Here's our summary of key economic events overnight that affect New Zealand, with news of eye-popping surges in Chinese equity markets.
But first in the US, the widely watched ISM survey of the services sector has delivered a spectacular result after two months of starkly negative readings. It is so good, at an index of 57 which indicates a very strong economic expansion, that it is hard to believe. The rival, internationally benchmarked survey is records a small contraction in the same June period which is more consistent with other economic data.
Still, it is the ISM one Wall Street watches and that result has powered the S&P500 up by +1.2% in afternoon trade.
And the Shanghai equities market has also risen strongly. It was up +2% on Thursday, another +2% on Friday, and then yesterday it rose a very sharp +5.7% on the day. Since the start of July, it is a market on a tear, up +12% in less than a week. It its most overheated since 2014. Analysts say a key driver is that hedge funds and quant traders are now unwinding bearish short trades, no longer betting China will stumble.
Chinese State media is also running articles urging private investors to load up too. The combined impact is impressive.
And behind both Wall Street and Shanghai are strong rallies in tech stocks - ironically driven by the political need to decouple their respective economies from each other. And to extend the irony further, it is Wall Street that is responding to the Shanghai surge.
And even Chinese bonds yields are rising as the shift to equities sees investors switch away from fixed interest securities, even Chinese government bonds.
But given the relentless rise of the coronavirus, it is not hard to think that this investor enthusiasm - everywhere - is quite misplaced and can only end in tears.
In some overnight direct economic news, the Bank of Canada business and consumer sentiment survey, no-one thinks the immediate future is very bright.
Indonesian consumer confidence is underwhelming.
German factory orders are recovering very weakly.
Later today, we will get Japanese household spending data which is expected to be very weak. (And the Q2 New Zealand QSBO is also released this morning.)
Australia may get a rude economic shock from the closure of the borders with Victoria. It is not an event that will aid their recovery, even if June data was improving.
The latest compilation of COVID-19 data is here. The global tally is 11,495,400 and that is up +178,000 since this time yesterday. Global deaths reported now exceed 535,000 (+3000).
A quarter of all reported cases globally are in the US, which is up +43,100 overnight to 3,007,200. US deaths now exceed 133,000. The number of active infections in the US is now up +30,000 to 1,572,900.
In Australia, there have been 8586, another +137 cases since this time yesterday, mainly in Victoria. Their death count is up +2 at 106 but their recovery rate has slipped back to under 87%. There are now 1060 active cases in Australia (up +114 in a day).
The UST 10yr yield is up to just under 0.70%. Their 2-10 curve is a little firmer at +53 bps. Their 1-5 curve is up too at +16 bps, as is their 3m-10yr curve up at +58 bps. The Aussie Govt 10yr yield is up +4 bps at just under 0.95%. The China Govt 10yr is up sharply, up +10 bps at 3.03%. And the NZ Govt 10 yr yield is up +4 bps at 1.00%.
The gold price is up by +US$9 to US$1,783/oz and that is a new nine-year high.
Oil prices have also firmed, but only marginally. They are now just over US$40.50/bbl in the US and the international price is just over US$43/bbl.
And the Kiwi dollar is firmer too, now just on 65.6 USc. On the cross rates we are holding at 94 AUc but against the euro we are marginally softer at 57.9 euro cents. That means our TWI-5 is still at just on 70.2.
The bitcoin price higher overnight, up +3.1% to US$9,316. The bitcoin rate is charted in the exchange rate set below.
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Crypto entrepreneur Brock Pierce throws his hat into the U.S. presidential race.
Pierce, a former child actor whose cryptocurrency net worth was put at between $700 million and $1 billion in early 2018, has funded dozens of cryptocurrency companies, including San Francisco-based bitcoin and crypto exchange Coinbase, EOS creator Block.one and crypto-focused venture capital fund Blockchain Capital. Pierce is also the co-founder of the oft-sued stablecoin tether, now the world's third largest cryptocurrency by value, according to CoinMarketCap data.
https://www.forbes.com/sites/billybambrough/2020/07/06/crypto-investor-…
The other question is why we take it as given that "business" is an experience that every political leader must have. Guess it's the financialisation of society that has occurred since the 80s, whereas in previous times it was military experience. Perhaps if things continue as they are the new expectation will be that every politician should have experience in property investment (in fairness, they mostly do...explaining why they only exacerbated the housing crisis for other generations).
Should a military background become the fashion again Trump's draft-dodging background will torpedo his chances.
I think one of the best SNL comedy sketches that they ever did was the one with Kanye West's official meeting with Trump. Hilarious!
