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US Fed maintains dovish stance; US exports drop sharply; air cargo volumes recover slightly; China imports steel; iron ore price up; UST 10yr yield at 0.58%; oil unchanged and gold at new record high; NZ$1 = 66.6 USc; TWI-5 = 69.9

US Fed maintains dovish stance; US exports drop sharply; air cargo volumes recover slightly; China imports steel; iron ore price up; UST 10yr yield at 0.58%; oil unchanged and gold at new record high; NZ$1 = 66.6 USc; TWI-5 = 69.9

Here's our summary of key economic events overnight that affect New Zealand, with news the price of gold is suddenly very volatile.

But first in Washington DC, the US Fed held all its monetary policy settings unchanged but said the resurgent virus is threatening their economic recovery from the first wave, and "will increase its holdings of Treasury securities and agency residential and commercial mortgage-backed securities at least at the current pace to sustain smooth market functioning". It was a Statement that didn't move financial markets, but it did move the gold market.

And in an update on Congressional action on extending the fiscal stimulus programs, both sides say they are far apart on any agreement. Congress ends the current session on August 7 after which the election campaign period formally begins.

In the real economy, American exports rose slightly in June from May in their usual seasonal shift, but are -24% lower year-on-year. American imports are down -13.5% year-on-year. The June 2020 merchandise trade deficit was -$74 bln compared to -$69 bln in June 2019. By any measure, their aggressive trade policies aren't working.

Improving however are US pending home sales in June, which were up +6.3% year-on-year suggesting the July levels will show increases too. The gains in the West are notable.

But American manufacturing is taking some heavy blows. Boeing said it would cut production of commercial jets even further and continue to shrink its workforce as the pandemic deepens its toll on aviation. And GE also said it is now losing huge money in its jet engine business.

But these negative earnings reports from these two bellwether companies hasn't hurt Wall Street today.

The S&P500 is up +1.3% in afternoon trade. That follows mixed and tame results in Europe overnight. Yesterday, Shanghai was up a very strong +2.0%, Hong Kong was up +0.5%, but Tokyo fell -1.2%. The ASX200 ended down -0.2%, while the NZX50 rose +0.2%.

In China, a surprise trade data revelation: China became a net steel importer in June for the first time since the last global recession in 2009, with imports from India, Japan, South Korea and Vietnam set for short term gains as demand overshoots supply in the rapidly recovering economy. China can't make enough steel for its own needs, it seems. No wonder the iron ore price just keeps on rising, up more than +40% so far in 2020. And that makes it difficult for China to 'punish' Australia for its foreign policy tensions.

In Australia, the steep fall in CPI inflation predicted happened, but just a whisker less than expected. They reported -1.9% deflation in June from the March quarter, and annual deflation of -0.3%. This was the largest quarterly fall ever in Australia. Since 1949, this was only the third time annual inflation has been negative. The previous times were in 1962 and 1997-98. The pandemic benefit of the public provision of free pre-school childcare was the main contributor, along with lower petrol prices. Without both they would have had a small amount of inflation. Food prices were up +4.1% pa in the year to June.

The international air cargo market is far, far healthier than the passenger market, but it has it's own steep decline to report. Overall aircargo volumes were down -19% in June from the same month in 2019 (which was a smaller decline than in May) and Asia/Pacific markets were down -20%. The smallest drop was in North America, down -9%.

The latest compilation of COVID-19 data is here. The global tally is 16,820,000 and that is up +280,000 since this time yesterday. Global deaths reported now exceed 662,000 (+7,000).

A quarter of all reported cases globally are in the US, which is up +65,000 from this time yesterday to 4,526,500. US deaths are now just over 153,000 and a death rate of 462/mln (+6/mln). And the number of people actively infected in the US rose +15,000 yesterday to 2,160,200.

In Australia, there have now been 15,582 cases reported, another +278 since this time yesterday, and still concentrated in Victoria but also small pockets in Sydney's suburbs. Their death count is up to 176 (+9). Their recovery rate has stayed at under 62%. There are now 5787 active cases in Australia (+81) and almost all are community transfer.

The UST 10yr yield is holding lower, at just on 0.58% (It has since fallen to 0.56%). Their 2-10 curve is unchanged at +45 bps. Their 1-5 curve is also little-changed at +13 bps, and their 3m-10yr curve is unchanged too at +49 bps. The Aussie Govt 10yr yield is unchanged at 0.88%. The China Govt 10yr is firmer, up +2 bps at 2.96%. But the NZ Govt 10 yr yield is lower and now at 0.83% after a -2 bps dip.

