Here's our summary of key economic events overnight that affect New Zealand, with news the Fed is warning that asset prices can't be justified in the new economic environment.
Firstly however, data for American retail sales in April shows them -22% lower than the same month a year ago, with -16% of that fall coming since March. There has never been such a sharp colllapse in American economic history.
In March, and prior to the April disaster, American industrial sales were down -4.9% from the same month a year earlier. Inventories leapt. When the April data arrives it is likely to tell a similar story to the retail sales story. But the US Fed has a measure of industrial production for April and that fell the most ever recorded, down -15% from April 2019. Consumer goods production was down -16% year-on-year, business equipment was down -26%.
Investors can't decide whether they should react to the unprecedentedly weak data, or the fact that many governments are moving to restart their economies. Wall Street ended flat on Friday, but down -2.5% for the week. Unbelievably, the S&P500 is at virtually the same level it was a year ago. (That is the power of share buy-backs to keep prices up.)
And the US Fed issued a clear and stark warning about the risks to stock and asset prices generally. In its Financial Stability Report, it fingered commercial real estate as the sector most at risk to a gruesome repricing. They also note risks are also high for residential real estate and farmland. It sees rising risk aversion leading to depressed valuations, increased volatility, and impaired market functioning.
Another complicating factor for the immediate future of trade is that the US-China trade relationship is unraveling faster now.
In China, retail sales in April were weak. There were down -7.5% in April when markets were expecting a lesser year-on-year fall and a larger recovery from March to April of +6.5% for the month. Chinese electricity generation and overall industrial production did rebound in April however. But the recovery probably isn't enough for Beijing, so markets are expecting more stimulus. But it could just be more debt stimulus.
The Asian Development Bank has issued an updated estimate that says the current crisis could cost global GDP up to US$5.4 tln and reduce economic activity by -5.9% worldwide. It sees China suffering a -7.8% decline, the US a -5.7% fall, Japan a -1.7% retreat, and the EU with a -6.7% fall. They say Australia and New Zealand will be hit with a -6.0% drop.
It is particularly hard on countries like Indonesia. An unstable Indonesia is Australia's worst nightmare.
In Australia, new figures show 429,000 mortgages have been deferred totaling AU$155 bln. The figures take the total number of all loans deferred to 703,000, worth a value of $211 bln. More than one in 14 mortgages now have deferral arrangements in place there.
The latest compilation of Covid-19 data is here. The global tally is now 4,508,400 and up +102,000 from this time yesterday which is higher level of increase.
Now, just on 32% of all cases globally are in the US, which is up +29,000 since this time yesterday to 1,430,000. This is also a high rate of increase. US deaths are now exceed 87,000. Global deaths now exceed 305,000. Mexico is another country with a fast rising level of infection, hurt but its proximity to the US. Brazil's raging infections haven't yet contaminated Argentina although their neighbour is reporting a rise.
In Europe, Lithuania, Latvia and Estonia opened their common borders last night, creating the first “travel bubble” within the European Union in a bid to jump-start their broken economies.
In Australia, there are now 7019 cases (+30 since yesterday), 98 deaths (unchanged) and an unchanged recovery rate of just on 90%. 46 people are in hospital there (+4) with 17 in ICU (-1). There are now 682 active cases in Australia (-6).
One additional case was reported yesterday in the Auckland Marist cluster. There are now 1498 Covid-19 cases identified as either confirmed or probable. Twenty-one people have died (unchanged). There are still only two people left in hospital with the disease (unchanged), and neither are in ICU. Our recovery rate is now just under 95% with 77 people known to be still infected (-9) and 62 of those are in 9 clusters. That means just 15 other cases are recovering in self isolation in the community (-3).
Equity markets are lackluster today. The S&P500 is little-changed, up +0.2% near the close and cementing in a -2.5% weekly fall. European markets closed generally higher, especially Frankfurt which was up +1.2% on the day to limit the weekly loss to -4%. The FTSE100 was up +1.0% on the day and that resulted in a weekly loss of -2.3%. Shanghai, Hong Kong and Tokyo all closed little-changed yesterday, and all ended their week with a loss. Both the ASX200 and NZX50 ended the week about where they started.
