Breakfast briefing: Markets desperate for green shoots

Wall Street sparked into monster rally; But Powell sees US GDP crashing; Japan enters recession; China housing back up; RCEP close to signing; UST 10yr yield at 0.74%; oil up and gold down; NZ$1 = 60.3 USc; TWI-5 = 66.2

19th May 20, 7:25am by David Chaston

Here's our summary of key economic events overnight that affect New Zealand, with news investors are reacting to market news based on pure [desperate?] emotion rather than reason. Trading AI is accentuating the frenzy.

First up today, a firecracker has been lit on Wall Street by an early report of preliminary human trials that a vaccine for the coronavirus has "positive interim clinical data". A manager at the company is part of the White House Covid-19 strategy. This report is enough to raise the S&P500 by an impressive +3.4% so far in afternoon trade. In fact, the same report boosted European markets by more, with most up more than +5% to start the week.

It also raised oil prices sharply.

Part of the European gains - actually maybe most - can also be put down to a positive outlook released by the German central bank. Although a bleak assessment, it did say there are "many indications that ... will move up again in the course of the second quarter", a phrase that caught investors attention.

But not everyone is convinced we are at a turning point. Fed chairman Powell said the US economy could "easily" contract by 20-30% in this crisis and the downturn could last until 2021. A -20% contraction would involve a decline of more than -US$4 tln, a world-scale shock. That alone would depress world GDP by at least -5%.

But the impact is on more than just the US.

Japan has just entered recession officially, just the first of most countries to do so. But at a -3.4% annual retreat rate, it wasn't as sharp as in the Q4-2019 when their economy shrank at a -7.3% pa rate as China pulled up lame. (Analysts were expecting Japan's Q1-2020 to come in at -4.6%.)

China has now formally imposed a 74% tariff on Australian barley, claiming it was dumped. But in fact this trade signal is there so that its buyers redirect their purchases to the US to meet their trade deal agreement. Being a US friend is no help to Australia in an "America First" situation. And to complete the political games, China is diverting US soybean purchases to Brazil. The tariff game is lose-lose for everyone.

It is not all bad for Australia. Iron ore prices are rising fast, spurred by cutbacks in Brazilian mines due to their raging virus emergency.

In China, there are new signs their housing market has returned to its year-ago "normal" levels with house prices and sales volumes in April little changed.

And China's favoured, parallel TPP trade agreement, the RCEP, is now expected to be signed sometime in 2020. It is a group that still includes New Zealand and Australia despite earlier indications that moves were afoot to ease both out.

The latest compilation of Covid-19 data is here. The global tally is now 4,769,200 and up +83,000 from this time yesterday which is similar level of increase.

Now, just over 31% of all cases globally are in the US, which is up +67,000 since this time yesterday to 1,496,500. This is a faster rate of increase. US deaths are now exceed 90,000. Global deaths now exceed 317,000. Peru has overtaken China's infection levels. Canada is poised to do so soon too.

In Australia, there are now 7060 cases (+15 since yesterday), 99 deaths (+1) and a recovery rate of just on 90%. 45 people are in hospital there (-5) with 12 in ICU (-4). There are now 572 active cases in Australia (-6).

There were zero changes to any coronavirus infection levels yesterday in New Zealand. Our recovery rate is now just over 95% with 45 people known to be still infected nationwide.

The UST 10yr yield has risen sharply in New York at the start of their week, up +10 bps to 0.74%. Their 2-10 curve is steeper at +53 bps. Their 1-5 curve is also steeper at +19 bps, and their 3m-10yr curve is in the same trend and up to +62 bps. The Aussie Govt 10yr yield is up +4 bps to 0.96%. The China Govt 10yr is back at 2.70% and a +3 bps rise. But the NZ Govt 10 yr yield is little-changed at 0.65%.

The gold price is a little lower today than this time yesterday, down -US$10 to US$1,732/oz.

Oil prices are higher again today. The US crude price is up another +US$2.50/bbl to just under US$32/bbl. The international oil price is up the same to just on US$35/bbl.