The gold price has pushed on up to yet another new all-time high of US$1,962/oz and a further gain of +US$8/oz for the day. And then after the US Fed announcements, it climbed further by another +US$14 to US$1,976/oz - and then promptly reversed itself. China announced measures to clamp down on precious metals speculation through leveraged transactions.

Oil prices are little-changed today. They are just on US$41/bbl in the US and the international price is just at US$43.50/bbl.

And the Kiwi dollar will also start today unchanged at 66.6 USc. Against the Australian dollar we are soft at 92.8 AUc. Against the euro we are also soft at 56.5 euro cents. That means our TWI-5 has slipped to 69.8 but still in the general range we have been in, all year.

The bitcoin price has risen again, up another +2.2% since this time yesterday to US$11,216. That has cumulated to be a +17% rise on one week. The bitcoin rate is charted in the exchange rate set below.

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Airfreight's been somewhat of a nightmare. Something that would normally cost in the vicinity of ~$1000 for us to Airfreight from Australia we were recently quoted $10,000. Not only that, there was no guarantee we'd see it in a week, more like 2 - 3 weeks. Better off sticking with Seafreight at 3 - 4 weeks.

It is what it is *shrug*.

Reports of sea freight being 3x more expensive as well

Next FY we are looking at increases in seafreight 70%-130% from Aus, ~15% China, and 50-60% UK

I ordered something from the states recently, expecting it to take ages. Arrived at my door in 4 days. Don't know if I got lucky, or if things are settling down in air freight.

Whereas my sister ordered me something from the Ukraine mid March and it only just arrived!!!


All those US economic numbers point to a massive downturn, but house buying is up. Which makes you wonder how they are going to pay for them. Extend and pretend is quickly becoming the only game in town.

I see .009% of the world's population have died allegedly of Covid-19, including 1 in NZ, who was confirmed but never tested(??). Including all the ones in USA, where medical people are paid more to call anything Covid. In a normal year 90 to a 100 million die usually. 1.4-1.5%. Not a big blip so far. My favourite stat is the number of ICU cases of covid, versus the number of ICU beds available in the area being discussed. Probably not counting the ones assembled by various armies, and then dismantled through underuse.


I see - the coronavirus and its effects are just a figment of our imagination, then?


Our imaginations have been hyped somewhat. More people died in the Asian and Hong Flu pandemics and populations didn't lose their minds and economies. "In Sweden and the UK for example, the public think 6-7% of people have died from coronavirus – around one hundred times the actual death rate based on official figures."


Ongoing exponential growth (BAU) is going to kill us too.

A giant reset is a slim chance at survival.

Where are young going to find the purveyors of this exponential growth you speak of? Population bombs and resource scarcity predictions are so 1960's. The only exponential growth will be in adult diaper sales. Time to find a new future scare story.
"The world is ill-prepared for the global crash in children being born which is set to have a "jaw-dropping" impact on societies, say researchers. 23 nations - including Spain and Japan - are expected to see their populations halve by 2100.
China, currently the most populous nation in the world, is expected to peak at 1.4 billion in four years' time before nearly halving to 732 million by 2100.
Countries will also age dramatically, with as many people turning 80 as there are being born."


We have overshot the carrying capacity of the planet.

The ability to deny this fact seems infinite however.

Yeah I'm worried I won't be able to feed my children. Things are getting grim. "Record global cereal production forecast boosts stock-to-use ratio to a twenty-year high. FAO’s forecast for world cereal production in 2020 has been revised upward by 9.3 million tonnes this month and now stands at almost 2 790 million tonnes, with the global output set to surpass the record-high reached in 2019 by as much 3.0 percent (81.3 million tonnes)."

With a big thank you to Mr. Haber and Mr. Bosch, together with mechanized farming and a one-off, enormous draw-down on natural capital.

You forgot Mr. Borlaug - whose plant breeding efforts have fed billions. Plant breeding being an apt example of growth without increased resource consumption. Urea use per ha has peaked and precision farming is only going to accelerate that.

"Most people still fail to comprehend the magnitude and menace of the 'Population Monster' - Norman Borlaug.

Of course, Borlaug's rice and wheat strains were particularly reliant on nitrate fertilizer from the Haber-Bosch process.

Problem being is our global economy relies on growing consumption - what happens when there aren't enough people to continue ever increasing consumption?

The world is be ill-prepared because BAU is the only option presented and offered. The world is in population overshoot due to utilising non-renewable resources and renewable resources faster than they are replenished. The only other mammalian species that outnumbers us humans is rats and mice. We need to be able to live within the limits of our planet. Personally I would rather deal with the implications of a falling global population than the implications of an ever increasing global population. It seems that most people on the would agree by the way they vote with their feet.