The UST 10yr yield is a little firmer at just on 0.64% and a +2 bps rise. Their 2-10 curve is little-changed at +47 bps. Their 1-5 curve is marginally flatter at +14 bps, and their 3m-10yr curve is also flatter +53 bps. The Aussie Govt 10yr yield is up +3 bps to 0.92%. The China Govt 10yr is down -4 bps at 2.67%. And the NZ Govt 10 yr yield has also settled, down -3 bps to 0.64%.
The gold price is much higher today, up another +US$16 to US$1,744/oz.
Oil prices are higher today as well. The US crude price is up by about +US$2.50/bbl to just over US$29.50/bbl. The international oil price is up a lesser amount to just under US$32.50/bbl. There was another very sharp fall in oil rigs operating in the US, and a new all-time low modern record (records started in 1991).
The Kiwi dollar is much lower this morning and now just under 59.4 USc. On the cross rates we have sagged to 92.5 AUc. Against the euro we are down to 54.9 euro cents. These falls mean the TWI-5 is now 65.5 and a six week low.
Bitcoin is a little softer today, down -1.1% to US$9,499. Overall May volatility is running at +/-5% compared to the April volatility of +/-7%. Over all of 2020 it has been +/-18%. 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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on covid, whats going on?
https://www.bmj.com/content/369/bmj.m1931
Here is how in Taiwan.
Vice President of Taiwan Dr Chen Chien-jen the Health Minister of Taiwan.
Discusses the factors that have contributed to the success of Taiwan's efforts.
Plus timeline.
https://youtu.be/-3Ry6eiKvvw
Amazing presentation by the Dr.
Amazing contrast to our own.
"There has never been such a sharp collapse in American economic history."
And what comes next? Just an opinion of course....( a good reads for anyone with 15 minutes to spare)
“Only a crisis – actual or perceived – produces real change.”
These days, more young US Americans have a favourable view of socialism than of capitalism – something that would have been unthinkable 30 years ago. The ideology that was dominant these last 40 years is dying. What will replace it? Nobody knows for sure. This pandemic could send us down a path of new values.
The going assumption – on both sides of the political aisle – is that most wealth is “earned” at the top by visionary entrepreneurs, by men like Jeff Bezos and Elon Musk. But in recent weeks, lists have been published all over the world of what we’ve started calling “essential workers”. And surprise: jobs like “hedge fund manager” and “multinational tax consultant” appear nowhere on those lists. All of a sudden, it has become crystal clear who’s doing the truly important work in care, and in education, in public transit, and in grocery stores. It turns out that not only education and healthcare and garbage collection and mail delivery start with the government, but also real, bankable innovations. Every sliver of technology that makes the iPhone, internet, GPS, touchscreen, battery, hard drive, voice recognition was developed by researchers on a government payroll.
And what applies to Apple applies equally to other tech giants. Google? Received a fat government grant to develop a search engine. Tesla? Was scrambling for investors until the US Department of Energy handed over $465m. (Elon Musk has been a grant guzzler from the start, with three of his companies – Tesla, SpaceX, and SolarCity – having received a combined total of almost $5bn in taxpayer money.)In the book The Hidden Wealth of Nations (2015), it worked out that $7.6tn of the world’s wealth is hidden in tax havens.
If there was one dogma that defined neoliberalism, it’s that most people are selfish. And it’s from that cynical view of human nature that all the rest followed – the privatisation, the growing inequality, and the erosion of the public sphere.
Now space has opened up for a different, more realistic view of human nature: that humankind has evolved to cooperate. It’s from that conviction that all the rest can follow – a government based on trust, a tax system rooted in solidarity, and the sustainable investments needed to secure our future. And all this just in time to be prepared for the biggest test of this century.