The Kiwi dollar is much firmer today and back above 60 USc. It will open at 60.3 USc and that is a very strong +1c gain since this time yesterday. On the cross rates we have risen against all, now up to 92.7 AUc. Against the euro we are up to 55.3 euro cents. These moves up mean the TWI-5 is now 66.2.

Bitcoin has slipped -1.5% since this time yesterday, now at US$9,599. 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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94 Comments

by northman46 | 19th May 20, 7:36am 1589830589

"mRNA-1273 elicited neutralizing antibody titer levels in all eight initial participants".

Eight, that's right eight, participants. Meanwhile the DOW is +969.17 (4.09%).

by Adam B NZ | 19th May 20, 7:45am 1589831159

Crazy isn't it!

by CJ099 | 19th May 20, 9:04am 1589835878

Well the good news for us at least is we're well on the way to eradicating the coronavirus from our shores. Not only that but NZ is being promoted as one of the first progressive western countries to do so. BBC Why is New Zealand so progressive? http://www.bbc.com/travel/story/20200518-why-is-new-zealand-so-progress…

by Logicthinker | 19th May 20, 10:20am 1589840442

Lets hope you are right. I would feel more comfortable when a vaccine is confirmed. I hope the virus dosent travel from Brazil to China due to the blocking of Australian products.

by Fritz | 19th May 20, 11:22am 1589844165

I am sorry but there is a large serving of BS in this. We have a lot of progressive rhetoric, but much of it is not delivered upon.
The likes of the BBC need to deliver better journalism than this...

by Believer1980 | 19th May 20, 11:47am 1589845674

Travel stories section of bbc are not to be taken as serious evaluation of something.

by Ralph | 19th May 20, 1:45pm 1589852717

Haven't we just delayed the arrival of the virus?

by Rhumline | 19th May 20, 3:26pm 1589858789

Sanitised bollocks.

by Foyle | 19th May 20, 11:19am 1589843960

Seems likely that combination of things learned about best treatment practices as well as breakthrough treatments will soon relegate wuflu to serious flu level rather than worrying risk of death.

by printer8 | 19th May 20, 7:38am 1589830688

Traditional fundamentals and rationale just doesn't seem to apply - Dow +4.09%, DAX 5.67%, CAC 5.16%.
This is not positive - rather just pretty scary.

by northman46 | 19th May 20, 7:46am 1589831183

I was messaging an armchair trader earlier, and as he gleefully pointed out, bad news = markets go up, and good news = markets go up.

by dictator | 19th May 20, 9:19am 1589836745

When I look at the trade volumes here there's next to nothing. When the next big sell off happens there will be large volumes of trades like last time.

by TuaWai Smith | 19th May 20, 2:59pm 1589857191

Im already out. I have been in equities since the 90s. These days equities have nothing to do with reality and I want nothing to do with them right now. Just as I don't want to be in the US right now where the president says he is the most bestest most perfect president from ever and ever.
The manipulation there will go down as the biggest wool puller in the history of the USA.
Not to say I wont jump back in when the wool falls. Salivating, again.

by Rosenstein | 19th May 20, 7:49am 1589831376

All that printed money needs to go somewhere.

by bw | 19th May 20, 8:07am 1589832448

When the fundamentals are so obvious to everyone, everyone has the same trade and the market runs out of sellers.
It doesn't mean the fundamentals are wrong, in fact, quite the opposite. But markets' trade on price signals. And once those who are short look to take their profit/cut their exposure/give up etc. we can get a face-ripper of a rally like we have today.
Once it calms down, those who had the fundamentals right are wary about going short a second time and hold back.
That could be when we see fundamentals take a heavy toll - when relatively few have the courage left to back them, and we get a scramble to reinstate short positions lower than here, rather than higher.

by Houseworks | 19th May 20, 8:18am 1589833109

Gee bw I hope you had better luck with your picks and forecasts when you were in the trading room haha lols have a good day

by bw | 19th May 20, 8:35am 1589834111

I got it right enough to not have had to 'work' for the last 27 years! Mind you, 38 was probably a tad early to give it all away on reflection. And deciding that farming in New Zealand was better than looking at figures on a dealing terminal turned out to be much harder than it looks. Farming is really hard and risky work!

