve is still very positive at +56 bps. Their 1-5 curve is also very positive at +34 bps. and their 3m-10yr curve is out there at +86 bps. The Aussie Govt 10yr yield is now at 1.07% which is a net rise of +4 bps over the week. The China Govt 10yr is up +5 bps in the week to 2.76%. The NZ Govt 10 yr yield is very sharply higher, now at 1.48% and a weekly gain of +28 bps.

Gold has risen +US$18 over the weekend to US$1,499/oz.

US oil prices are lower again overnight at just over US$22.50/bbl with the Brent benchmark just on US$27. These represent another -25% drop in a week as demand growth prospects vanish and more than a halving in two weeks.

The Kiwi dollar is starting the week lower and now at 57.1 USc. That is only a minor fall from Friday but it is a -5.8% devaluation in a week. On the cross rates however we are higher from this time last week at 98.7 AUc. Against the euro we are softer by more than -1c for the week at 53.1 euro cents. That means our TWI-5 is now at 64.9 and a -2.9% devaluation in a week. And that has now grown to an overall -10% devaluation over all of 2020 so far.

Bitcoin is now up to US$6,069 which is a weekly gain of +13%. 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?

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One of the things that occured to me over the weekend is that people are looking at the virus, and the crash happening, as events, when they are trends.

Yes. And we are at the start of it.
At some stage a realisation that 'We aren't going back to normal. Holding on for 10 years isn't going to wipe away the damage being caused today" is going to panic society. We've seen market gyrations so far ( part of the early trend) but we ain't seen nothin' yet.
If you physically make something; grow something, plant something etc - you'll be much better off than those who don't.

China recovering. The rest of the world weakening. Watch this space!

China is in no position to rescue the World. It's got a billion of its own people, still relatively poor, that it needs to protect first.
China will shut its borders just like everyone else. The difference? They make all the stuff ( see mine above) and we don't.
China will survive. Anyone who relies on them for everything? Uncertain.


Not sure that rescuing the world is on their agenda.

(I might have misinterpreted Foxglove's post, which fits in well with your!)

They don't produce enough food for their population is one major problem.

Watch out for vertical integration of supply chains!

What was that 1930s policy about living room? Lebensraum or something? Trying to remember how that panned out (*warning: post contains dark humour that may offend some viewers)

Did we really need all that stuff in the first place?

Short answer: no.
Computers, phones, TVs can last for 10 yrs or so.
Clothes, more than 2 years. And with clothes there are alternative countries that we can buy them from.
Cars, 40 years if you look after them. And well, Chinese cars are still really bad in general so buying one is not in your own interest. Plus there will be discounting from car manufacturers based in other countries who make reliable and good handling ones.
Other more major stuff like cranes, steel, construction equipment I would like more testing and anti dumping cases to be brought in on these things.


David - I commented on one of your Sunday articles and it was posted and there were several replies to it. The post was critical of the Chinese leadership sitting on the Wuhan virus for a month and not doing anything. I also criticized WHO. I thought the post was reasonable.

Later I checked in and found my post and the replies were gone with no footprint left by the editor as normal when it was felt the posts were outside the guide lines.

Was this Interest doing this censorship or have you been hacked?


There is frequent censorship on this site.


Didn’t you see in the article above? “ Transparency is an early casualty of this crisis.”

Maybe this was "hacked" off the site?
David will know...

Hacked off? That’s more gangrene than coronavirus...

Officially, China's retail sales dropped 20.5% in Jan and Feb comparing to 2019. Industrial production fell 13.5%, and fixed-asset investment fell 24.5%. Although China is building a narrative that she is coming back, I think it is too early to be optimistic about it. Being a key player of the globalisation, it will be interesting to see how China can recover while the rest of the world is stuck with Covid-19. Also, it is clear that CCP is waging information warfare against the United States and the West right now. I will have to take a discount on what they say.

China is desperate for USD, as is Europe and the rest of the world. USD denominated "investment" has flooded the world, causing globalisation. China couldn't believe its luck, so much so they believe it was because they were very clever.

The flows have now reversed with a vengeance. Hence the collapse in the value of the NZD and AUD against the USD. The Eurozone is facing an existential crisis and have broken all the treaty rules in a last ditch attempt to con and control the population. Capital controls will follow the travel ban.

What? No they aren't.
This isn't part of a trend. This is an impulse. An exogenous shock.
It is not part of the normal business or financial cycles.