Kanye West Donald Trump Cold Open - SNL: https://www.youtube.com/watch?v=4sO5-t3iEYY
But what's even funnier is when you look at the comparison with his actual meeting and the SNL sketch, the script writers didn't have to change much.
SNL's Kanye-Trump meeting vs. the real thing: https://www.youtube.com/watch?v=2n3WZejI24Y
There has been no better time but now to raise income requirements for work and residence visas. For a few years, top 4 occupations securing NZ work visas have been chefs, retail manager, tour guides and cafe managers.
We're footing the bill for welfare to unemployed Kiwis and also for the wage subsidies and welfare (education and healthcare for the workers' families) going to support foreign workers in low wage hospitality or tourism jobs. This needs to stop!
Your task for today is to write an explanatory paragraph of no more than 150 words using all of the following
Residency Visa
Temporary Work Permit
Work Visas
Guest Workers
Permanent Residency Visa
Visitor Visa
Student Visa
NZeTA NZ electronic Travel Authority
Family Re-union Visa
Special Exemption
Path to Citizenship
China is leading recovery, well their own one anyway. Watched an episode of Australian border security, pre CV19. At 8.15 pm a family of 7 chinese nationals. Amongst their luggage examples, of raw seafood, fungi, feral meat, herbs and on and on. Filled a trestle table more of this stuff than clothing and personal possessions. Two weeks after Wuhan was sectioned off a chinese national arrived at Washington DC airport 27/1/20 with a poly bag of dead birds in his luggage. He thought there was nothing wrong with that, and cared even less. BBC/Fox web sites this morning reveal bubonic infection in Inner Mongolia, citizens eating rodents. The world has been economically crippled, lives lost and ruined in the millions by CV19. No acceptance of responsibility, no apology forthcoming from the Chinese regime. To mind this demonstrates a wilful inconsideration, that is little short of a menace to civilisation. Can we as a nation ever then be confident that the return of thousands daily of visitors from China will not include a party that has consumed, handled or is carrying similar stuff as the above examples.
If any of our politicians consider NZ has to rush back and embrace our previous relationship with China then they are offering the people a disservice and peril.
as a former ukranian national, i've met many people who attributed 'holodomor' to russia's desire to genocide ukranians, when in fact it was just plain incompetence, poor planning, corruption and yes stupidity. Result? hasty, hot-headed decisions, lives lost, centuries long relationship ruined, economies in decline.
The verdict is mixed on that. Yes, holdomor was a product of incompetent bungling officials implementing a disastrous collectivisation policy but historians also believe a desire in Moscow to pacify Ukrainian restiveness resulted in the famine being intentionally used as a tool to achieve that. A very dark chapter in Ukranian history. Great to have your perspective as someone with a personal connection.
then take kazakhstan for instance, where holodomor also happened - russia had zero geopolitical interest in genociding kazakhs, but holodomor happened nonetheless. people are so easily swayed by narratives and agendas, when a simple google search and more than perfunctory look at historical events will tell you a less glamorous story which is there was no genocide, just idiocy and a rotten regime.
well if you know the russian language, there is a lot of interesting free stuff that a simple google search can unearth, publications, books etc. not sure what your point is exactly, you can find a lot through simple google search nowadays, may be it's easy for me as a millenial :)
OK. Tks. Personally I'm a bit over some people attributing noxious behaviours from the CCP to historic concepts such as 'face saving' etc when it is a carefully calculating regime that considers itself not subject to many normal principles of equity and decency. Imagine the media frenzy and international outrage if the virus had escaped from a Kansas chicken farm as in 1918. The clown Trump would have been no doubt held personally responsible as he of course is for most of the bad stuff happening in the world today.
Some doubt now about whether bubonic plague was in fact distributed by rat fleas. Tracking the sequential progress of English infection spread patterns through family and acquaintance groups using historic date of death data suggests human to human viral transmission was more likely. Contemporary accounts of the plague death process and observed effects on the body don't correlate convincingly with bubonic plague. The black death disease progression and bodily effects noted along with separation of limbs in graves is more consistent with an ebola style virus.
Even after over 28,000 deaths, only 5% of Spaniards show any antibody response to COVID-19.
https://edition.cnn.com/2020/07/06/health/spain-coronavirus-antibody-st…
"In light of these findings, any proposed approach to achieve herd immunity through natural infection is not only highly unethical, but also unachievable," said the Lancet's commentary authors, Isabella Eckerle, head of the Geneva Centre for Emerging Viral Diseases, and Benjamin Meyer, a virologist at the University of Geneva.
Doing a quick calculation for Spain, 300'000 infected people divided by 60 million population = 5% which happens to be exactly the rate of people with antibodies. One could therefore come to the exact opposite conclusion that people do indeed build antibodies and that herd immunity is achievable when enough people get exposed to CV.