'Not a big blip so far. My favourite stat is the number of ICU cases of covid, versus the number of ICU beds available '

How many would be free if no containment measures were in place?

Remember when Sweden's hospitals were over run? Me neither.

When your treatment of the infected elderly is a shot of morphine and a cover over their face your hospitals tend to remain empty.

I'll go with the proven prediction rather then speculation. Sad that their eldery rest homes were not protected more.
"If Sweden stops at about 5,000 or 6,000 deaths, we will know that they’ve reached herd immunity, and we didn’t need to do any kind of lockdown. My own feeling is that it will probably stop because of herd immunity. COVID is serious, it’s at least a serious flu. But it’s not going to destroy humanity as people thought. "

5,700 dead in Sweden from Covid 19 is not a prediction or speculation; it's a fact. What is pure speculation is the claim Sweden may now have herd immunity, especially when antibody tests show such a claim is false (

Deaths fall as citizens self lock down even if the Government does not mandate a lock down, this is what is happening in Sweden

We need a country to be the guinea pig and go for 100% infection to give us relevant numbers on mortality and herd immunity. I thought Sweden, UK and Netherlands would be the canaries but unfortunately their people balked at the price and are cowering in their bubbles.

5000-6000 was a prediction in early May. See link above. Perhaps even read it? A prediction that proved correct unlike the endless varied doom - some time in the future - predictions in the comments feed here.
You need to do more reading if you think you need "100% infection to give us relevant numbers on mortality and herd immunity".
"Our inferences result in herd immunity thresholds around 10-20%, considerably lower than the minimum coverage needed to interrupt transmission by random vaccination, which for R_0 higher than 2.5 is estimated above 60%."

The 5,000 - 6,000 wasn't a prediction (you even cited the relevant sentence but maybe you did not understand it ""IF" Sweden stops at about 5,000 or 6,000 deaths") but rather wishful thinking that if this was as bad as it got in order for populations to achieve herd immunity then a mortality rate of between 500-600 per million was all the world has to worry about e.g. open up NZ and you will only lose about 2,500 to 3,000 oldies then no more worries. Belgium has already put paid to that dream with a 848 deaths per million. The dying hasn't stopped in Sweden and would have rocketed past 6,000 if Swedes had carried on with business as usual, however, the growing death rate scared them all back into their homes for a self imposed lock down.

You seem to think Covid 19 has done its dash, when in reality it is only getting started.

"During the months of March to early June, all shops were practically empty, people stopped dining with friends, and families stopped seeing even their closest relatives," Furberg told MedPage Today. "A lock-down could not have been more effective. Handwashing, excessive use of hand sanitizers, and staying home at the first sign of a cold became the new normal very quickly."

Interesting. Perhaps the Swedes are not so indoctrinated with freedom propaganda as parts of the USA (and even NZ Facebook nutters).

Self preservation is a sign of intelligence. The problem with relying solely on self preservation is the unintelligent take the ship down with them.

Sometimes by escaping from isolation, it seems.

I do remember the Italian Doctors being forced to make choices of who loved and who died due to a lack of equipment and space.

And then they learned - like NY, UK, Spain etc. to not send Covid patients to recover in rest homes.
"Matt Hancock, the Health Secretary, said hospital patients who tested positive for Covid-19 would continue to be discharged into care homes despite evidence that the policy is fuelling outbreaks and deaths."

Must have a short memory if you don't remember New York's ICU over run and containers for temporary morgues.

He wants us to ignor that and the trucks parked up outside NY hospitals to cater for the dead.
With the limited amount of infections per the amount of US population and no abate to the infection / death rate. Now is not the time to be calling that it has reached anywhere near a peak. When we get too 100 million cases into US we'll have a much better idea of the distuction or lack there of.

"China announced measures to clamp down on precious metals speculation through leveraged transactions."
Good! Its been getting overhyped.

So those who want to buy Gold ( **what for really?! Price action is all there is) will have to buy the hard stuff and not paper stuff then. I wonder what that will do to the price?
(** Gold is the classical 'hedge' against Inflation. And one has to chuckle at its recent moves given that what we face is anything but an Inflationary environment. What are holders of anything Gold going to do to buy 'stuff' at deflationary prices when they want to?

Herd Theory - People who seek to control the behaviour of large numbers of other people, work on the experiences of those other people. Once people can be induced to experience a situation in a similar way, they can be expected to behave in similar ways. Induce people all to want the same thing, hate the same things, feel the same threat, then their behaviour is already captive - you have acquired your consumers or your cannon-fodder. RD Laing )


You can still trade spot on derivative exchanges without leverage though.