No they wouldn't be if you were not smart enough to be about to see patterns or make predictions. Which is sort of what I mean. We are managed by people like you, that is why this predictible "shock" has happened.

If you were predicting a pandemic, you are a fool. Not some sort of messiah.
The outcome was predictable, but not the shock. That is why they are called 'shocks'.

the economy was that brittle it only needed (ANY) small trigger to topple it
Now it remains to be seen if it can get back off the canvas

I agree this isn't part of what people think of as a normal business cycle though…
this has been 40+ years in the making


The economic damage of bailing everyone out... what will it be? Bail out people paying rent, landlords paying mortgages, people becoming unemployed, companies... let's just bail everyone out! We don't need actual output to run economies, just printed money!

Well its unprecedented , so we have no idea what is going to happen .

I would bank on a depression a-la 1930's and we should prepare for that eventuality

The helicopters are on their way.

On a microeconomic level, like many of us I was astounded to see the volume of supermarket purchases over the past week. I have been casually observing the goings on at several local supermarkets when time allows. Its one thing to witness panic buying on this scale, but much of what I saw being purchased was perishable which I suspect will only go to waste. Which raises the next question...which bills will be going unpaid to accommodate such a spike in spending?

Rent probably


It's raining here. That's positive.

36 mls so far and still heavy. Woo-hoo!

you have to be joking, not a drop here.

Dribs and drabs here, there is definitely a green hue appearing under the brown. Doesn't look like meaningful growth yet though.

"China, South Korea and Japan all seem to be on top of their outbreaks"
It is worth noting that the 1918 "Spanish Flu" pandemic in NZ peaks passed within a month within each of the four main centres. Virus outbreaks like this tend to have a life span - in part as the percentage of people in the host population are or become immune. In 1918 the first NZ outbreaks were in early November and the pandemic was over prior to Christmas. However the virus can also mutate and there can be a second wave within the outbreak which can often be more virulent - within the month of the NZ "Spanish Flu" pandemic there appeared to be a second more virulent strain.
It is important to keep in mind that the worst of the current virus may pass in ten to twelve weeks in NZ and those businesses wanting to come out of the pandemic on a strong footing will be creative in trying to retain staff with skills and/or institutional knowledge.

It does feel odd writing now about what happens after the peak. Looking at the figures by nation there is a glimmer of hope that the tide has peaked although that could be just services being overwhelmed and in many nations such as NZ, USA and India it has only just begun. It seems reasonable to assume that best practice for controlling the epidemic will become normal, testing will improve (hopefully dramatically and soon) and maybe even a vaccine developed - but it is unlikely to be a vaccine that stops it like the polio or measles vaccines, more probably like the old flu vaccine or antimalarials which just reduce incidence and severity.
So three months from now 'back to normal'? Unlikely - it will be without international tourists, without cruise liners with govt and councils having paid staff but maybe only 80% of income, landlords with roughly 80% of income, most service businesses struggling to survive and our supermarkets quiet as we all consume our over-stocked larders.
I'm curious as to how different the economic recovery will be for many nations. Will NZ push tourism and international education with quite the same fervour.

Agreed: "It does feel odd writing now about what happens after the peak."
Yes it may seem odd to many and don't get me wrong; I do consider the current situation to be both health and economically serious.
However, the vast majority of people including the mainstream press seem to be simply "looking into the eye of the storm" and not recognising that - like any virus pandemic - this will pass and it could do so surprisingly quickly (a few months).
There will be some companies and individuals who not only survive but do better than others. These will be those looking and planning for the other side. That includes those companies that retain skills and the knowledge of staff. It will also include individuals who consider opportunities that present themselves during the worst of the pandemic.
I see the vast majority of comments on this site being apocalyptic and simply looking into the eye of the storm.

Only Korea is managing to reduce the number of active cases over time. Everywhere else (maybe excepting China but their data are fabricated so who knows) is trending upwards, even with isolation measures in place. The world is still on track for global 3-4% dead as hospitals are overwhelmed. (Overwhelmed Italy and San Marino 9% and 12% respectively). Current path is Armageddon delayed not averted

I really hope you are not leading today's company planning discussion on managing the current situation (including people's jobs) and ensuring that the company is well positioned as we come out of the current pandemic. If so, the likelihood of your company's mortality is around about 100%.

