Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
No changes here today, so far at least.
TERM DEPOSIT RATE CHANGES
Heartland Bank and the Police Credit Union have both trimmed rates today.
UP BUT STILL VERY NEGATIVE
"Reflecting New Zealand’s continued steady progress out of lockdown, the preliminary ANZ Business Outlook data for June saw further increases across all forward-looking activity indicators. Levels remain very low, however. Both business confidence and own activity saw large lifts, of 9 and 10 points respectively. A net 22% of firms expect to reduce investment (up 10); a net 51% expect lower profits (up 5), and a net 18% expect lower capacity utilisation (up 8). A net 37% of firms expect to cut jobs." More here. BNZ thinks this data shows a "stalled recovery".
IMPROVING, BUT STILL A LONG JOURNEY
In May the Light Traffic Index of ANZ's Truckometer series recovered more than half of its April fall, but it was still 37% lower than last May for the month as a whole. The Heavy Traffic bounced more, and is 7.8% lower than May 2019.
STUART MCKINNON CONFIRMED IN ANZ NZ ROLE
ANZ NZ has appointed Stuart McKinnon as managing director of institutional banking. McKinnon has been acting in the role since March following the departure of Paul Goodwin to an ANZ role in the US. McKinnon has worked for ANZ for 23 years, most recently as head of institutional relationships and specialised finance.
MASKED VARIATION
Wholesale trade sales rose +1.9% year-on-year in the March quarter, the same modest rise recorded in the December quarter. But that masked some very large changes in the components. For example, the grocery component was up +5.2% while the automotive component fell -6.1% on the same basis. Wholesale inventories are not rising; in fact they reduced in March compared with teh same level a year ago. This data is among the final elements being released befor the Q1-2020 GDP result is announced next week on Thursday. Massey's AI tool, GDPLive, suggests that that will show an annual change of a touch under +2.0%. Subsequently of course it has fallen hard and the GDPLive forecasts we are heading for a Q2-2020 result at the rate of -2.0% pa, or -15% quarter-on-quarter.
A KEY ACTIVITY METRIC
National electricity use seems to have recovered to normal levels.
NEARLY BACK TO NORMAL IN SOME KEY AREAS
Paymark is reporting that spending in the economy continued to rise during the last week of May. A core set of merchants that are indicative of underlying spending patterns saw electronic payments increase by +2.4% last week. However this still leaves spending amongst the group down by -1% compared with the same week last year. Not surprisingly, spending is still running well below year-ago levels among accommodation, cafes/bars and a wide range of non-retail merchants, such as travel agents, doctors, cinemas and education providers.
LOCAL UPDATE
There were zero new Covid-19 cases again today in New Zealand. Unless (until?) new cases pop up, we will be dropping this daily paragraph update.
AUSTRALIA UPDATE
In Australia, there have been 7267 cases (+2 since yesterday), 102 deaths (unchanged) and a recovery rate of just under 92% (unchanged). 19 people are in hospital there (-6 since yesterday) with 3 in ICU (-2). There are now 459 active cases in Australia.
GLOBAL UPDATE
The latest compilation of Covid-19 data is here. The global tally is now 7,113,400 and up +107,000 from this time yesterday. This is still rising at a faster pace than recently. American cases rose by +20,000 since yesterday to 1,960,6500. US deaths now exceed 111,000. Global deaths now exceed 404,000.
EQUITY MARKET UPDATES
The S&P500 rose +1.2% in trade earlier today, a sharp contrast to the falls of about -0.5% in European markets overnight. At the open in Shanghai, they have booked a modest +0.3% gain, Hong Kong is looking at a larger +1.0% rise, while Tokyo did its dash yesterday with a big +1.3% rise, but today is giving back about -0.6% of that so far. The ASX200 has opened +2.3% higher while the NZX50 Capital Index is in reverse today, down -1.7% in late trade.
SWAP RATES UPDATE
Swap rates may have changed little today. We don't have wholesale swap rates movement details yet but we will update this later in the day if they show a significant movement. The 90-day bank bill rate is still unchanged at 0.26%. The Aussie Govt 10yr has retreated sharply today by -11 bps to 1.06% but really only just giving up all of yesterday's equally sharp rise. The China Govt 10yr is down -2 bps to 2.85%. And the NZ Govt 10yr yield has slipped slightly to be just under the 1% benchmark at 0.99%. The UST 10yr is down -5 bps since this time yesterday at 0.85%
NZ DOLLAR FIRM
The Kiwi dollar has held on to its overnight gains to be still at 65.5. Against the Aussie we are staying firm at 93.6 AUc. Against the euro we are also holding firm at 58.1 euro cents. That means the TWI-5 is still up at 70.1 with no sign of a retreat from its recent gains.
