Here's our summary of key economic events overnight that affect New Zealand, with news the focus is on the credibility of American government data.
In a surprising announcement, the US Administration is reporting that "nonfarm payroll employment rose by +2.5 million in May, and the unemployment rate declined to 13.3%". Markets were anticipating further deterioration of -8 mln jobs and a 20% jobless rate. Apparently, no one noticed a jobs hiring spree in May and a minor rise in their participation rate - until today. The private sector monitoring of the same labour market, and the rising layoff levels are apparently 'fake news'. The "greatest comeback in American history" didn't see any improvement for Black or Latino Americans however, intensifying the dubiousness of the reported data.
To be fair, the US Agency responsible for the May payrolls data have cautioned that data-collection issues that have plagued them throughout the crisis continued in May.
But Wall Street ignored those caveats and jumped higher anyway on the news with the S&P500 up +2.6% so far and heading for a weekly rise of +5%.
But the US Fed didn't get the message. It reported that consumer debt fell a remarkable -20% annual rate.
Across the northern border, they too reported labour market data that was more optimistic than expected but the effect was within normal statistical tolerances. Employment grew marginally in May from April.
Back in the US, China is apparently canceling purchases of US farm commodities.
But China's recovery seems to on track. New personal loan lending, including credit card loans and consumer loans, shows signs of improvement in May. In particular, home mortgage loans in some regions have recovered to pre-coronavirus levels.
Not only are iron ore prices rising on rising demand, but so are copper prices.
China however is advising its citizens not to travel to Australia, in an escalation of the trade and security tiff between them. Beijing says the risks of "discrimination and violence" against its citizens is high at present. That will restrain the flow of students at Australian universities. But there is some [minor?] evidence that those who were aiming for American, British or Australian universities may transfer their focus to New Zealand now.
Singapore is reporting that retail sales fell a remarkable -40% in April as their lockdown bit. In May they are reporting that Singapore banks attracted rising deposits from protest-hit Hong Kong. Record inflows follow unrest in their rival.
Meanwhile in Japan, they are reporting the largest decline in household spending since 2001 when their data on this started.
Bond yields are rising fast over the past week. It seems investors are moving back into equities as the mood lifts about restarting major economies. If it lasts, this will have an unfortunate impact on government budgets that have mushroomed recently to battle the economic impacts of the pandemic. Sharply higher liabilities combined with interest rates that have almost doubled from very low levels will eat into tax revenues very fast. Yes, central banks can create new money to buy increasing amounts of government debt, but obviously they can't do that forever. And if market push bond interest rates higher, the taxpayer will need to shoulder an increasing load just to make the interest payments
The latest compilation of Covid-19 data is here. The global tally is now 6,703,700 which is up +130,000 in a day, still rising at a faster pace than recently.
Now, just over 28% of all cases globally are in the US, which is up +23,000 since this time yesterday to 1,885,200. This is a similar rate of increase and the spread isn't abating. US deaths are now exceed 109,000. The shift of infections and deaths to Texas, California and Florida is deeply worrying.
Global deaths now exceed 388,000. Sweden's herd immunity strategy has cost them 4639 lives so far and that is on an upward trend. The different strategies in neighbours Norway (238), Denmark (586) and Finland (322) is very clear at this point, and all those are probably higher than they need to be because of the Swedish contagion.
In Australia, there have been 7251 cases (+11 since yesterday), 102 deaths (unchanged) and a recovery rate of just over 92% (unchanged). 21 people are in hospital there (-2) with 2 in ICU (-2). There are now 466 active cases in Australia (-8).
There were zero cases again yesterday in New Zealand, so now only one person is left with it in the whole country. We are now at fourteen days with zero new cases.
The iron ore price is ignoring official Chinese warnings about a frenzy and is higher yet again today, and on high volumes of trades. Thermal coal prices are being ignored by buyers, dropping to ten year lows. Mines are shutting.