Apocalyptic - good word and not right. Well not right for the epidemic which I can understand but maybe right for the worlds economy which is a mystery to me. As per Yuval Harari money is a myth we all believe in. The $20 notes in my wallet are not just pieces of green paper - or at least they are not until govt's worldwide start printing them willy nilly.
The Covid-19 epidemic is not that significant when compared to past epidemics. I'd give it a 50% chance of killing myself, my wife and one of our daughters and do so this year however that still would leave eight members of my immediate family alive in NZ. Compare with the Black Death and it would be at least one in three. Compare Covid-19 with the epidemics that struck my melanesian wifes tribe from 1850 to 1900 - about 80% to 90% death rate and the arrival of Europeans in South America left maybe 95% dead usually just before the European arrived.
Even if the epidemic mutates into a really deadly form with a 99% death rate in a literate society knowledge doesn't die so YouTube will still be there showing survivors how to plant crops and repair lawnmowers.

I think the key issue here is to what extent businesses can survive and retain staff over the next 3-6 months.
I agree that there is light ahead, but you can't underestimate the potential for permanent damage over the coming weeks and months.
That's why the government needs to do much more NOW. Budget 2020 will be far too late.

Agree 100 percent. In my business we have a salary/wage bill of 100k/month. We’ll be lucky to ring 20k through the till this week (if we don’t get shut down before the end of the week). And this is a busy, long-established Optometry practice. I’ve had to make two optometrists redundant this morning, to try and make sure there is something to resurrect on the other side. It’s not just tourism and hospitality that are getting hit hard.

"But the USA is up by a factor of 8 times in one week, now with 27,000 cases and the global hotspot. Mismanagement of the crisis in its early stages is a key cause."

Mismanagement you say? Can anyone remind me how much NZ is up by a week as a multiple?

NZ is still 2 weeks behind the USA and not actually testing anyone who isnt already dying, so how do you know.?

The graph on this page is worrying, as our trajectory seems to be mirroring Italy (just starting at lower numbers).

Economic hardship is about to hit NZ too, we're about 3 weeks behind but the lockdown and self isolation will bite incredibly hard. Only in 1 months time, when there are mass layoffs and people have no money to buy anything will people understand why I have been asking "what price are we willing to pay to attempt to contain CV19"


If we believe that at some stage we will go to full lockdown why not do it now.?
The proverbial stitch in time comes to mind.

Of course we could leave it a month as China did.


Economic activity is already being hit hard so we might as well just do the one month lock down now and get it over and done with. No staff lay offs, no selling up of shares etc, just freeze all activity for a month so we don't need to have more extended lockdowns and economic disasters down the track.

Believe me I am more concerned about economivc disaster than the virus. Doing it now to nip the outbreak in the bud makes economic sense I think.

The touble is after 1 month we may just be back where we started. It would be worth while if we were confident that testing will have improved dramatically and hospitals will be better resourced.
I would like to see more effort put into encouraging physical isolation. My local wharf had too many people on it over the weekend - I wouldn't have minded a policeman there telling everyone to keep 2 metres apart. My grandchild has just gone to school - but is the school keeping classes separate - staggered morning breaks, staggered start and end times, etc.

No we wont be back to where we started. All pockets of infection will have been identified and contained. We will see the true extent of the outbreak and a huge amount of people will not be infected who otherwise would have been. It will be actually be very interesting for very little cost.

All pockets? I can imagine 99.5% but there are some rogues in our society. There may even be medically asymptomatic carriers.

We cannot close down totally: supermarkets and hospitals will have staff coming and going. What is needed is far more enforcement - if your neighbour is having a party report him; if someone fails to keep to an imposed self-isolation then fine the hell out of them; have police patrols searching for places where the public is clustering (too many fishermen on your wharf?) and dispersing them. Officials supervising supermarkets - controlling numbers and enforcing queuing and hand-washing. We could do far more.

There are fast tests with results in less than an hour coming out now - if they can be scaled up fast then we can potentially root out infection in the whole population quite quickly. Tech can save us (lives and economy), but need a couple of months for it to spool up.

there have been test available (out of china) for at least a month now that are cheap ($US3-00) and take 10 minutes to tell you if you have it, from a drop of blood. This simple test may have a false negative rate but with repeated tests can offer some measure, instead of no measure at all.

The interesting thing about Japan is that apart from widespread school shutdowns, there have been very limited shutdown of other things. Most offices and businesses are operating as per usual

That could be the clue, the schools? Shut the schools now. Honestly there will be absolutely be no impact on society by closing all schools and universities. They hardly need to learn anything at the moment as just watching the world will be giving us all valuable lessons.