by Houseworks | 19th May 20, 9:06am 1589835963

You must be really rich now bw... like JK rich... sadly now too worn out to enjoy it. Russell is a good place to go bruce

by bw | 19th May 20, 9:35am 1589837714

I met Key in 1988 (?) when he was a trader at Elders Finance, Welly and he called in to see me when I was Director of an investment banking operation outside NZ, and he wanted to increase their credit lines, as they were drying up across the board. He was one generation behind me; the one that was the first to start making REAL money! But my spreadsheet tells me that with interest rates at 0% and inflation at 10% my liquid assets will be exhausted and I'll have to go back to work when I'm 133. (Having to halve your assets a couple of times, tends to do that!)
Russell? Not for me. In the unlikely event that we move again, it will be back to London. The great thing about that City is; it never changes and it never disappoints!

by Roger Witherspoon | 19th May 20, 10:04am 1589839473

Thanks for the personal background bw. I now know to take your comments on markets very seriously. Very few understand how the internals work, me included. Those very few are the only ones who think about the short positions and their magnitude. As you say, a market with no shorts has no buyers on the way down, the exact opposite of the popular socialist delusion that short traders are naughty and cause declines. Short traders need to cover at some point, as the experienced investors will wait until the decline has stopped. Like most things, it's much more complicated from the inside than it looks from the outside.

by Houseworks | 19th May 20, 11:35am 1589844952

How many years were you farming and what sector.. were you horticulture like BOP kiwifruit.

by iconoclast | 19th May 20, 7:51am 1589831518

Sunday: Eric Trump announces virus will disappear after the US election. Next morning White House announces a
positive clinical vaccine trial. Wonder if NY rises will disappear when the trials prove negative.

by CJ099 | 19th May 20, 9:19am 1589836791

I'm wondering just how much of Trumps voter base is going to be left able to vote by the November US election? They're now up to 91,717 dead and will be a 100,000 dead probably by next week. Political Darwinism at it's best.
The good news is that densely populated areas like NY are decreasing in the number of infected but the other states that aren't following social distancing etc, are very much increasing in the number of infected.

by Foxglove. | 19th May 20, 7:53am 1589831629

“positive interim clinical data” for a potential CV19 vaccine. Trump & his White House will be seizing on that like a lightening rod. And let’s hope that ends up being viable because if the opening up in the States causes CV19 to surge beyond the present level, large but consistent, of infections, national panic will ensue.

by ilikewalnuts | 19th May 20, 8:03am 1589832198

Why do we even bother seriously reporting statistics from China with their track record?

by powerdownkiwi | 19th May 20, 8:15am 1589832935

You think they're less truthful than the current White-house occupant? More interesting was the Aust comment about wet-markets. Tells us the Aussie leadership in the grip of BigAg (commodify-ing the food).

Two good links: https://www.afr.com/companies/financial-services/why-bankers-hope-they-…
https://www.resilience.org/stories/2020-05-18/the-energy-bulletin-weekl…

by ilikewalnuts | 19th May 20, 8:49am 1589834965

Good read! However, I still think China is less truthful, especially with their housing market statistics.

by Fritz | 19th May 20, 11:27am 1589844444

100% agree. The orange freak obviously isn't truthful, but I would be confident in most if not all of The USA's official data. Recognizing of course that stats can be sliced and served in different truthful ways.

by TuaWai Smith | 19th May 20, 3:09pm 1589857743

Recent Poll (from Politico??) trump is untruthful 75% of the time. Could be he is just ignorant and doesn't know the answer to anything, not intentional, if you know what I mean, nudge, nudge, wink, wink.

by Kezza R | 19th May 20, 8:23am 1589833393

If that is the case we may as well stop reporting on the US stock market as well.
The official data is the only data we have.

by blobbles | 19th May 20, 9:01am 1589835694

Why do we even bother reporting statistics from the fake US stock markets?