Nobody knows where this crisis will lead us. But compared to the crisis of 2008, at least we’re more prepared.
""... for a different, more realistic view of human nature: that humankind has evolved to cooperate. It’s from that conviction that all the rest can follow – a government based on trust ..."". Sensible comment except for this bit. The last thing we need is a govt based on trust. Just open a newspaper and we see grants of our taxpayers money given to NGOs that have worthy aims and then there is fraud and the money is never paid back. Yes almost all people want to cooperate, they want to do good (just look at the many unpaid volunteers running our charity shops) but among the dutiful sheep lurk wolves. I prefer a society that trusts the public to donate blood rather than pay for it and get HIV from drug addicts but I also want to avoid being robbed whether by local book-keepers or Elon Musk. NB I'm not a Musk fan but there $5bn has produced some beneficial results - it just needs some serious accounting.
On rare occasions, Governments arrive that are appropriate to the time and place.
Singapore could be considered one such example. A benevolent 'dictatorship' that has taken a country of swampy poverty into the nation-state we see today in 50 short years.
But for every Singapore, there are 10 Zimbabwe's etc. I get it.
Change is upon us all. I'm confident that New Zealand can make necessary changes to rebalance our country. We have everything we need to do it. All we need is a Government with courage. Will it be this one? I hope so. Not because I am a Labour supporter ( I'm ambivalent in that regard) but because it has to be done. And now is the best time we will very have in a generation.
You see Dalio's latest views bw?
https://edition.cnn.com/2020/05/15/perspectives/ray-dalio-capitalism/in…
He's thinking a reformed capitalism or potentially another civil wars. I find that interesting as I follow Jonathan Haidt (read his books and went to his show in Takapuna last year) and he suggests that the partisan divide in the US now is as bad as its ever been.
I read Dalio's writing a week or so back, and agree with much and disagree with some.
He believes China is an answer that it may not be.
But he's dead right on the main premise - Change is here. It's not going away, and we all have to deal with it.
Partisan Divide IS what holds us back. It's a function of Western 'Democracy' , and a regime that can order change on its people "Do it, or else!" can change faster than we can.
But if we have courage, we CAN make the changes that are needed! Fingers crossed because if we don't do it now, one way or another we are going to get a set of rulers who say "Do it, or else!"
I wonder with house sales if they are related to the velocity of money, which I predicted would decline along with interest. There is a cost to moving, quite a significant one. I wonder also if that cost is all good and well when you are spending capital gains, but much less likely when booking losses. People might end up staying put unless really forced to move.
The mayor Jim Boult is resorting to telling those on work visas to hurry up and leave and that is abysmal treatment of people who served the community. If they want to stay and dont resort to crime or being a nuisance then that's up to them. Give them some financial and moral support it's the kiwi way. It's bad that kiwis complain when the Australians tell kiwis to feck off but now dont say anything about what wnker Boult said.
There is about Queenstown a self anointed image as being the St Moritz of the Pacific. In truth they do run the place to an international standard hospitality wise. Pity though that a vaunted alpine lake side tourist town cannot provide pure drinking tap water. The trouble is, one might think, that the industry and commerce down there could be more interested in the money the town can make for them rather than the town itself.
Housing
The past decade has been one of up-sizing and up-grading and accumulation
The next decade will be the reverse - down-sizing and down-grading and distribution
Still - the money will continue to go round
The collapse of the tourism and hospitality means there will be less volume to circulate
You must be confused as I don't think I asked a question? The share market is significantly over priced at the moment in my opinion and I don't expect great returns the next 10 years. This aligns with Robert Shillers CAPE modelling (cyclically adjusted p/e ). I'm backing gold and gold related shares at present and currency - USD in the short term.
But then again, I don't take leveraged bets on the share markets. I only invest what I can afford to lose.