Close the schools and impose a curfew for all children at all times.

I agree. Problem is who will look after the ankle biters. Some countries are advising that grandparents avoid their grandchildren at all costs.
Noticing a bit of an intergenerational thing on social media by the young. Virus parties, young coughing around the elderly, or disquieting feedback of the picture of the elderly lady looking at the empty shelves along the line of " you understand how the young felt when trying to find an affordable house", or "a job after your generation sent them all overseas"

Japan's approach probably wouldn't work here. Kids can legally be at home without adult supervision.
Also, it's quite common for grandparents to live with their child and grandchildren. That's the set up for my wife's family.


Honestly I kind of have some sympathy for this attitude. A lot of Boomers seem to be too concerned about their impending demise. Like they were going to live forever. Plunging the world into a Mad Max style disaster rather than facing the prospect of 10% of 60+ year olds suffering and dying may be the wrong decision in the long term. Even so, some young may imagine they would prefer the Mad Max reality to being wage/mortgage slaves while Boomers sun themselves on tropical islands.

That's part of the point. Models of transmission after school shutdowns assume a proportion of parents also stay home.

They have a culture of wearing face masks, even before the Wuhan Virus. Despite what some "experts" are saying, if every person wears a face mask, the virus is stopped dead in its tracks. Not because you won't catch it with a mask on, but because the sick won't cough out the droplets with a mask on.

Good point. The much maligned masks! They also have an amazing healthcare infrastructure

Don't underestimate the very high degree of automation that japan has long woven into their economy, the country virtually operates itself with a few token humans doing what still remains unautomated.

Listen to an ER doctor in the UK, a must listen, warning it's shocking.

Very dubious to be honest.

sent to my daughter by a friend who is a nurse in England, she is going on 24 hr shifts.


We are witnessing a deliberate attempt BY CHINA to destroy America's economy and President Trump's chances of re-election. And they will come to the brink of succeeding.
It’s worth noting that In late December/early January they flat out lied about the outbreak of Coronavirus in China. They said it was not being transmitted among humans, and at the same time they prevented any outsiders from verifying this false claim or verifying patient zero. As a result the WHO tweeted this false information to the rest of the world on January 14th.. The WHO is in China's pocket. The WHO now bitterly regrets doing this as it lulled everyone into a false sense of security - all except Donald Trump!! Imagine if Joe Biden had been president. America would be totally ravaged by now and China would have achieved its aim of totally destroying the American economy and the American people. And Biden is a blackmail target, having corruptly profited along with his son, Hunter Biden, from their association with the Chinese dictatorship when he was VP under Obama. 
China owes the USA and the rest of the world an untold sum as a result of the deaths they have caused and the economic disruption and loss world-wide to countries, businesses and individuals. 
As a first step in only partially redressing this massive assault on world democracy, the US should repudiate ALL of the debt they currently owe to China which as at December 2019 stood at 1.07 trillion US dollars. And ALL other countries that may owe any debt to China should also repudiate that debt. This 1.07 trillion US dollars represents 16% of all US debt held by other countries. The balance of the 23 trillion US dollars (15.24 trillion) of total US Government debt is held by Americans and by the US Government.
The second step should be the nationalisation of all Chinese owned assets in the US. No idea what that's worth, but it is probably far more than the US debt to China.
A third step should be that the USA and all countries who currently import goods from China either put a blanket 100% ban on those imports, or maybe a 500% tariff. This would cripple the Chinese economy and wouldn't be so good for the rest of the world either, until manufacturing started up again, but it would be a price worth paying to stop Chinese hegemony and military expansion everywhere. It would bolster individual countries' economies all over the world, including New Zealand. If these steps are not taken, we and our children and grand children will in the not too distant future become subjects of the Chinese Empire and the 21st century will be the Chinas century.

I seriously dislike the Communist Party of China and totally distrust it (see info on forced organ donations and the extermination of the Uighur culture). I'm also very fond of the USA and especially their support for free speech even when it hurts (ref those church fanatics who picket military funerals because the US Army permits homosexuality). So my bias ought to be towards this post. However it is a dreadful load of cobblers; I'd put it on the same level as the Chinese social media who claim the Covid-19 was invented in America and brought to China by the CIA. Once you repudiate debt that you freely took on where do you end up? If China why not the even more evil Saudi Arabia?

