Here's our summary of key economic events over the weekend that affect New Zealand, with news 'health' policies are very much secondary to 'economic' policies.
Around the world, governments are starting to plan re-openings of their economies. And this is despite a clear lack of control of the pandemic. Many countries are at vastly different stages in their fight for control but the drive to restart business is growing everywhere. The scientific advice is being pushed to the background and it is now clear that choices are being actively made to sacrifice lives for "jobs" and "profits". "The economy" trumps all.
In the US the pressure is enormous. More than 20 mln people lost their jobs there in April, according to their official data.
At the same time, another 2 mln people lost their jobs in April in Canada. Between the two, that is 22.5 mln extra people jobless in just one month. We want to try and put that into perspective. That is like saying everyone in the workforce in New Zealand (2.8 mln), Australia (13.0 mln), Singapore (3.8 mln), and Hong Kong (3.9 mln) all lost their jobs in one five week period.
But it is worse than that, much worse. Even the White House says things will get worse. The US data is based on a survey taken on April 12, and things got substantially worse after that. And at the same time, the same survey reveals that the American labour force shrank because a remarkable -6.5 mln adults withdrew from their labour force on top of the -1.6 mln who did the same in March. So in two months 8 mln more people gave up looking for work and these people are no longer counted as being in their workforce, so the unemployment numbers ignore them. Their participation rate fell to almost 60%, the lowest since 1969 more than fifty years ago.
And of course, the jobless numbers don't count those who have had their pay cut, their working hours cut (or both), or are in the casual, gig economy (surveying these workers is difficult). All up it is an epic economic disaster and one that will probably be repeated in May, despite the desperate attempt there to restart their economy. You just cannot take the purchasing power of that many people out of the giant American economy and not have long-term global economic implications. The hurt will spread to New Zealand and our export markets.
And the impact is playing havoc with the US Federal Government finances. The federal budget typically records a surplus in April because of the timing of tax payments. But this year, they incurred a deficit of -US$737 bln in April compared with a surplus of +US$160 bln last year in the same month. Remember, it was just a few weeks ago, estimates were being made that the full year deficit could exceed -US$1 tln. Well, they got close in April by itself. The revised estimates are now closing in on -US$4 tln.
There is also a heap of hurt being reported elsewhere around the world for April. For example, Brazilian car production fell -99% (!), Mexico's car production fell by almost the same, Israel's factory sector dived, and industrial production in Spain, Germany and Norway all fell very sharply. The global economic carnage is widespread.
But not everything was disastrous. Canada's housing starts fell sharply, but not by as much as feared. And Canada's building permit levels were also down sharply, but not to levels feared. (But there may be questions now about whether any of these projects will be started soon.)
And in Europe over the weekend, finance ministers accepted a plan for a €240 bln credit extension on very cheap terms, allowing under-pressure governments to access huge amounts of new borrowed money.
And in China, there is more evidence that a return to normal life is bringing an economic upswing. But being the only game in town also means that China is pressing its advantages for access to that rebound. It is pretty callous in how it is doing that. It cares little for its neighbours.
And deteriorating relations have resulted in China giving Australia 10 days to explain why Beijing should not impose tariffs of 80% on Aussie barley, a AU$600 mln trade. Canberra is not impressed.
Meanwhile, even though iron ore prices keep on rising, the price of both thermal and coking coal continues its downward direction, down more than -10% over the past few weeks and threatening to shut mines in the same way oil rigs are shutting.
The latest compilation of Covid-19 data is here. The global tally is now 4,077,600 and up +167,000 from this time yesterday which is sustained level of increase.
Now, just under 33% of all cases globally are in the US, which is up +46,000 since this time yesterday to 1,320,400. This is a marginally slower rate of increase. US deaths are now almost 80,000. Global deaths now exceed 281,000. Although much faster increases are coming in four key countries, Russia, Brazil, India and Peru, there is no slowing in the UK which is has passed Spain to be the country with the second highest level of infection globally. Their health system and public management has been a clear disaster, both unable to cope with the challenge.
In Australia, there are now 6941 cases (+27 since Saturday), 97 deaths (unchanged) and an unchanged recovery rate of just under 89%. 43 people are in hospital there (-15) with 17 in ICU (-6).
There are 1494 Covid-19 cases identified in New Zealand, with two new case yesterday, a rise unchanged from the prior day. Twenty-one people have died (unchanged). There are now two people left in hospital with the disease (also unchanged), and none are in ICU. Our recovery rate is now 92% with 123 people known to be infected and 87 of those are in 11 active clusters. That means 36 cases are recovering in self isolation in the community. The cabinet decision on when to move from L3 to L2 will be made at 4pm today, but they are probably boxed in now because almost all of New Zealand is acting as though we are already in L2.
Wall Street ended last week with a rise of +3.5%. In Europe, the Frankfurt DAX was up just +0.4% for the week, but the FTSE100 was up +3%. In Asia, Shanghai gained +1.2% in their shortened week, and Hong Kong was down -1.7% for the period. Tokyo registered no gain, falling for most of the week but recovering it all at the end. The ASX200 gained +2.8% over the week, while the NZX50 Capital Index gained +2.4%.
The UST 10yr yield will open the week at just under 0.69% and little-changed from Friday. Their 2-10 curve rose sharply last week but is unchanged today at +52 bps. Their 1-5 curve is unchanged at +18 bps, and their 3m-10yr curve is also little-changed at +59 bps. The Aussie Govt 10yr yield is still at 0.95%. The China Govt 10yr is stills at 2.63%. And the NZ Govt 10 yr yield will start the week also unchanged at 0.57%.
Gold is lower today, down -US$3 to US$1,703/oz.
Oil prices are marginally higher again today. In the US, they are currently at just under US$25/bbl. International oil prices are just under US$31/bbl.
The Kiwi dollar is firmish and is now at 61.4 USc. On the cross rates we will open at 93.9 AUc. Against the euro will open at 56 euro cents. These rises mean the TWI-5 is now 67.1.
Bitcoin is being dumped today and it looks like last week's halving hype is being unwound suddenly. It is down -14% or -US$1,372 in the past few hours to just US$8,541 and its lowest level of the month. 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 ».
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