With the housing market you're making a massively leveraged gamble at present. i.e. I put in 20% of my money and the bank puts in the other 80%, so leveraged at around 400%! I'd never do that on the sharemarket! You risk losing all of your deposit - i.e. hundreds of thousands of dollars for the average kiwi home. With the share market you can dollar cost average to reduce your risk as well - I can't do that with the housing market. When you buy in the housing market you're saying I'm all in with all my money and bunch of other leveraged money as well - all at the same time! I can't spread my risk over time and price movements.
So I'm not even going to buy into your argument as its comparing chalk and cheese. The two things are very different. But yes generally I think the share market is a bad option in terms of risk vs reward - but with buying shares I have no obligation to somebody else to keep contributing income to the investment (like mortgage payments on the house...) - so in a time when income/employment is dodgy, it makes housing an even worse investment. If housing falls by 30-50%, great it would be a buy. But not now.
Housing still has and will continue to have for the foreseeable future a lack of supply.
Sharemarkets, especially offshore, are not supported by fundamental earnings but by easy money. A lot of the entities listed are not growing - no demand pull.
That and capital gains still being able to be avoided; banks more than willing to lend; relatively low level of time required to invest vs running a business etc..
That’s why!
I’ll ask you one question. Where will all this printed money end up? (All in gold...for more bubble creation, or in fundamental “essential “ investment - see people don’t need gold but they do need homes, medicines, water, power, food etc)
Eventually it will but not before a major deflationary event. The velocity of money has ground to a halt. You can throw as much money at people as you want but if people are afraid of their livelihoods they aren’t going to spend it until their confidence returns which won’t be for a long time. There has never been a shortage of housing only a shortage of affordable housing...that is about to change.
Yes. Look at the Nikkei. Look at the German Neuer Markt tech index (now defunct). Look at the FTSE100. Look at the SP500 on an inflation adjusted basis if you tipped your savings in at the top of the Tech Bubble, or in 1929, or in 1937, or in 1969. There are multiple very long periods in history where stocks have had a real return of 0%. And that's in the SP500.
https://www.macrotrends.net/2324/sp-500-historical-chart-data
When you have a human lifespan timing matters.
Yeah I really don't get all the people trying to say stocks are on sale. The market is 15% off one of the highest valuation multiples of all time and retail speculators are buying in droves, it's hardly blood in the streets stuff. Something that was wildly overpriced doesn't become good buying at 15% off.
I was thinking a move to people working from home might balance that out - those doing so need enough space for a home office. And also if pension gets means tested like Australia (assets other than residence lower the payment, so incentive to keep bigger house instead of downsizing when older) . Will be interesting to see over time. According to TV interview today pension will remain universal though....
The Government sets the test. Evidently the Australians don’t think that equity in a personal home is a means to pay your bills. If my income is low and other assets are low, then I would get the money, if I was in Australia. Right now, there is no Super means test in NZ. If there is, then I will arrange my affairs to defeat it. I can’t see the point in using my own assets when I can take money off the State. Isn’t that par for the course in the new NZ?
You are not taking money off the state, as I said you are stealing more money you don't need FROM ME a 32 year old net taxpayer.
You fancy yourself as Sun Tzu on here reading what 'the enemy' has in store for you. So clever aren't you? What you seem to forget is that conflict is dynamic: 'the enemy' adapts to your adaptation. Don't think these sorts of comments are not being memory banked by those of us who will be running the show in 10-15 years.
I don't like thieves.
I dont qualify for pension for over 15 years by then it might be 67 by the time I do. But everytime I hear pollies or political commentators suggest means test it makes me riled up. Yesterday it was Kevin Milne on his weekly zb slot but of course hes over 70 and been recieving a govt pension for years. My thought was hypocrite, stop receiving it yourself right now if you believe that. Of course he wouldn't. He doesn't really believe his own mutterings Kevin Milne is only being populist. Another champagne socialist.
Till now the enormity that corona virus is having on economy has not sink in or has been over shadowed by the Big Stimulus by almost all government as a result true price as of now is not reflecting in asset class be it stock or property.
Time to be alert and extra carefully as worst is yet to come in terms of economy parameters as till now all attention is on numbers /spread of Corona Virus/health (rightly) and once it settles the real impact will be felt in economy world over.