Very good points but how will China take this.
Already they are trying to blame USA for spreading it to them first to deflect attention away from leadership.
Next they will be using Hitlers tricks if we punish the Chinese econmy who know they start invading countries and take resources etc.
Remember wars make some countries alot of money etc.

What about Donald Trump's reaction in January indicated to you that he was the only one who saw the seriousness of COVID-19?

Very reluctant to believe any data coming out of China

Here is a website that collates stories on China's mendacity:

To be fair its also impossible to believe anything coming out of the orange guy. He needs to step aside and let the experts lead.

The young also need to understand that their attitude of not letting the virus interfere with their life (due to their youth) is incorrect. Trevor Noah calls it the Harvey Weinstein of viruses.

Consent is not asked for.

Note that Rikers has been hit heavy by the Wuhan.

I don't understand why David keeps writing this:

Back in Britain, it is so sudden and so extreme, the Government there is promising to pay wages of laid-off workers..

They are paying the salary of retained workers not laid-off workers.

For the one month lockdown everyone should either use up their leave or take leave without pay. Everyone should decide according to their own circumstances what they should do. Those that live payday to payday and have no leave should receive a government subsidy via their employers. The well off should just take leave without pay. I'm more than willing to do that although I do have four weeks leave accumulated :).

I don't think this should be covered by sick leave. If everyone could just make a bit of a sacrifice according to their means that would be good.

Come on it's just for one month!

Why not just declare April as a non-month for the economy. Rents frozen. All mortgages delayed by one month with no extra interest. All wages paid by the govt in a new temporary Kiwi currency with an online existence only and all food for sale by that new currency. A one month UBI sufficient to just feed a person. When the epidemic is over the temporary currency disappears (govt switches off the database holding it) and we return to normal.

There are a lot of financial liabilities that extend beyond our borders and beyond the ability of the govt to legislate such a break for.

OK non-month economically except for importers and exporters. Just switch off capitalism within NZ for a short fixed period - capitalism is not viable when a very large fraction of our able workers are forced to stay home..

I think it is a possible idea?.. Stop all rent/ mortgage/ power/ insurance bills and pay a small UBI for the month for food etc.

Australia's construction industry facing collapse

This will e awful.for NZ too, lots of kiwis work in that sector. They will need to come back

Be like Ireland - all the young people leave the country.

"China, South Korea and Japan all seem to be on top of their outbreaks, even if the West isn't."
South Korea and Japan (and Germany) have 4x more hospital beds/1000 than NZ - we track similar to the US and the jewel in the crown NHS.

Germany - groups of >2 banned apart from families. Enforced by police. Merkel isolated.

Time to recognize that kiwis are not doing the social distancing thing. If we dont have enough police then the army has to stop doing its marching practices and mobilize to help.

I wonder what our military hospital capacity is? Going by the infection rates in Oz and our lax testing/border control to date we can't be far behind.

the vast majority of the defence force's capability to surge its medical capability is dependent on reservist doctors who already work in the public sector.

We need a 'dob in your neighbour' helpline.

"In Canada, sudden unemployment is at crisis levels. In fact almost 3% of their entire workforce has lost their employment in the first three weeks of March. That's more than ½ mln people."


Yeah this is a key one. Some countries out there have tight tracking of what is going on with their workforce and with the virus spread, as opposed to our approach of obscuring numbers, not measuring, and avoiding testing when possible. We can use other countries therefore as a real guideline to what is probably going on here.
Is it far fetched to imagine 3% of NZ workers have already been told either "You will get no contracted hours for the forseeable future" or "be warned, the business will likely fail and I'm not sure the government support can keep us afloat" ?

Some economists say US heading towards 15-20% unemployment:

And the end must be nigh for retailers like Harvey Norman? Who have 'Sales!" that bring the prices down to just a bit more than what the opposition will sell the same item for, and then jack the price back up several thousand dollars when the "Sale!" is over, so they can do the same again - at Easter?
Now, any owner of any asset can ask whatever price they like. And the mantra of "If it isn't going to sell, then 'Not Sell' for a higher price than lower one" is a way to go. But at some stage, as all will find out, it's really a matter of what price the buyer is willing to, and CAN, pay.

The return of true price discovery across all asset classes.

Let's hope so; the cost of debt included. But I won't hold my breath!

Actually Harvey’s is doing just fine at the moment with all the panic buying. They aren’t having to discount much at all especially on things like chest freezers. Give it a month or two and we’ll see if it’s still the same but all good for them at the moment.