As for the inflation thing, if you double the amount of money in circulation, then at some point that money has to find a home. When you expand M2 money supply, that home will likely be investment assets - gold, houses, shares even crypto. This is why post GFC we saw the largest bull market in all asset classes in history - even though conventional inflation does not increase that much.

If I'm wrong and money printing doesn't cause asset expansion, we should have taxes at 0% and should print money till infinite.

Let me put it another way, last night I asked if I had $1000 where would I put it? Some people said cash. Yet cash has an inflation rate (currently) of 2.5%, with possible negative interest rates plus bank fees by end of year. What will that $1000 be worth (in today's value) in say a year, compared to property, shares, gold etc.

Shamino, problem is, it's a lot more complicated than that. At some point the money does have to find a home but as yet, most of the printing hasn't made its way into circulation yet. It's mostly still sitting as reserves and won't make it's way into the real economy until banks lend it out to the real economy or governments spend it into the real economy. And even then, people have to be induced to want to borrow the money and then spend it. There is also the issue of debt defaults. The debt that is paid back decreases the amount of money in the system, but so does debt forgiveness or debt defaults and insolvency. Population growth, resources extraction, trade, productivity and psychology all massively impact inflation.

After the Great Depression, it took years for inflation to return, but yes, it did return and yes, eventually asset prices went back up. If you look at the entire global market though.... there are still assets that have not recovered to their pre-GFC values (or only recently did). For instance gold has only just surpassed it's 2011 value. It took 9 years. Cold comfort to the opportunity cost of having owned stocks instead over the last 9 years eh?

It's far too simplistic to look at money printing as a guarantee for inflation because we won't know how that inflation plays out. Which market will inflate? And when will it inflate. We don't know when, what or how the printing will make its way into the real economy.

Your $1000 might buy you a huge amount more in 1 or 2 years, but significantly less in 7 years. Depends what you buy and timing that and recognising the opportunity cost is huge. Very few manage to time these things perfectly to get rich.

...most of the printing hasn't made its way into circulation yet. It's mostly still sitting as reserves and won't make it's way into the real economy until banks lend it out to the real economy or governments spend it into the real economy

And not just most, but all in the case of RBNZ reserves created to purchase government bonds under QE/ LSAP programmes. Just as the bonds have to remain on the RBNZ's balance sheet until sold or redeemed, so do the reserves. They cannot be lent into the economy.

But in the case of banks it is thus:

But from the point of view of the bank, it has acquired the security without giving up any cash; the counterpart, in its balance-sheet, is an increase in its liabilities. There is expansion, from its point of view, on each side of its balance-sheet. But from the point of view of the rest of the economy, the bank has ‘created’ money. This is not to be denied. Hicks (1989, 58) Link

But as you wisely note it takes a willing and creditworthy borrower for banks to engage such a process.

Tony Alexander;
"Plus, there’s one further factor to finish on. Getting a mortgage at the moment, according to the mortgage advisors I survey, could be the hardest since the early-1980s. At some stage the banks will ease their newly tight lending criteria. When they do a whole new wave of buyers with solid purchase ability will enter the market".

So Tony is as specific as "at some stage" and "solid purchase ability" (the latter being a very unpredictable variable for the next 12 months at least). And the former will be greatly effected by the banks assessment of the latter and therefore whether the reserves see the light of day, any time soon!

I suspect in this highly unpredictable climate, what is considered a creditworthy borrower might be a movable feast too.


Does Herd Theory also work for the election to make us all 'want' to vote for the One Supreme Leader ardern and hate the eyebrow raising Collins.

Yes it dose sound like it comes out of the Labour little red handbook.

also comes from the National handbook Kezza, and it is the biggest problem with democracy. Ideology rules. Even in this forum there are contributors to the discussion who are clearly quite intelligent, even expert in their fields of interest, but still blinded by their blue or red ideology. Those who cannot for the life of them give JA credit for what she has achieved. Sadly I believe democracy is wasted on them as the real power lies with the swing voters, those non-aligned to any party. And this is where the weight of any party's election strategy needs to directed. to draw those to their side of the divide.


I am not aligned to any Party.
I do give JA credit for is being CV free but also it needs to be pointed out that she dithered for a week longer that necessary / failed to control boarder entries, which resulted in a longer LD costing NZ by far more than it needed to be.
We are stuck between the two major Parties that are not really viable at being able to do their jobs effectively but the masses still stick with the 'my team 'V' your team' mentality. We need to move away from that and demand delivery instead of excuses.