BITCOIN HOLDS
The price of Bitcoin is little-changed from this time yesterday at US$9,689 which is only marginally softer. The bitcoin price is charted in the currency set below.
This soil moisture chart is animated here.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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38 Comments
20-30 percent of AIRNZ ontop of those cut already
Half of the staff at most councils do very little compared to private sector
75-80 percent of tourism jobs
many middle management who will soon been culled for cost saving as we are now seeing across the board
and the firms taking the goverment job money to stay afloat for another 4-8 weeks.
Just remember we just had a lockdown and people who had to keep working are the non zombie jobs that should be safe in the longterm everyone else is just a number that maybe cut.
Entirely better to pull economic band-aids off slowly, things happening all at once cause panics, and the various downstream chaos that comes with panics.
Also reccomend a re-read of this earlier Interest article that highlights the benefits of keeping people connected to employment (even if it's expensive)
https://www.interest.co.nz/opinion/105293/masseys-alison-brook-looks-ho…
Despite being attached to a university, she has no idea. They just don't teach them.
http://www.lifeworth.com/deepadaptation.pdf
Read the lot of it. Twice. What does it say about academia? What does it say about us? And remember, he only looks at one aspect......
Paymark is reporting that spending in the economy continued to rise during the last week of May. A core set of merchants that are indicative of underlying spending patterns saw electronic payments increase by +2.4% last week. However this still leaves spending amongst the group down by -1% compared with the same week last year.
This is very good news. if consumer spending has only decreased 1% yoy, that is very positive for the economy. However, I'm not sure why I'm sceptical that data is accurate.
One missing factor here is cash transactions. If they were about 1/3 of transactions prior to COVID, you would expect electronic payments to jump +50% if literally all cash stopped being used (and all retail activity to return to normal). Anecdotally, I've heard of retailers suddenly being completely pay-wave transactions where they used to accept significant amounts of cash.
If you guess that perhaps we now have half as many cash transactions as before, we would actually still be in a massive hole.
Great point. Its also just the result of us having very few job losses so far (compared to what may be coming round the corner).
A lot of people have been spending far less than usual during lockdown, as they couldn't eat out and didn't spend as much on transport. That has left people with a bit of extra cash in the pocket.
The real question will be how things look after the wage subsidy ends.
Try doing the numbers a different way. If you look at deaths in the US as a proportion of recovered cases (a more valid comparison), you've got a more than 20% chance of dying than recovering - double that if you're black or hispanic,
Get off your comfy chairs people and face up to the facts.
The dollar index is looking like the wholesale printing of dollars we have seen in the past two months is starting to come home. Something has to give and in this case it's the mighty greenback.
Will be interesting to see the result of the crypto RMB when it gets released. If replaced even a small fraction of EM business conducted in USDs more dollar weakness is on the cards.
Investors piling into bankrupt companies. Car renter Hertz Global Holdings Inc., oil driller Whiting Petroleum Corp. and retailer J.C. Penney Co. Many 10x+ returns.
https://www.latimes.com/business/story/2020-06-08/bankrupt-stock-hertz
"Drop GST for 6 months!" (Brad Olsen, Infometrics)
Cool.
Then in 6 months time, when households have spent their accumulated savings on a splash to 'save' 15%, and the economy drops dead when GST is reintroduced households will have less of a buffer to insulate themselves from whatever unknown position the World is in at that stage. Then what?
"But we'll be out of it by then!". Let's hope so. Because New Zealand households stripped of whatever liquidity buffer they have will not need another round of virus/economic challenges. Neither households or the country have the financial capacity for a second go.
Where is your evidence for this? Even in NZ companies that are doing the best are those who are able to milk as much printed money as possible. See THL (had millions sitting in the bank, but got the government to bail them out with $4m), the Warehouse (took heaps of wage subsidy money, then fired 1000 staff) and so many other companies it's not funny. That's the new normal, if you can convince the government you need funds, the just give it to you. No longer need to be viable, in fact it's better if you aren't, because then the government will REALLY bail you out (see Air NZ).
Capitalism only works when the weak/insolvent etc are allowed to fail. When nobody can fail, there is no real capitalism which relies on continuous improvement and stripping away of insolvent companies. One of which is no longer encouraged (it's only how much you can inflate your assets, not about productivity) the other is not allowed to happen (bailing out zombie's galore).
Air NZ not returning flight refunds and using wage subsidy to lower overdraft.The workers of all companies should have been paid the wage subsidy direct Too many restaurants etc are sacking workers,some of them migrants and keeping the money .The Govt will never get around to trying to reclaim it.
Oh, honestly, showing up with a comment like that after a single registered day on this site? The very first thing on the subsidy application form is the employer's credentials (IRD number etc). And every single employee IRD number is required in the body of the form in order to claim it.
In accounting terms, the subsidy belongs 100% to the employee......geddit?
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