Would not be surprised if NZ is already in recession, Australia most certainly.

Would be really surprised if we weren't in deep recession at this point.

Gvt are too slow to act. Taken kids out of school from today. I think people need to take responsibility for themselves. Don't wait for the govt to act. They are more concerned in not offending anyone. If it's an over reaction well better safe then sorry.

If students don’t attend college it is logged as unauthorised leave.

Grandkids school (total school population 13) emailed parents over the weekend saying they have on line learning set up if parents want to keep kids away. So if kids don't attend physically but attend on line, I can't see how a school would consider those pupils taking unauthorised leave.

Grandkids in UK with school closed are now doing on line lessons. I asked my daughter how long it takes the kids to do their lessons. 'As long as it would if they were in school', was the reply. Kids won't be at school again until June. However, parents in the area, believe the school won't open again until the new school year in September.

$30 Bn. It's a shock to real economy, rather than finance.
Help folk in street first rather than the carry trade unwind.

I feel like I'm looking at completely different numbers to Mr Chaston sometimes. Japan for example is doing a terrible job. They have a worse death to case ratio than Brazil. So Japan doesn't test = they're doing a great job, America does test and they're doing a terrible job. It's like opposite day. Germany has seen a huge explosion in cases, doesn't mean they're not doing a good job.

Agreed that has been an issue of the reporting everywhere at the moment. There needs to be a big asterisk by any comments on how well certain countries are doing. I wonder actually how many cases NZ has right now outside the “reported” 66 for example.

Reported cases lag about a week behinds infections given time to symptoms and then time to test. About 3x case growth in that time (10x per fortnight typical international growth rate). Probably safe to assume NZ has several hundred already infected.

if the number of those infected continues to double every week it will only take 15 weeks to hit 8 billion.

Savings households New Zealand , (in an emergency)
Grattan institute Australia, if you believe New Zealand is better

Scary stuff - wonder how many rental properties will need to be sold to cover lost income?

Heard that rents in Queenstown for long term rentals down 30% already.

Former Airbnb properties, now being listed for long term rentals.

Businesses closing down mean workers laid off and some are leaving town for work elsewhere, so demand for long term rentals also falling.

Housing shortage, the property promoters said ...
House prices doubling every 10 years, property promoters said (sarc)

Share market be like a car more like a train crash...happens slower but the destruction is much worse.

Saw a post from a property promoter to property investors to ignore the doomsayers.

He's trying to reassure property investors.

He says the debt numbers aren't that high with a debt to income of 6x.

This issue is that the above calculation assumes that both people in the household are working. That ratio rises significantly when one or both are laid off and have no employment income.

For example, I heard a story where a father, his son and his son's girlfriend were all working at the same company. (unclear if it is family owned business). They just closed down, and laid off all their employees. So that family has all experienced a significant drop in income. So in this instance the income may have dropped to zero, whilst the debt is still outstanding. FYI, the business was related to tourism.

Remember that 14% of the workforce is directly or indirectly employed in tourism. So assuming that 50% of these people lose their jobs, that is 7% of the working population and a huge jump in the unemployment rate. Add that to the current 4% unemployment rate, then there is a 11% unemployment rate potentially, unless government programs can fund jobs elsewhere, where these people can be redeployed. That potential 11% unemployment rate would be higher than that during the GFC in 2008, and the Asian Financial Crisis in 1998, and reaching levels last seen in 1992. If you assume higher than 50% of tourism sector workers lose their job, then those unemployment levels could be surpass those in 1992.

"For the year ended March 2019 just over 14 per cent of the work force was directly or indirectly employed in tourism. "

That is before other industries in the economy - construction, non tourism retail, restaurants, real estate, etc

As far as China making all the world's stuff is concerned, that is only a temporary thing. If Dunedin goes back to having two large clothing factories, and if Summit shirts are made in Paraparaumu(I think) again, will that be a bad thing? On a closely related topic, $1.20 spent locally is actually cheaper than $1 spent out of town. This virus thing might be our chance to get rid of all the multinational businesses running our corporate world, and we can go back to spending our money with it circulating around New Zealand instead of being syphoned as fast as possible offshore to the foreign rentiers.

Maybe just maybe petrol stations will employ kiwis again.
My understanding is that the servo franchise has replaced the corner store for a lot of Indian immigrants and their next step is to employ Shane Jones "psuedo students" with some believing NZ laws are just a guideline...