Also some jobs / business has been lost immediately but many who are not being affected now may be in future so the full impact of corona virus will be felt by September/October.
I think we’ve had irrational exuberance in the NZ housing market from about 2013 and the share market about 2017!
Robert Shillers book with that name is a good read if you haven’t looked at - in fact, I’d recommend it to anyone on this site. Great section on property bubbles for any bulls out there who are willing to explore any blind spots they may have and to turn into more fully informed investors.
I lend money in the US. Last month was an absolute horror show in terms of payments and this month is tracking above expectations. People are finally starting to get their unemployment checks.
For some customers their unemployment payments are higher than their normal pay so it will be interesting to see if this influences their loan payments at all.
People are dying to maintain Trump in power to keep his assets in play.
People are disposable. Numbers are buried...many are cremated. It is not just a Virus that matters to some. It is the sum of all Financial Additions and Subtractions.
When you look at the Death Toll it is minimal compared to the Billions and Trillions printed and thrown at the problem.
This not just a Corona19 crisis Pandemic , it is a World Wide Financial Panic Attack blown up beyond any ones means....Except those abusing the system for their own "Ends"....of course.
The Federal Reserve is throwing USD $ trillions at the merchant banks and other financiers expecting the money will find its way down to under-classes. As it didn't during the 2008 GFC and it won't happen this time either. The money sticks to the sides of the fat-cats and stays there
Yep...Especially with the lack of oversight by independent monitoring. Any official that complains that the money is simply being siphoned off to trumps cronies is fired. Start at the corruption of the Attorney General and work your way down....Amazing and sad that the system in America is so corrupt and broken in this respect. After this is all over trump will go down as one of the biggest criminals in US Presidential history.
Certainly not to spend the first 2 weeks of their holiday enjoying a magnificent view of Auckland International Airport!
NZ has invested too much I get to where we are now with the virus.
Queenstown suggesting the can be an isolated 'bubble' to themselves ( jet in - jet out) is fanciful thinking born of desperation. The place is a Dead City, Walking. It just refuses to see it.
Comments from other 'Queesntowns' elsewhere: " Cairns is deserted and many in the tourism sector will barely make it through. And that’s if the domestic inbound sector starts again."
It depends on what those numbers represent. We have had our own lower numbers for the last couple of weeks but every case was clearly part of a known controlled cluster. maybe it is the same in Australia.
Make the entire Queenstown area a quarantine zone - all international flight to go in and out of Queenstown and nobody to leave Queenstown.
Easy, download the App Flightradar24
See all the plane movements, including helicopters & topdressing.
Now but what is interesting.........
https://www.npr.org/sections/goatsandsoda/2020/05/15/855669867/countrie…
Restrictions are often promoted by politicians as a sign of strength in efforts to halt the spread of the new coronavirus. But experts say the border closures have done little to stop it. And going forward, they say, travel restrictions will play only a small role in containing the virus.
"I think they're mostly useless, to tell you the truth," says Ira Longini, a professor of biostatistics at the University of Florida who has studied the effects of restrictions. Far more important, Longini says, are domestic systems for testing and contact tracing. "You have to have the internal control strategy — that's effective," he says.
Any news on our backend, or are we still at 185/day, the 23rd April number.
More Trump propaganda from Henry bot. By the way you do know that the boarder restrictions do work and NZ is a shining example of that! Oh and the US death rate is still increasing on average around 1500 deaths a day, currently you're at 88,400 total deaths from coronavirus.
At this rate we'll have to ban all US citizens from entering NZ in the future if you're not able to get the coronavirus under control. https://www.worldometers.info/coronavirus/
Actually think the active cases is even more telling. Presently 1.07 mill and rising steadily, and undoubtedly understated to boot. Now each individual on the way to becoming of that statistic is a potential carrier. And there is still massive movement coast to coast, city to city, community to community. The virus is not receding it is spreading and ask yourself will opening up the already loose lock downs, accelerate or decelerate the problem.