Edit, my top of the head calculation is wrong by a factor of 10, my post is therefore invalid, sorry
5% of 60 million is 3 million. This is good news - 3 million infected = 28,000 deaths which is a touch under 1%. Still, say you need 60% of the population exposed for herd immunity and assuming a representative sample has been infected so far, you're looking at another ~300,000 deaths to get there. Perhaps better treatment can get that down to 200,000 or even 100,000. Is that something Spain can stomach?
This assumes the antibodies hang around long enough to get through this thing without overwhelming healthcare.
And whilst being completely blind to the length of time antibodies might remain, we are also blind to the after and longer term effects of the virus or hitherto unknown effects on numerous types of peoples or co-morbidities with other pre-existing conditions, including pregnancy and fetal development.
Exactly, we are all looking at the first order effects, whilst being ignorant of the 2nd order effects. Early evidence suggests they can be devastating to non existent, which indicates different mutations of the virus.
Precautionary principle should prevail when evidence is lacking.
The herd immunity depends on the R0 and for Covid-19 it was estimated at closer to 80% of the population needs to have had it and recovered. You can quickly see how long this will take, especially in countries that slow it down but still have no chance of elimination now like the USA and Brazil. Covid-19 is now here to stay for years and years and will possibly never go away until a vaccine has been found. Work out the number of dead before this happens and its in the tens of millions. Covid-19 has only just got started and thats what people need to get into their heads.
It could be worse, new and old plagues are popping up all over the place. Here's the latest one: China bubonic plague: Inner Mongolia takes precautions after case. Authorities in China have stepped up precautions after a city in the Inner Mongolia autonomous region confirmed one case of bubonic plague. https://www.bbc.com/news/world-asia-china-53303457
The spread is occurring via younger age ranges. Given that the US is recklessly spreading the virus it will sweep through the older age groups again and the fatalities are going to climb.
The new mutation has been detected in China, and as far as I'm aware not the US.
Given the exponential increase in cases watch for the deaths over the next month or two. It takes a while for people to die from it.
I think I found the answer to my own question;
In April there were about 75'000 new cases and 5'000 deaths daily
Recently, there are about 150'000 new cases and 3'000 deaths daily.
It looks like the mortality rate has dropped from 1 dead in 15 infected (= 6.7%) to 1 dead in 50 (= 2%). A stark reduction in mortality rate worth talking about.
Scroll down to see graphs
https://www.worldometers.info/coronavirus/?
Taking those numbers at face value is incredibly foolish.
The case rate depends hugely on testing. Obviously testing is more widely available now than previously.
It could have been, for example, that in April there were actually 300,000 infections daily but only 75,000 positive tests.
And now there could be 200,000 infections daily and 150,000 positive tests.
Death rate depends on actual infection rate, not the case rate.
There's also about a 3-4 week delay between contraction and a death being reported in stats, so current low deaths reflect a lower infection rate happening about a month ago, since infection rate has recently increased particularly in the US, death rate is expected to increase soon.
Since most deaths are in the 70+ age group, it also matters hugely who is getting infected. I expect rest homes in affected countries will be operating under siege mentality now.
Something that is missing from the data is the change in treatment. The first round of deaths there was no treatment. There are treatments in use that appear to be making it less likely to be on a ventilator and if people end up on a ventilator (where there was an 80%+ chance of dying) there is now a treatment that may be reducing the rate of deaths.
Comparing datasets without treatment information for comparison is not that useful. We need better data to understand what is actually going on.
I'm saying you simply looking at the numbers in April and comparing them to the numbers now, without accounting for all of the factors around those numbers (principally the availability of testing) is foolish.
Yes, use the numbers because that is the data we have. But trying to use the numbers inappropriately without understanding what they actually mean is what you were doing. Don't.
Firstly, reporting is getting worse because most of new cases are in developing countries like India and S America. So, not reporting as accurately
Secondly, younger people making up greater share of those infected as their share of pop in these countries is much higher than in USA and EU
Younger people do not die as much from Cv19
It is daft to promote the death toll as the bottom line. Totally daft. There are ongoing life long issues from CV19 for a start. As an anology, is the death of one driver in one car a more important statistic than a truck vs bus collision that produces no deaths but several paraplegics and amputees.
Its all in the counting Yvil
HEALTH AND SCIENCE
Official U.S. coronavirus death toll is ‘a substantial undercount’ of actual tally, Yale study finds
https://www.cnbc.com/2020/07/01/official-us-coronavirus-death-toll-is-a…
Distorting science
https://drmalcolmkendrick.org/2020/07/05/distorting-science-in-the-covi…
With any new topic in science, there is always huge disparity and lack of consensus. That is a strength in the scientific process, not a weakness.