But we wouldn't be able to produce at the same cost....wouldn't we end up with an inflation issue? i.e. general rise in the price level?

Good luck with Microsoft and Google (OS), Cisco (routers and telephony), IBM/SAP/Oracle (databases) and the list goes on. Multi-nationals all, and running the very keyboard you're typing on.

lockdown must be abandoned
or is it already too late

Disagree. A stage four lockdown to contain the virus could be place on any centre where it is positively identified. Keep stage 2 for all others.

I was really referring to worldwide
NZ wont truck along fine if the rest of the world is in lockdown
the remedy is FAR worse than the disease
wait till the pain (of shutdown) kicks in in a month or two …

It is too late for blame. Any debate we must have now is around the future shape of our economies. This virus has shown the extreme vulnerability created by globalisation. The economic models that drive Government policy must necessarily change to provide for an element of isolation, and will support resilience. Many multi-nationals will need to be dialled back strongly on how they have run rough shod over smaller countries. Our politicians are at the point where their true colours will be revealed. It is an election year, so for us the timing is great about asking some seriously hard questions of those who are in charge of our Government.

The RBNZ partaking of QE is an interesting but commendable step. I still am waiting to see a substantive indication of the private banks actions. A surprising move in the US is outlawing mortgage foreclosures.

As an aside.
What do we think banks will do 'tomorrow' if they can't call in collateral today on delinquent loans? ( forclose)
If I was a lender I'd be including that in any future commitments made ie: MUCH higher cost of debt.
The only thing that could keep me from doing that is, Government regulations. In which case I'd move the risk costs involve to other parts of my business. The only thing that would stop me doing that is if my banks was now, a Government bank.....

More talk among friends and family of pulling their savings out of the bank (already have some that have pulled tens of thousands out) - like all of it...I'm worried about a bank run.

why would the banks have delinquent loans? Most businesses can run a month or two if they cut costs, hell I can run for a year or two but I don't employ anyone. Once the cost of labour has gone a lot businesses will just be frozen in time. Banks will keep trucking along bills get paid etc. I am trying to continue as normal as much as possible, paid all the accounts this morning.

A friend went in to a pub cafe on the weekend. Said the owner thanked them for supporting their business, as it was much appreciated. Friend said they felt sorry for the owner who looked quite stricken by the lack of patronage - bought the place about a year ago. A very popular place prior to COVID 19.

Resilience & efficiency are polar opposite when it comes to supply chains
Which is the problem increased globalisation has created
An economic system designed to maximise efficiency (and raise living standards) has left us totally dependent/non resilient
It has also resulted in massive overshoot

Its a given that the step back will have to involve a crash in living standards & population
You cant unwind the efficiency & still hold DEBT and commodity prices up

You made my day! What a crack up! I hope he sees this.

It's not too late to change leadership. Do we have the right people making decisions during this crisis - on performance to date the answer is unequivocally no.

Humour us for a moment, who would you personally recommend for leadership?

Too late for blame , my backside !!!!

We have known of the risks of eating certain animals for centuries ( in fact since Biblical times ) and even recently in 2003 with SARS where China was the epicentre .

The consumption of exotic animals with exotic viruses . must stop .

Out of curiousity, do you eat bacon?


I hear a lot of CCP propaganda being repeated these days. Let's get one thing straight - China has imperiled the world with its actions, covering up the reality and refusing to act in the first crucial weeks.

NOT SINCE THE LAST SUPPER 2,000 YEARS AGO HAS A SINGLE MEAL ( of bat soup or whatever) had such an effect on the Human race ...............

I would suggest that it is not only China. It is politics/religion (there is very little difference!). it is people lusting after power and privilege making all manner of promises to get where they want to be and then just looking after themselves when they get there, at the expense of those they are supposed to serve and protect. NZ is not immune to this. What is the crime is any one group, people, culture, religion thinking they are better than any other. The murder of 51 innocents in Christchurch is no different than the politics emanating from the US over decades that has led to the deaths of many time more. People in power or with wealth seem to think that somehow they are immune to the things impacting the rest of us. COVID19 is set to teach them a lesson!

Why does John Keys name come to mind reading your post..?

My daughter tells me that London is a mess. Went into huge ASDA to get some food at 7am and it was almost empty of any fresh food, lots of easter eggs. This is not being reported in MSM. The Veg is coming out of Spain/ Ghana/ Nigeria/ Kenya etc. The supply chain has broken.
Her friend is a nurse who is sick got sent home as a precaution as they don't have ability to test her. Other friends tell me traffic in country is unbelievable as people leave the cities, potentially carrying the virus with them heading to holiday homes etc.