by stuart786786 | 19th May 20, 8:05am 1589832353

Maybe now days the market goes up or down and than the experts find reason for the same and justify :)

Market jumping up despite the pandemic, we all are in is not just crazy but worrysome.

by stuart786786 | 19th May 20, 8:06am 1589832394

by Carlos67 | 19th May 20, 8:12am 1589832766

I'm not holding much hope for a vaccine and I'm sure as hell not going to get in a line to get it. This virus came out of a lab and its estimated that its gain of function would have taken 800 years to occur in nature. Sounds to me like it got a pretty big head start on us.

by Houseworks | 19th May 20, 8:16am 1589832962

They might inject a chip that tracks and monitors you and used by marketers

by vman | 19th May 20, 8:32am 1589833978

Crikey,better get out and burn a few more cellphone towers...

by frazz | 19th May 20, 8:46am 1589834776

Well that would be a bit boring - home - farmers market - beach - home...

by TuaWai Smith | 19th May 20, 3:25pm 1589858731

they already track you through twitter, facebook, ph location, hwy cameras,etc. etc ...ive managed to avoid all of the above by hiding out in the Coromandel and not using any of the above mentioned...yes, proud to be a caveman. Hairs growing longer too, but not as bad as mullet head from the national party!!!

by northman46 | 19th May 20, 8:29am 1589833774

Maybe the 5G sped up it's evolution... /s

by Houseworks | 19th May 20, 8:21am 1589833281

Some of this shows that the extreme economic projections wont happen. It's already proven the health hype was overstated.. The hype around this disease was overblown for political purposes ... "run into my arms little children"

by bw | 19th May 20, 8:43am 1589834583

"A man who claimed Covid-19 was a hoax and a government powerplay has changed his mind after being rushed to hospital with the disease. "I thought it was maybe the government trying something, and it was kind of like they threw it out there to kinda distract us." He's now urging people to take it seriously and follow guidelines in a bid to stay safe.

https://www.nzherald.co.nz/world/news/article.cfm?c_id=2&objectid=12332…

by Houseworks | 19th May 20, 8:55am 1589835327

Where did I ever say it's a hoax? It's a valid disease

by Albert2020 | 19th May 20, 10:04am 1589839469

32 million (and counting) Americans losing their job in a month isn't extreme enough for you?! To put that in perspective the highest weekly loss of jobs in the USA during the GFC was 800k. How can you possibly say the "hype" was overstated when you see what has happened in Europe and America with some (albeit late or incompetent) intervention? We can be fairly certain of the consequences of doing nothing at all and it wouldn't have been pretty. Sadly I fair large parts of the USA are going to highlight the major health implications that occur when restrictions are lifted without appropriate control of the crisis.

by TuaWai Smith | 19th May 20, 3:34pm 1589859251

my suggestion is that anyone that runs around intimidating mask wearers saying it is no big deal should sign a waiver to NOT be treated in a hospital when they get it. Ok to say in NZ AFTER the event, who went 'Hard and Fast'...not so ok in freakland usa and UK where hospitals were overwhelmed in the first few weeks in the midst of a LATE semi-lockdown. Lets see how Brazil does under their 'not my problem' president.

by Tradersam | 19th May 20, 8:24am 1589833492

It isn’t the S&P500 it’s the S&P5 which is made up of the 5 FAANG stocks. These stocks are in essence the market cap of the S&P. Robots do the trading which are governed by algos not fundamentals.

by Mrs The Point | 19th May 20, 11:19am 1589843974

Does someone need to switch these algorithms over to Bear Mode?

by leila | 19th May 20, 8:48am 1589834897

Martin North interviewed someone who said it came from a meteorite :) Theories abound. Edit: this comment was meant to answer Carlos' comment re the virus origins

by vman | 19th May 20, 8:53am 1589835201

They are not theories...they are fact...I read it on facebook ;-)

by Kezza R | 19th May 20, 9:58am 1589839137

Lol.
If it can live on a rock with no air and it didnt burn up on entering the earth's atmosphere, there is no way in hell we will control it. It sounds like this is this something to do with Scientology.