CJ099, you are the using machine code for identity.
NPR.org is a wonderful public institution.
You have muddled boarder restrictions with border closure.
Very few have clean data, dreadful business when Cuomo returned infected to aged care facilities. But some Governors have lower death toll. I like Colorado, North Dakota.
Nothing wrong in hearing from Florida Man expert.
Enjoy the day, get out and find a coffee.
And like magic...
https://www.rnz.co.nz/news/national/416786/canterbury-district-health-b…
Sounds like they are giving up and looking to start again - being the backbone to the contract tracing system & workflow.
Plus who is in charge, one of the dhb, all the DHBs or the MoH. Where is Ash and the past promised Gold Standard.
"The Canterbury DHB has issued a tender asking suppliers for information about ready-built systems to monitor and control infections.
The current system called ICNet has been used at Canterbury since 2012, and more widely since, though some DHBs, including Taranaki, still are not hooked into it.
It was now gauging if there were competing systems that might require the DHB to run a full tender for a new national system, Canterbury DHB's executive director of finance and corporate services, Justine White, said in a statement.
The pandemic has demonstrated major difficulties in DHBs trying to share data about testing and contact tracing."
Vaccine will be years away
https://www.cnbc.com/2020/05/15/trump-downplays-need-for-coronavirus-va…
I can't see the Covid 19 rate in Australia falling to a level where it would be safe to open our boarder to them.
We are heading to 0 live cases provided that it doesn't flare up again in Auckland. (Still think that Auckland and a few other regions should have been held at level 3 or at least geographically isolated) However Australia's much vaunted relaxed control regime doesn't seem to getting figures down. They have 30 new cases today and 587 remaining live cases. The effectiveness of their controls appear to have plateaued to a point where they do not have complete control. I suspect that their population may well slacken off and they risk a second wave.
I can't criticize him for being positive and looking for ways to help our economy. However we have to be realistic and careful. Sticking to this idea just because it offers so much hope and the population is so invested in it, would be very foolish if it risks the collapse of our achievements. We should however continue to plan how we will manage tourism with Australia for when they have achieved our level of control.
An unstable Indonesia. All of the Far East is looking precarious. No greater example than, as reported by NZ Herald but can’t find it elsewhere though, Trump’s latest rambling pontification that the USA should cut ties with China entirely, extracted the response that China would then take out Taiwan. Echoes of the 1930’s confrontation USA vs Japan culminating in Pearl Harbour perhaps?
You'll like this one Andrewj - US inflation/deflation going back to 1650
https://i0.wp.com/www.innovativewealth.com/wp-content/uploads/2015/04/H…
Ray Dalio can see civil war in US if capitalism isn't reformed:
https://edition.cnn.com/2020/05/15/perspectives/ray-dalio-capitalism/in…
GDX looks to be on its way up for anyone investing on NYSE.
When a sufficiently large percentage of the population are not improving the quality of their lives (or even experiencing a deteriorating quality of their lives) via wealth inequality, there is potential for the existing economic system to be rejected by more and more people. More people who are experiencing a deterioration in their quality of life want change from the status quo and this can lead to extremes.
Under those conditions, isn't that how people in democracies choose candidates that offer significant change from the status quo? (look at economic conditions of hyperinflation and conditions of the general public which resulted in Hitler becoming leader)
Did the underlying economic conditions lead to fall in monarchies? - Russian Revolution, French Revolution.
Absolutely agree CN. Read the recent book about Napoleon in the bookstores and it gives a reasonable account of the French Revolution. The leadership of recent decades (in particular the last 10 years) has made the current system very vulnerable to revolt. The concept of 'haves' and 'have nots' being thrown around is a sign that there are two classes of people appearing - those who have benefited as those who haven't. When those who haven't are big enough (perhaps now?) I'd say watch out. And it has been painful seeing politicians getting voted in saying they will address the inequality (e.g. wealth taxes), then not doing it.