The UST 10yr yield is up again, today up another +8 bps at 0.89%. For the full week, it is up a remarkable +26 bps as investors start pricing risk back into American Government debt - in fact, long term debt from all governments. Their 2-10 curve has steepened further to +69 bps. Their 1-5 curve is also steeper at +29 bps, and their 3m-10yr curve is now up at +77 bps. The Aussie Govt 10yr yield is up another +6 bps to 1.14%. The China Govt 10yr is up too, by another +3 bps to 2.88%. And the NZ Govt 10 yr yield is also firmer, up +6 bps to 0.99%.
The gold price has started a yo-yo ride in the past few days with large falls then rises. Today reverses yesterday's recovery, and more. It is down -US$40 to US$1,681/oz.
Oil prices are sharply higher today. The US crude price is up about +US$2 to just on US$39.50/bbl. The Brent price is up to just over US$42/bbl.
And the Kiwi dollar has risen further. We are now just on 65.1 USc, another +½c gain and the last time we were this high was at the end of January. On the cross rates we are to 93.4 AUc and a one month high. Against the euro we have are up almost +1c to 57.7 euro cents. That means our TWI-5 has moved up to 69.9.
Bitcoin is lower than this time yesterday, down by a minor -¾% to US$9,743. 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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103 Comments
Haven't we seen all this before, and not that long ago?!
Remember "We're saved!" when The Fed engineered the rescue of Bear Sterns ( forced marriage with JPMorgan) and all was 'back to normal' until within a relatively few weeks, Leahmann galloped over the hill. And we know what happened then. And so do 'they', and why they've made absolutely sure it doesn't happen again.
But that's what they also thought last time.
So let's see what hapoens now....
Apparently the Washington DC mayor has changed the name of a plaza outside the White House to "Black Lives Matter Plaza" in a rebuke to President Trump. Lets see if the orange chicken is going to risk crossing that road.
BBC article: "Mayor Muriel Bowser, a Democrat, also unveiled a two-block long mural painted onto the street leading up to the White House declaring "Black Lives Matter". https://www.bbc.com/news/world-us-canada-52941254
Black Live Matter always peaks in election year. It's like homeless in the NZ political cycle when National is in power.
https://trends.google.com/trends/explore?date=today%205-y&geo=US&q=%2Fm…
No, it's a (not) open and transparent left wing govt, so activist media and trustifarian propagandist Hagar will ignore data; increased child poverty, increased suicides, rising beneficiary numbers (before wuflu), rising road toll, worse health care outcomes (health KPIs cynically no longer published) not to mention failure of every major program committed to etc for this election cycle.
Explained very well by one of the protesters and why I support the looters: https://youtu.be/Ed5CNt5wA0w
Great link - thanks. If we continue down the same road of landlordism/serfdom here, I can see similar hatred and social disconnection happening in NZ. Why play the game if it’s rigged? The players who continually get burned will decide they no longer want to play and if they become the majority, under a democracy, they have the power. I think it’s a very risky game central banks are currently playing. Social consequences could be enormous.
This is the Democrat Plantation that Candace Owens talks about. How the black vote is harvested by the Democrat Party (party of the southern slave owners, Lincoln was a Republican) each election with a bait of change and handouts but after the power is gained the blacks are returned to their place at the bottom.
Average working hours to buy the S&P 500 1860-2020 - got to forgo a lot more smashed avocado now.
https://media.moneyweek.com/image/private/s--nQzcNm-N--/t_content-image…
US money supply per capita 1960-2020
https://media.moneyweek.com/image/private/s--1iAfzcYR--/t_content-image…
https://moneyweek.com/investments/commodities/gold/601444/these-seven-c…
No one knows what is happening in stock but all are surprised and worried.
Phil Town :
https://youtu.be/TKT0AAClkjw
The Finns Are Revolting - ECB Suffers Another Einstein Moment
The Finns are revolting. They are good Europeans, but the Frugal Four just became Five. Their parliament has apparently rejected the EU’s 750 bln Coronavirus Next Generation Recovery Fund proposals – in its current form. The Finns say they are willing to talk, but want something that is largely loans, much shorter in duration, and much much smaller.