by Houseworks | 19th May 20, 10:39am 1589841542

Back already kezza. You must have got some good ones and pretty fast

by Kezza R | 19th May 20, 11:47am 1589845673

8 point red stag on Sunday. Getting it cleaned up and done into salami. Would have seen 15 good size trout from my truck. One or 6 pounder and the other 3 or 4 pounds. Normally would have seen maybe one in the same spot. Didn't have my rod so back up there to grab a couple of them to smoke them and fingers crossed some more venison. Thinking about jumping one chopper into somewhere in the deep dark bush after I've cleaned up a job that I've got on.
Would have seen 20 hawkes on the 2.5 hour drive. Guessing that the animals living by the road aren't used to so much traffic.

by Houseworks | 19th May 20, 1:41pm 1589852486

Good work. Wouldn't it be great to get paid to hunt, organise a few tourists, local kiwis of course

by Kezza R | 19th May 20, 4:14pm 1589861689

It would become work and that would suck.
I've fairly much decided that I'm going to take the next year off and do landscaping arround the house, a new garage and fish and hunt as much as possible, while looking for investments.
Just have to figure out how to market that idea to my wife.

by Audaxes | 19th May 20, 9:21am 1589836893

And China's favoured, parallel TPP trade agreement, the RCEP, is now expected to be signed sometime in 2020. It is a group that still includes New Zealand and Australia despite earlier indications that moves were afoot to ease both out.

Let's hope so - ‘US would lose Pacific war with China’

by Advisor | 19th May 20, 9:42am 1589838156

China has now formally imposed a 74% tariff on Australian barley, claiming it was dumped

The world we live in - 'advanced' anglophone nations rely on investments, high-value tourists, skilled workers and productive exports from developing countries, to plug those large gaps in their economic outputs, and export bulk commodities to them in return.

Despite those flashing signs, our best and brightest minds wonder why we are witnessing this socioeconomic failure on so many fronts.

by Roger Witherspoon | 19th May 20, 10:09am 1589839743

The government bureaucrats and political classes don't seem to understand that foreign capital inflow must equal current account outflow. Result, they think selling all our assets to foreigners is a good thing. The biggest and most profitable went first, namely the Aussie banks who are sophisticated farmers of human livestock in disguise.

by Rosenstein | 19th May 20, 10:41am 1589841663

Human livestock eh.
What do you call a cow with short legs?

Lomu

by Roger Witherspoon | 19th May 20, 11:06am 1589843181

The banks enable us to seek to outbid each other, pledging our future income for a better barn. Our future income is the equivalent of milk from a dairy herd.

To be clear, I am not saying that banking is bad. The banks just respond to the incentives our society places before them. The incentives are messed up, not the banks.

by Rosenstein | 19th May 20, 11:19am 1589843941

Humans have been farmed since Sumeria. I'm with you on that. I don't think this society and it's perverse incentives are necessarily 'ours'. But who is strong willed enough to look at 'debt' and call it 'imagination'.

by murray86 | 19th May 20, 12:56pm 1589849794

Not sure that I agree Roger. while it is true the banks respond to the incentives placed before them, they do selectively pick which incentives they will back. And this is where the banks are the problem. They don't support building industry and creating jobs. Rather they go for easy money, or perceived easy money housing, and dairy farming. But as we can see their placing these incentives ahead of the rest, and ignoring, or actively discouraging the rest, results in placing the whole economy at risk. Their control and position in the economy enables them to create a huge imbalance that puts their business at risk because it puts all of us at risk.

Banks could do better, and so could the Government in regulating them.

by Roger Witherspoon | 19th May 20, 1:29pm 1589851763

We choose, through our choice of government, to incentivise housing and foreign capital inflow, over more productive endeavours. Banking is a technology, it seeks return. Our choices determine where that return may be found.