When in a position of privilege its important to show humility and goodwill to the poor and working class, otherwise history suggests you tend to lose your head (literally). Yet this website is a good example where the most arrogant are those who appear to have the most (or at least are willing to say they do) e.g. the landlord class. I'd remain humble and grateful towards those who are paying their bills if I were them as if the tide turns they will be the first inline for the guillotine.
1) "He hates bitcoin and gold"
Buffett prefers income generating assets over non income generating assets (such as bitcoin and gold). In the past, Buffett has purchased silver (non income generating asset) via Berkshire Hathaway (i.e not in his personal capacity).
2) "lost 50 billion in a month"
FYI, those are mainly unrealised mark to market losses by Berkshire Hathaway. Berkshire did recently sell their stakes in US airlines however unsure what their purchase price was. Buffett is an investor with a long term investment horizon, not a short term trader.
US vs China ........When I was as school in the 1960's there were often playground punch-ups , and I realised pretty soon they were mostly between 2 well known and equally disliked bullies , with the net result I never took sides .............and often enjoyed the spectacle until a teacher came along and broke up it .
I wonder who is going to won the fight between China and the US .
China has been bullying a lot of countries lately , especially over debts where China has build ports (Sri Lanka ) or railways or oil refineries (Sudan ) , and they have even bullied us by slowing down our exports on arrival in China
The USA commenced its “imperialism” with its unjustified war on Spain beginning of 20th century and the foothold in the far east, The Philippines. WW1 then saw the USA emerging as a global power and that put them head to head with Japan in circumstances that scarily resemble the present square off with China. There is though no school master to pull them apart.
Here are some ideas on ways that we could turn the aftermath of the Covid 19 situation to our advantage:-
We could try to attract the IT and research industry to NZ as a site for their headquarters. The USA and a lot of other countries look like being basket cases for a long time and may find NZ an attractive place to base their business. For Queenstown - forget minimum wage-paying tourism and turn it into the next Silicon Valley - the lifestyle, safety and security would be a huge drawcard in retaining the best staff. One condition however, would be if you come here you have to totally commit to NZ. All your profits must return here, taxes be paid here, and you cannot leave for a minimum of 10 years.
Similarly, with the banking and finance sector - this is our opportunity to become the Switzerland of the South Pacific. One proviso being - we have to make our offering open, honest and internationally trustworthy, unlike Switzerland's shady obscurity. Leave that end of the market to them.
Why not trade on our reputation as a safe country and honest broker. We could try make a play to become the headquarters of some of the major international NGOs. As we are all witnessing, modern technology is slaying the tyranny of distance. Jacinda's international profile could be very useful in pursuing this.
Form a relationship with either the Mayo or John Hopkins medical research hospitals and set up satellite facilities around our medical schools hospitals. When Dunedin has its new hospital, the old, but still relatively new ward-block building, adjacent to medical school would provide an ideal site for a research facility.
What all of the above have in common is that they are knowledge-based and high-paying with no to minimal environmental impact. These are the sort of businesses that we should be chasing and the way we should be pivoting our economy, using this turmoil as an opportunity.
Not trying to be mean but the fantasy of NZ being a financial center has been around since I was a child (and I'm not young) and the tech fantasy has been around since tech became a thing.
The financial idea has always been laughable: NZ is a capital importer. What on earth do we have to offer in the financial sector?! You need to be able to save ten cents to be in the financial world and NZ cannot do that. The tech idea, while technically possible, fails to take into account of the utter lack of high level human capital here. You would have to import everyone above the grunts.
NZ is a farm with a tourism industry. The second industry is gone for now. We still haven't learned how to even process logs they go out with zero value added. Techno/finance fantasies need to wait until we learn the basics.