A perpetual motion machine is impossible, but what about a perpetual inflation machine? This is supposed to be the printing press and central banks are, they like to say, putting it to good and heavy use. But never the inflation by which to confirm it.
So round and round we go. The printing press necessary to bring about consumer price acceleration, only the lack of consumer price acceleration dictates the need for more of the printing press. It never ends.
If you have to use “stimulus” forever, can it be stimulus? Link
Can't we all feel the next desperate theme coming from the Powers that Be?
"Massive Inflation is Coming!. Quick. get out and spend your savings before that $1000 only buys you $500 worth of goods at tomorrows prices".
It's about all there is left to stem the collapse of the Global Economy - frighten those who are prepared for the worst into sacrificing their protection; turn creditors into spending debtors.
"Interest rates are about to rise, triggering massive inflation!" will be the next call, and who knows, 'they' may even throw the low-interest rates policy onto the Fires of Hope to try and prove their point.
And it's going to take a lot of personal resolve to beat back that propaganda. Because that's all it is - talk.
Reality is fewer jobs; lower wages and strangled discretionary spending.
"The Trend is Your Friend" - the Herd is always right, so just do as you are told. Until that one time that you shouldn't.
It's simple. Forget massaged 'jobs data'. The real measure of an economy is the work being done, and you monitor it by tracking energy-use. Too easy.
https://www.iea.org/reports/global-energy-review-2020
"The result of such a scenario is that energy demand contracts by 6%, the largest in 70 years in percentage terms and the largest ever in absolute terms. The impact of Covid‑19 on energy demand in 2020 would be more than seven times larger than the impact of the 2008 financial crisis on global energy demand."
Why we persist in these upper-Titanic-deck counts (more stewards on tonight) when we could measure the coal-burn rate and the amount remaining, (plus the rate of water-ingress and the likely timing of the foundering, of course) beats me.
So all those Chinese wanting to go to Harvard Business School are going to come to The Imperial College of Golden Happy Dragon Business School in Auckland? As long as they have a pathway to parking family funds in a property market they, our .govt and the banks will all be happy.
Now here's an area of Government investment I'd gladly support. Why shouldn't we use our current advantages to create a few world-leading schools of things that matter. For the same price as the Americas Cup, we could fund:
- A world-class business school based in Auckland
- A world class medical school based in Wellington
- A world class IT Engineering school based in Christchurch
Low fees for New Zealanders, high fees for internationals. It doesn't have to break even. It just has to be the best.
Stocks vs real economy:
It’s not surprising to me that businesses are hiring. Anecdotally it seems like businesses are back operating at beyond their normal capacity. I had to spend half an hour on the phone to talk to someone about buying an insurance policy yesterday and spent at least ten minutes in line at Bunnings to pick up some hardware this morning. Unless you’re an airline or hotel it should be back to business as usual.
"The UST 10yr yield is up again, today up another +8 bps at 0.89%. For the full week, it is up a remarkable +26 bps as investors start pricing risk back into American Government debt - in fact, long term debt from all governments. Their 2-10 curve has steepened further to +69 bps."
And this is happening regardless of epic QE, and zero or negative rates. It seems almost like the market forces are finally struggling to unchain and assert themselves.
Can anybody imagine how much higher the rates would actually be if the Central banks were not all hell-bent on keeping interest rates low (including the RBNZ)? How long are they going to keep playing this dangerous and ultimately destructive game of deception ? Will they be able to do this indefinitely ? Does not the Japanese experience count as a warning ?
Was watching a George Gammon youtube this morning - he was basically saying that the protesting and rioting in the US is in part due to racial inequality, but also just inequality in general and looking at stats in real terms, the US could have been in a depression for around 10 years or more now - but its been masked by historically low interest rates an phoney measurement of CPI to mask the real underlying problem/s that exist.