If we chose to incentivise productivity (eg, refund all GST collected by businesses under a certain size, have a zero tax band for retained profits for small and medium sized businesses) the banks would support the choice. Take away the silly risk weighting rules on bank lending whereby the banks can lend 4 times as much for mortgages as they can for business on a given capital base. Adjust the incentives.

by Ralph | 19th May 20, 1:52pm 1589853130

Banks are allowed to do what governments allow them to do, they are the most regulated market in the country.

The government decides what level risk any bank is allowed to carry, that's part of the regulations.

Banks 'control and position' is a license. From the government.

by Andrewj | 19th May 20, 9:22am 1589836936

'Amygdalotomy
In a wide range of animals, including humans, the ability to detect, observe, and immediately respond to the fear of other members is essential to survival. When a herd of gazelle run from a lion, it’s not because most of the gazelle have even seen the lion, but rather because they respond in sequence to the fear signals provided by nearby members. Some animals even respond to the behavior of other species. That essential survival response is mediated by a part of the brain called the amygdala.

In extreme cases, the fear response can lead to aggression and self-harm. One of the ways to remove the fear response is to surgically disconnect the amygdala. The procedure is known as an amygdalotomy. In mentally ill patients that experience such profound, unwarranted, and persistent fear that they become self-injurious and suicidal, amydalotomy is sometimes used as a last resort. It is not used in less severe patients, because the procedure itself makes the person more susceptible to risks that threaten survival, by blunting appropriate and adaptive responses to danger.

In my view, by aggressively intervening in the financial markets, at valuation levels that are still nowhere near run-of-the-mill historical norms, the Federal Reserve has performed an amygdalotomy on the investing public. The Fed has encouraged a maladaptive confidence that risk does not exist. This overconfidence of investors is itself a threat to their survival.'
https://www.hussmanfunds.com/comment/mc200518/

by Andrewj | 19th May 20, 9:23am 1589836989

Proof QE is deflationary
https://www.youtube.com/watch?v=MlUIzjhFnk8&t=920s

by ham n eggs | 19th May 20, 9:32am 1589837568

you can forget the Markets … its signals are pretty much meaningless

Its now ALL about cashflow (some economists may even start talking about velocity of money)
This is where the rubber meets the road .. .. more delinquent and slow payment through businesses and serious cashflow problems with a chain effect .. and prices for commodities to keep tracking down

Central banks will print and resort to negative interest rates... but there will just be too many holes in the dyke to jam a finger into

by Roger Witherspoon | 19th May 20, 10:14am 1589840098

Isn't it that people sense that money isn't what it used to be, and it's going to keep on going down in value? They want to get rid of the stuff and buy something with a better future?

by ham n eggs | 19th May 20, 1:27pm 1589851667

doesn't really work like that …
if times are tough, people hunker down, they don't spend thinking their money is devaluing

by Andrewj | 19th May 20, 9:36am 1589837769

We have had rain, not enough to fill dams and get creeks flowing but more than enough for the grass with 10mm last night. Friends are still desperate to get rid of stock but stock are light after so long without grass, prices are per kg, it's a sad story.

Spent ages on phone with friend in Sth America. Interesting stuff, he thinks they could never afford a shut down, so many people are poor, living hand to mouth, people would riot and civil unrest would be worst nightmare for governments.
However lots of interesting outcomes. Currencies in Argentina, Brazil and even Chile have been hammered.
As a result we now have some of the most expensive cattle in the world %75 above Argentina or Brazil. Brazil currency is back % 41 and Argentina back over %70.

He thought it would be worth a look at farms in Argentina, I have family in South America which gives me options not available to others. They live in gated communities but somehow manage to survive with a very high standard of living, they also know the ropes when it comes to doing business.

'Currency factor
A critical part of current Australian feeder cattle pricing is currency. The A$ is down 19pc against the US$ since March 2018. Over the same time frame, the Brazilian currency is minus 41pc, the Argentinean Peso minus 70pc – extraordinarily low currencies – as a result of the trade war and COVID-19, making South American supply even more competitive.