Yep my brother lives there, it's carnage


asked a mate in London to give a daily update, I could post here if people are interested and he's okay with that.

Yes I would. Family in East Midlands so it would be interesting to see what is happening in London

Yes please, AndrewJ. As a Son of the Soil, you are far more credible than most of the revolutionaries and blatherers who ply their trade here. I have family in Somerset and can contribute the odd anecdote as it all unfolds too.

Heard from a French guy from Brittany of the same thing happening there with city folk deciding there were better chances in isolated food growing regions. His folks are now stuck in NZ after visiting here.

How the tide has turned.

People dont understand supply chains. Friends of mine initially disparaging of stocking up (I did it a months ago). I tried to explain just in time supply chains and how little redundancy we have these days.

what happens if the person repairing the machine that makes the widgets is off I'll, the person operating the machine,the person driving the gift,the person driving the truck, the person unloading the truck....

We wont starve but for a while you wont be able to get what you want conveniently and immediately when you want it. The toilet paper madness if overdone but the fundamentals are sound. More redundancy in our own household systems

See my comment below.
It becomes self fulfilling...

exactly so

redundancy & efficiency are not bedfellows
And economic growth required efficiency about everything else

From the CCP: Welcome to globalization everyone, our problems are your problems too comrades!

I have to say it the WHO has totaled failed the world, they took the CCP BS reports hook, line, and sinker back in December and January. The CCP wouldn't allow anyone, including WHO, into Wuhan to review and report on the situation. Not to worry the CCP is donating $20 million to the WHO now to pay them off

The west has now been caught napping and totally unprepared while the C̶h̶i̶n̶e̶s̶e̶ ̶F̶l̶u̶ opps I mean COVID-19 has spread globally. It's time everyone realized that the CCP is your modern day Nazi party equivalent, their aims are globalization also, but based on CCP control. So when is NZ signing up for the Belt & Road initiative....John K. where are you?

FFS people open your eyes to what China really is! There is no freedom of speech, freedom of religion, or liberty for people. No Google, no freedom to internet search, everyone has an identity card. China is a state controlled dictatorship that NZ and the west is bowing to. The don't play by our rules of fairness, honest, or any international agreements they singed up for i.e. WTO.

It's time that NZ and the west looked away from China and the CCP before it is to late. They say history never repeats but hell it's starting to feel like the 1930's already.

History may not repeat in the sense of exact replication but it sure as sugar Rhymes....

WHO really do give huge bureaucracies a bad name. Hopeless, and quite possibly corrupt.

The NZX currently getting a pedicure

Those who see 92 cents worth of value in Air New Zealand, good luck to you.
Zero dividends and even when this is over, a mass of airline waiting to cut your throat to secure lifesaving passengers ( who will be a lot fewer on the ground, so to speak) makes little sense to me. But I suppose those who have been caught with them may as well average-up...In for a Penny; in for a Pound etc.

would be interested to know where you do see longterm value in NZX companies?

One hour later - getting worse - the toe-cutters are up to the knees

Economic consequences of too much debt and too much focus on residential property. Covid19 is the pin.

Was at Countdown this morning and most of the staples had been pillaged. I thought they said they will be keeping things stocked?
This lack of stock just further encourages stockpiling.

Promises promises … like the debt system
Its real stuff where the rubber hits the road
when supply chains grind further down & they cant magically make things appear?

I went to New World on Lunn Ave in Auckland yesterday. Got there at 7:30Am but store had changed opening hours so didn’t open until 8. About 50-60 people gathered outside mostly chatting to each other about how they were dealing with covid19 at home and work. Everyone was very pleasant and I have never had my bags packed so quickly... I think people will cope, it’s the economic effects that will be the hardest to deal with, especially for those loaded up on debt.

I so rely on your daily post, David. Thanks so much for the work. Best wishes to you and the whole team.

Given the slowing economy, I suspect that advertising spend will fall in the country. is likely to experience a fall in advertising revenues as a result.

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Labour and the Greens have started party fund raising off the back of the pandemic. Must have a lot of spare capacity not actually working on the pandemic. Rather tone deaf.

What is "The most significant financial decisions of this election campaign will be made on 1 April." that the Greens fundraising ads mention?

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