At 1 in 200 population IFR (0.5%) that seems to be typical of wuflu it would be something like 30000 dead to achieve herd immunity. Which is politically untenable for Sweden.
But if you deliberately infected (using optimal methods of low exposure + pre-conditioning with best medicines and vitamin supplements) it would only kill about 3000 of entire lower risk under 50 population (risk of death about 1 in 2000) to achieve 60-70% herd immunity.
Is modern capitalism really just communism in disguise? Where's the price discovery?
https://twitter.com/GeorgeGammon/status/1269023613405073409?ref_src=tws…
In a surprising announcement, the US Administration is reporting that "nonfarm payroll employment rose by +2.5 million in May, and the unemployment rate declined to 13.3%.
From Stalin in the thirties to America at the dawn of these twenties, it’s not yet so harsh and one-dimensional. But the direction we’re all being herded into taking cannot be denied. One man forced into unemployment by the “greater good” is a tragedy; 1.877 million is a statistic.
That’s how it has become. For the first time since GFC2 began, weekly jobless claims have dropped below 2 million per week, but at 1.877 million are these really cause for the full-throated celebrations right now taking place? The thing about victory laps is you have to first make sure you’ve finished the race. Link
.
It's all easy looking back...
The epidemiologist who led Sweden's controversial COVID-19 response, which did not involve a strict lockdown, now says...."If we were to run into the same disease, knowing exactly what we know about it today, I think we would end up doing something in between what Sweden did and what the rest of the world has done,"
https://www.livescience.com/results-of-sweden-covid19-response.html
Compared to its three nordic neighbours and compared too, to the close by three baltic states, Sweden is an example of poor management. It might be that the policy took into account a health system with capacity to cope with an influx of CV19 admissions and also an established efficient tracing system already monitoring alcohol consumption. Be that as it may, if considered by the mortality rate it has gone well beyond embarrassing, it is an indictment politically, socially and morally. And the final straw, a study in The Independent UK opines the Swedish economy is not markedly less impaired than its above neighbours.
Its tuff. Most thought, closing the border best. Then do the Swedish measures.
The lockdown was.. a plunge... is described now below.
It sounds not so much the deaths, rather the wrecking of the hospital system.
New Zealand was "literally a week away from not being able to contain" coronavirus when the decision was made to plunge the country into a nationwide lockdown.
https://i.stuff.co.nz/national/health/coronavirus/121738171/coronavirus…
https://i.stuff.co.nz/national/health/coronavirus/120560483/coronavirus…
Based on current advice, there will be 552 ICU capable beds" available in July, the ministry told RNZ.
"New Zealand has enough ICU-capable ventilators on order to equip any current gaps and the additional [ICU] beds planned by August.
https://amp.rnz.co.nz/article/e231fb18-95a8-4674-ba6c-2fe360c6997c
HCQ. :Medcram
https://youtu.be/KS-mHOtXX84
And this sounds like being swept up in orange man bad.
But have we witnessed the tear up of scientific research credibility.....
May be food for thought for folk banking on "science being settled".
Trump saying something has no bearing on whether it's true or false. The science definitely isn't settled, so he doesn't need to be telling everyone to take it.
For those not feeling like a punishing youtube video: https://www.theguardian.com/world/2020/jun/03/covid-19-surgisphere-who-…
There are two facts consistently ignored by the ignorant. Firstly NZ’s comparative few mortalities doesn’t signal there was no problem, no need for the levels of precautions. It signals that the precautions worked. Secondly NZ pre CV19:was ranked about 39th in the world for preparedness to combat a pandemic. The hospital system as it existed was already pressured. Winter was approaching. A high influx of CV19 admissions would overwhelm the health system capacity rapidly. What then regarding the care and the fate of the usual everyday patients, cardiac, oncology, accidents etc etc. They just don’t run away and hide because there is a new kid in town do they.
But did any of it really matter?