“Looking at it another way, 78pc of China’s beef imports are coming from countries with currencies that are on average 45pc below the US$, compared with Australia at 19pc, Mr Quilty said. “It’s a stark reminder how important currencies are, and how competitive South American countries are in world beef trade.”

https://www.beefcentral.com/news/four-factors-will-drive-cattle-prices-…

by Advisor | 19th May 20, 9:47am 1589838447

That's unnerving. Goes a long way in clearing the air over all the unchecked confidence we have in our agricultural sector to keep bringing in high export dollars in these desperate times and fund our economic recovery dreams.

Every economist and reporter believes nothing can go wrong in our main exporting sector because "we feed the world", as if we are the only ones out there doing it.

by powerdownkiwi | 19th May 20, 10:11am 1589839877

Economist and reporters are a self-perpetuating feed-back loop.

Actually, there's a third link and it's the teachers of economics, so tertiary education, as constructed, is flawed in that it represents our flawed narrative.

We can see a classic example on this site, via Massey. I put quite a lot of information in front of their representative, which I suspect has gone 100% unread. Yet we hang on these folk as gospel-emitters. And we repress other comments - for instance I have yet to see a discussion re our lack of capacitance - our ability to weather such as the recent event, or longer/deeper - in the media. Perhaps because it would have a negative effect on the 'growth' story?

Interesting times

Funny old world

by Roger Witherspoon | 19th May 20, 10:26am 1589840807

Argentina is further down the socialist road to ruin than we are. They are thus much more polarised than we are. The socialists there impose an export tax if their farmers do well. Profit is unfair in their deluded world.

We are at an earlier stage of decline where we impose excess regulation on farming to make it unprofitable. Still the widespread delusion that profit is unfair, though.

by powerdownkiwi | 19th May 20, 10:45am 1589841950

One can argue that profit is an increased expectation to buy processed parts of the planet.

So 'unfair' is a valid question, re the currently-disadvantaged and re future (unrepresented) generations.

Just sayin'.....

by Roger Witherspoon | 19th May 20, 11:17am 1589843828

Most business is based on unforced transactions bringing benefit to both parties. Both parties profit from the transaction.

The argument that because some profit is due to an abusive relationship, therefore all profit is suspect is essentially the same as saying because some people are criminals, everyone should be locked up. We all grew up drinking this Kool-Aid, it's like a mind virus and it has mutated into many polarising and destructive forms.

by Foyle | 19th May 20, 11:06am 1589843188

In the 1920's there was a common phrase "As rich as an Argentinian". Then they walked down the vote-yourself-rich path of Peronism that so strongly mirrors the aspirations of the modern left, and the result is as we see now, an impoverished nation mired in corruption and unable to break free of the embittered us-and-them filtered thinking that condemns their country to frustrating stagnation.

by Te Kooti | 19th May 20, 11:11am 1589843518

Currently in the middle of their 9th default, another socialist paradise. How do you know when socialism isn't working, when your prime residential property is priced and traded in US$.

by Fritz | 19th May 20, 11:32am 1589844772

We all know that socialism doesn't work.
The key question is what we do with the capitalist system. The Scandanavian countries are capitalistic, but well toward the left in terms of the capitalist spectrum.

by Te Kooti | 19th May 20, 12:07pm 1589846828

You and I may realise that, many don't. The Scandi's are the only credible alternative but if you look closely all is not that rosy. Norway is a giant oil based hedge fund that pretends it's virtuous. Sweden has very high levels of immigration, a loss of much of their manufacturing and a stagnant economy. So Finland, maybe Denmark??

by Fritz | 19th May 20, 2:34pm 1589855691

Well, nowhere is anywhere near perfect...

by TuaWai Smith | 19th May 20, 3:55pm 1589860522

Argentina 53 million, NZ 10 million (including diary)..interesting to compare...Brazil 232 million, India 305 million, China 95 million...just shows how small we are on the world stage...solidifies the need to produce quality (high dollar) over quantity...let them destroy their ozone..oh wait, that's our ozone as well...doh.