Tech sector in NZ is rising and rising fast. NZ govt could supercharge it if they wanted to, but instead they want to protect the property sector. Major tax reform could see it supercharged, but it will get their on it's own anyway. Currently 3rd biggest industry...ooops currently second biggest industry (sorry tourism), on track to become the biggest in a decade due to it's solid growth rates. https://www.newsroom.co.nz/2019/11/01/890073/top-nz-tech-firms-revenue-…
I think it is a worthy goal and NZ does have some real tech. There really is no high level human tech capital here though. Its great that we make electronic ear tags for cows but NZ has a long history of driving out any high IQ, high drive people that emerge here. I'm curious how much NZ tech will survive a shake out. I routinely see people pay huge sums of money here for incredibly poor quality work.
I guess its more the "NZ is so special people should just do things here" mentality I find frustrating.
You are absolutely right about the logs. It applies to wool also. The Chinese production subsidies are so large that they are exporting finished products at the cost of the raw materials. They seem to do that for a while until they have destroyed any competition then rack up the prices.
Once upon a time we had a very competent and reasonably priced woollen industry. That was largely destroyed by cheap Chinese imports, so now all you can buy here is either very expensive good quality haute couture local product or Chinese rubbish. The marketing may try to convince you that some of the import product is high quality, but mostly it is no better than what you can buy from KMart
The Russians did something interesting when the Chinese started stripping the forests of everything that they could get their hands on. They slapped on an export tax. May be we should apply an export tax that is graduated according to the degree to which the raw material has been processed.
Been out and about today. No contact tracing at supermarket, warehouse, mitre 10, had to sign in for coffee, none at stock food shop, or petrol station, one at cafe for lunch, then nothing at dairy....so may as well go level 1 few weeks as it's all a bit hit and Miss to be honest
Opened our store on Thursday. Down 75 percent on same day last year. Friday was slightly better 50 percent on last year. Saturday was a disaster. $18 through eftpos machine. Would have normally taken 3k plus on a Saturday. Store traffic was normal. Just lots of people wandering around the store wearing out the carpet. We are cbd regional city.
As the Propaganda Minister says, you need to pivot... what she doesn't understand is that there is nothing to pivot to for most. It's just a catchy one-liner
Hobbiton labels $400 million tourism rescue package a 'joke' | Stuff.co.nz
https://i.stuff.co.nz/travel/news/121529314/hobbiton-labels-400-million…
We watched our competitors try click and collect. Talking to the stores who did it the costs outweighed the income. Retails point of difference was the customer being able to touch, smell, feel and buy the product on a whim in store and with no postage costs. Trying to create a new online store competing with the likes of trademe is a waste of time for small brick and motar retailers. We own our building without a mortgage so can survive just paying rates etc until we can figure out how to change what we do. The wage subsidy has helped but we hope that doesn't keep getting extended. We all need to survive without the subsidy now the lock down is over.
New and used furniture, appliances, antiques, collectables. We have our market pretty sewn up for buying estates and houselots through local lawyers, ptrust etc. We work with local charity shops so we buy everything and then they take the items we don't want like clothing and mdf furniture. Normally get 2 calls per day to price houselots estates etc. No calls, None at all during lockdown and only one last week.
A consumers point of view. Spent next to nothing for 7 weeks of lockdown (90% savings). While we have had normal household income to date we expect to lose 75% of that before the end of Winter. Every expense is up for review. We did some click and collect but found it clumsy. It doesn’t work for us. We will increase online purchasing where the cost of freight is less than the cost of personal transport. CBD travel is being avoided as we don’t want to use public transport and parking is too expensive. Work from home will be the preference as long as there is a job and it’s possible. We will increase our long distance road driving. No planes and no South Island trips. Dropping the X5 to 95 octane and fueling outside the Regional fuel tax zone. We spent $1,200 this weekend. Each purchase was well thought through. We went for items we need e.g. new hedge trimmer and bought more expensive options if they were value for money. We had hair cuts and my wife shopped at encore for quality secondhand clothes. We have no discretionary spending intentions for the coming weeks. If others are similar it’s going to be apocalyptic.
Excellent article from Damien Grant:
https://i.stuff.co.nz/national/politics/opinion/300013538/economic-vand…
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