Compare UK vs Sweden, or
NZ vs Australia.
Professor Karl Friston as some interesting stats. https://www.youtube.com/watch?v=dUOFeVIrOPg
No, I think the point was as he says, for those that built a Noah's Ark, will have to wait for the floodwater to go down. But a better analogy would be we built a Noah's Ark for summer rain because we didn't know how to read the weather.
We could become the equivalent of native peoples coming into the first contact with European disease by shielding us so completely.
But the issue of a second wave is we are now coming into the winter virus season, so a few infected Aussies (I mean more infected than usual) if we have a trans Tasman link, could really take off, but as he is saying the Stats show, 50% to 80% of a population are immune anyway, so the percentages are worked out on the balance, which if we now have level 2 precautions in place, and opening our borders, with tracing etc., plus increased ICU, then we should be no worse of than your usual flu season.
His observations are remarkably similar to Professor Dolores Cahill but from a completely different angle.https://www.youtube.com/watch?v=wWBy3-4_lVc
Here is Hoover Instition.
Haber & Galetovic.
Commenting on country strategies.
Lockdown & stamp it out, is a bet on a vaccine.
Think option theory.
Think Friday doc dump & following Bridge committee questioning. There was no paperwork thinking through the option premium being paid.
Remember when it was flattening the curve (not reducing the area of the curve) but lowering the slope of the line, and plus upper limit to match hospital system capacity.
Australian thought
Sky News
https://youtu.be/P2PYTSgVO3s
Dr Michael Levitt, former chairman The Department of Anaesthetics.
"We don't know why they've continued the lockdown though".
It's very easy to scare people, but very difficult to un-scare people.
Sounds like a bit of an idiot to me. Surely in hindsight all countries should have done what NZ did and the virus wouldn’t even exist right now. The somewhere in between approach is the worst - you get most of the deaths and most of the economic impact but the economic impact occurs for much longer.
It's pretty obvious they couldn't of, the main one being the outbreak was out of season for the Southern Hemisphere. We are only coming into the virus season now. Plus our overall population density, plus demographics etc.
And why is the NZ approach any better than what the Aussies have done?
Plus the final death tally is not yet in:
https://www.stuff.co.nz/national/health/300028415/coronavirus-three-mon…
Special Report: 'Ghost collateral' haunts loans across China's banking system
In some cases, collateral that has been pledged simply doesn't exist. In others, it disappears as borrowers in financial distress sell the assets. There are also instances in which the same collateral has been pledged to multiple lenders. One lawyer said he discovered that the same pile of steel was used to secure loans from 10 different lenders. Read more and more
Unlike the local election, that looks more and more like fait accompli.
Judging by her latest effort Nikki Kaye should have stuck to her retirement plans....
https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12337724
The Boy revelled when the equity markets fell. People like him who are negative on equities have a lot to answer for. Those who listened to naysayers like him switched their kiwi saver accounts to cash and alike and have lost the opportunity to share in the incredible recovery that equity markets have achieved of late. My KiwiSaver account as modest as it is is now higher than it was before the virus crisis. I for one did buy some shares in March and April. Friends and family asked me what I thought and they are all very happy with their share purchases. The secret is to surround yourself with positive people who are balanced and diversified in their investments. Don’t listen to grumpy old naysayers who have tunnel vision and don’t look outside where they live and what they invest in.
I guess it takes different perspectives?
When our daughter rang up as the markets crashed and asked "Should I get out now?" my answer was "It's too late. Wait and see what happens". She did and over dinner last night the same question arose and my answer? "Get into your cash alternative, now". She did. ( Phone apps are marvellous things, aren't they!)
Was last nights stockex boom the start of things to come? Who knows! And that's why I suggested a little caution might be good at this stage.