There will not be a valid and well evidenced consensus for years.
This is a new virus and whilst its understandable that we all want to cling to this or that piece of data, it is premature to cling to any data. We are still learning and there is absolutely no way we can know enough at this stage to offer anything but weakly held and evidenced hypothesis based on best available evidence and comparisons to similar viruses and pandemics.
It will be years before we know the true fatality rate. Even the scientists who report current case fatality rates will admit that this it is based only on their current access to data. And of course the incoming data is itself flawed and mired in political, technical, reporting, classification and communications problems. Not all countries report in the same way, let alone respond and treat in the same way.
2 months ago the idea of suffering long term side effects after surviving the virus hadn't even entered most peoples consciousness. And yet, now we know this is an area of concern but we don't know the extent of the post-viral effect. This is why it is better to respond cautiously to a new virus because you just can't and won't know enough to make good decisions in the beginning, which is why so many recommendations were to err on the side of caution.
In addition to the reasons others mentioned, there's an expected decline of the percentage of "deaths due to Covid" as a bigger portion of the population gets infected. If, say, 1000 people have Covid in the whole country and 20 of them die in the next 2 weeks, it's very likely that their cause of death will be due to Covid. If 1 million people have Covid and 20000 of them die in the next 2 weeks, many of those 20000 will die due to other causes, such as a car crash or heart attack. On top of this, if 20 people are in serious condition, all of them will be in the hospital - monitored by healthcare professionals, sheltered from other external dangers such as car crashes. When you have 20000 seriously ill people, a sizable portion of them won't be in hospital.
Anyone fancy a 'mild' case of coronavirus?
https://www.theguardian.com/commentisfree/2020/jul/06/coronavirus-covid…
Here is full version of what USA ISM survey said: not getting worse as fast as May: big deal
https://wolfstreet.com/2020/07/06/a-word-about-the-bounce-in-us-service…
The Revolt of the Elites
https://unherd.com/2020/07/the-book-that-predicted-2020/?fbclid=IwAR3dB…
Looks interesting. Will add it to the list of next books to read. Currently on Deaths of Despair: https://www.amazon.com/Deaths-Despair-Future-Capitalism-Anne-ebook/dp/B…
Like many I've benefited from capitalism and think it has many good characteristics , but at the same time, my thinking is also that Karl Marx might be right and that eventually the system will destroy itself and socialism will be the future. Is that what I want? Well I'm not certain yet.... But I look to history and then at what is happening all around the world and what governments and central banks are doing and it makes me ask, are we now in the final phase/s of capitalism? - like the end of slavery and feudalism? Now is it the turn of capitalism? There almost seems to be a sense of desperation to keep something alive that is dying, like a patient on life support that is only in the land of the living because of the artificial means to keep the heart pumping and the lungs breathing. Yet you know nothing can bring it back to life as its underlying sustainability is no longer present. I look at the debt and the required increases in aggregate demand to generate goods and services to service the interest on additional debt as too much to keep this model of capitalism alive. It means the system is broken. And the life support of QE and lowering rates is only keeping it alive temporarily. The question then becomes what comes next and how does the transition work?
I do not think it is "Capital Idea" to employ people who are not "Business Like" and can never make New Zealand into a profitable Nation,again not a debt ridden, over priced and totally dependent on Houses rising as Interest Rates fall below gravity.
Gravity being the point, where we follow the rest of the World into a Financial quagmire and Covid-19 plunge in figures, beyond all imagination.
Wasn't that why we elected "business like" John Key, who campaigned on reinvigorating productivity and addressing the housing crisis?
But instead he gave up and focused on debt bubble economics, inflating house prices, abandoning productivity, and living up large now off the back of young and future generations. Fat lot of good that was in the end.
Drawbacks of a Low Interest Rate Environment
Just as there are advantages to a low interest rate environment, there are also drawbacks, especially if the rates are kept extremely low for a long period of time. Lower borrowing rates mean investments are also affected, so anyone putting money into a savings account or a similar vehicle won't see much of a return during this type of environment.
Bank deposits will also drop, but so will bank profitability because cheaper borrowing costs will result in a decrease in interest income. These periods will increase the amount of debt people are willing to take on, which could be a problem for both banks and consumers when interest rates begin to rise.
Please note...........A rise is the opposite of a Fall.
While on the subject of a rise..
Is someone taking a rise out of you....and the USA.
https://www.zerohedge.com/markets/real-reason-chinas-massive-market-mel…
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