by Andrewj | 19th May 20, 11:20am 1589844042

I remember them putting a tax on exports because locals couldn't afford meat. That has lead to very low beef prices for farmers and many are going to have to exit.
It also means that if they change the law they will become major threat to our Ag industry. China could start playing us off against each other, we have been foolishly naive in trusting countries with only their own interests, we end up a small boat tossed in a violent ocean.

by Foyle | 19th May 20, 12:30pm 1589848250

Indeed, in the words of a brave Hong Kongian: "Don't trust China, China is Asshoe"

by waymad | 19th May 20, 3:14pm 1589858054

Glad to hear you've had some wetness. Now for some GDD.....keep up the news from the frontline.

by Casual Observer | 19th May 20, 9:51am 1589838691

NZ is not testing all those currently arriving from offshore - only those with symptoms. Is this putting our current 'lockdown success' at risk from asymptomatic arrivees? https://www.stuff.co.nz/travel/news/300014461/coronavirus-why-arent-all…

by Ngrrk | 19th May 20, 10:03am 1589839430

It certainly is. You can remain asymptomatic for longer than 2 weeks.

by Henry_Tull | 19th May 20, 12:35pm 1589848526

Here is Dr Shelton, from north of Wellington.
Listen to his in field comments about testing and symptoms seen in lockdown.

https://youtu.be/pRd7TqqIxzg
Via Dr Campbell.

by pin3cone | 19th May 20, 10:04am 1589839490

Is it just me or has the tone in the comments changed to fatigue and weariness of the financial system over the last few weeks?

by Houseworks | 19th May 20, 10:40am 1589841620

The air is leaking out of the hype balloon

by TuaWai Smith | 19th May 20, 3:59pm 1589860787

still trying to be pumped up tho...just got my first text from real estate agent today promoting 'BARGAINS' to be had...'those that wait miss out' etc etc. Im thinking ..how come the price is the same as 6 weeks ago.?? I guess I am in the dark with real estate as I am in the equity markets..I must get back to listen to the 'experts'...;)

by Rosenstein | 19th May 20, 10:45am 1589841914

irrational exuberance: markets go up.
fatigue and weariness: markets go up.
all life wiped from the face of the Earth, rendering it a cold space rock: markets spike into the weekend.

by mikekirk29 | 19th May 20, 10:37am 1589841425

"Markets" as a term, and "bond market " ditto, now meaningless.
Central banks have destroyed real pricing in order that governments and pop can get more into debt.
Who gains form all this debt? Those who own land, property and other assets and can lend at interest.
That is, those gaining do nothing to make anything or look after anyone.
parasitical finance rules

by Casual Observer | 19th May 20, 1:32pm 1589851970

Van Leeuwen Group selling 9 of its farms - 3509ha. The properties will be sold by Colliers International, through an international expressions of interest campaign. Govt blocked other large scale dairy sales last year.
https://www.stuff.co.nz/business/farming/121544662/van-leeuwen-group-to…
https://www.odt.co.nz/rural-life/rural-life-other/govt-blocks-south-isl…

by Andrewj | 19th May 20, 1:39pm 1589852388

CO, it could be a problem that those cow houses are not profitable, unless someone gets a hiding on price. We all know how easy it is to tweak those returns. I read that they had huge problems with M Bovis, were expecting a Govt payout, do you know if that happened?
I am sure locals will be able to put market value on these properties in the absence of international buyers.

by Casual Observer | 19th May 20, 2:21pm 1589854874

Aj, In Feb it was reported they had been successful in their High Court challenge against MPI. That resulted in it going to arbitration so perhaps a deal was done there? https://www.stuff.co.nz/business/farming/119856660/van-leeuwen-court-de…

Keith W would be the one to know more.

by waymad | 19th May 20, 2:55pm 1589856936

One advantage of the robotic cow barns is that milk is produced year-round: there's a premium paid for Winter Milk. So somewhat of an offset to the admittedly spectacular capex, and the VL's look to be keeping the robotic side of the operation.....The Oceania plant is literally over the road from the homestead block: the farms are being advertised with a supply contract in place according to Stuff.