(NB: This was advice from someone who thinks AirNZ is fundamentally worthless. So that she listened was a brave move!)
fundamentally worthless and morally inept too so it seems.For instance. No we will not honour our legal obligation to refund your cancelled ticket even though you might be in dire need of the money. Why? Because our staff members are more important than you and we prefer to pay them instead. Airline service? Public disservice utterly, I mean the tax payer baled them out, so who exactly do they owe their jobs to in the first place.?Funny how inevitably, you always find that arrogance is accompanied closely by ignorance.
Gordon, you have got a KiwiSaver account at your age?
I thought you are retired, so you didn’t invest well enough during your working life?
Personally believe that you can invest a heck of a lot better than KiwiSaver, although I do agree that the ones that can’t invest well should have one ,due to the contributions from the employer!
What I did hear the other day on the radio was that projections had the average KiwiSaver balance on retirement to be just over $250k which to my way of thinking is not a heck of a lot!
The radio announcer even said that as well, and even stated that with those figures quoted, felt that people would be far better off investing in Real Estate if they wanted a better retirement!
You couldn’t disagree with that at all!
Great interest. The Art of Fake News.
Here is a news fake in action.
Watch in real-time, what will Stuff do. Remember the article is NOT marked Opinion.
Attributed to Matthew Knott.
https://i.stuff.co.nz/world/americas/300029106/donald-trump-believes-ge…
See the headline: Donald Trump believes george floyd would be thrilled over job figures.
The headline is very specific.
In the body of the reporting - the headline is debunked:
During a riff about racial equality, Trump referred to Floyd, saying: "Hopefully George is looking down right now and saying there’s a great thing happening for our country. It’s a great day for him. It’s a great day for everybody."
https://youtu.be/nnk0hCgmamQ
The Guardian clip, 25 sec mark. Debunks the headline.
Question:
Who wrote the Fake Headline.
Are Headlines accepted as being fake now.
About Stuff, it's a great shame they are now so weak and under capitalised, the $1 sales price to management buy out, main stream media needs a solid equity base.
"One makes oneself unpopular agreeing with Trump, but a lot of his China policy makes sense”
"Back in 2009, after the last financial crisis, the global economy shrunk just 0.1pc. And then, the entire world benefited from a massive Chinese fiscal stimulus. This time, China itself is stymied by a fragile banking system and crippling corporate debts. Yet, this year, worldwide commerce is set to shrink 3.8pc, says the IMF, worse than the Great Depression of the 1930s."
https://www.telegraph.co.uk/business/2020/06/06/chinas-golden-era-has-l…
Britain is to form a deeper relationship with our ‘Five-Eyes’ intelligence partners that will see heavy investment in areas China dominates – such as technology and research Link
I wonder if NZ has been consulted, or will we become a victim of US/UK foreign policy? Others haven't fared well when they resisted. A NZ perspective is not much better.
Sloppy Stuff
And in this afternoon, we get to see what Stuff do.
This morning...
https://i.stuff.co.nz/world/americas/300029106/donald-trump-believes-ge…
Stuff change the published article without noting the correction.
This afternoon...
https://i.stuff.co.nz/world/americas/300029106/donald-trump-stages-a-vi…
donald-trump-believes-george-floyd-would-be-thrilled-over-job-figures
Becomes ......
donald-trump-stages-a-victory-lap-over-shock-us-job-figures.
How many other times have sloppy sly corrections been made?.
I think the media should be fined for this kind of perception management. I don't think it's acceptable in a modern connected world, it's destroying credibility of the MSM.
"Perception management is a term originated by the US military. The US Department of Defense gives this definition: Actions to convey and/or deny selected information and indicators to foreign audiences to influence their emotions, motives, and objective reasoning as well as to intelligence systems and leaders at all levels to influence official estimates, ultimately resulting in foreign behaviors and official actions favorable to the originator's objectives. "
If anyone has ever been in a lifechanging event...carwreck, death of child or spouse, health crisis then you know full well that the real difficulties only begin to set in AFTER the initial incident or diagnosis. There is much nastiness ahead. Don't dump those 900 rolls of toilet paper you panic bought in April just yet...you might need them sooner than you think!
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