The disappointing thing for me is if JA and her team have managed to execute even a fraction of their flagship policies, we'd probably all have been better off. Same if Bill English had been elected and his social investments had been allowed to mature. Instead, after years of being lectured about the Key era and 'celebrity politics', the left are more interested in having their turn and they are displaying the same neglect with the incompetence knob turned up a few notches.

Incidentally, Simon Bridges gave a Key-esque informal interview yesterday on the Spinoff (Vid is on their website) and I would have voted for THAT Simon Bridges with Nikki Kaye as a Deputy in a heartbeat.

"Social investment" has truly reached the status of legend, spoken of in hushed whispers these days. A fond memory of a forming idea, that by virtue of including the word "investment" gained instant repute with all "astute" and "savvy" self-identifying "investors".

The idea is nice, but nice in a rebranding kind of way.

As to the lockdown - a really hard decision to make, especially if you have a good understanding of the potential consequences. So I'm not so hard on them for delaying a little, at least until they had more information.

As to being stuck between two parties - I totally agree. It's really frustrating that almost all policies we get offered are coloured in some way by ideology. I'm not sure they are totally non-viable at running the country, but i do think that the filters on the information they receive and from which they make their decisions are probably too biased one way or another.

But this is politics the world over - you don't see a presidential hopeful going to a rally of non-aligned voters do you? Really at the end of the day they only talk to and want to hear from people who agree with you. Why do you think WP is so unpopular in the mainstream here? It's not because he's an elderly Maori lawyer. It's because he's almost certain to tell you a truth you don't want to hear.

Murray, you got it wrong way round, act (close border) first, even 10 days, grab more info & intelligence.

Why seem advocate Victoria, in preference to Queensland/NSW method in pandemic.
Remember the delay seemed for the shooter memorial, plus medics & other pollies were petitioning her to close the border...

Labour was polling badly in an election year.
The medical profession told her that the boarders needed to be shut.
If she did not do that, she would have lost the election if cases esulated.
It was a political move to act as her claims that we were prepared would have been exposed as untrue.

Remember the 'I will continue to hug people' a week before LD. 'we have 5 million masks and ordered 15 million more' 20 million masks and we were prepared??? Prepared for a few weeks at the amount if that.

And you can guarantee that there were plenty telling her that there was no way the country could survive if she closed the borders, including the RBNZ Governmer, her Minister of Finance and so on . Figuring out how to trawl through all that advice and pick the right path is never easy.

And a point to being prepared - having participated in some planning sessions and discussions on pandemics, I can tell you that even many of the 'experts' believed we were 'prepared'. But to the critics, no one had a clue. No one has recent experience of such a pandemic, simply because one of this scale hasn't happened. Yes CARS and the others gave an indication, but they were not on the scale of COVID. So while it is easy to criticise and say what should have been done, that is just BS noise. We elect and pay our politicians to make these decisions, and in the wash so far, our lot have not done too badly.

She dithered and stated she was still hugging people.
Despite the majority on here knowing exactally where this was going Jacinda had very little to no clue how bad it actually was.
She is still dithering with a recovery plan.

Agree some are partisan to the extent, regardless of what any issue might be, one party can do no wrong and the other no right. Not sure though if this has become more pronounced over former times, the media is now engaging much more along these lines and obviously nowadays far more outreaching with internet sites. However the “partisans” of today are certainly not committed like those of old, if you look at actual party membership as registered, especially the two majors.

We are social, and often gullible, beings.
Whether it's housing, politics clothes etc we often follow the herd.
And there is wisdom, as well as foolishness, in the herd...

The wise are always in the minority - statistically it cannot be any other way.

The rest vote national.

So who do the wise vote for then? ACT?

No way. I don’t want to be in his tribe.

"Tribe". Therein lies the problem with politics.

Tribe and politics are synonymous.

China hasn't been hoarding gold and silver to play tidly winks.

As I understand it, if the speculation on the paper PM market stops there is only physical. That would not allow for Oz's to be sold several times over and esperate the price difference between paper and physical. That would have a massive effect on the US players and wipe them out overnight if they had to deliver their contracts if they had sold over the amout they hold.
Not an expert, maybe others could comment if this maybe the case.
We know China has been stacking for a long time and I doubt that they are in the game to devalue that investment.


New reports are emerging (one here) that COVID leaves lasting heart damage, even if only suffering a mild case. Median age of a study was 49.

Don't catch it, you won't enjoy the experience even if it doesn't kill you!

Yep it can be nasty for sure.
For the majority it is still.mild - moderate, though.
But yeah, I would prefer just not to get it

RE US Federal Reserve comment: "will increase its holdings of Treasury securities and agency residential and commercial mortgage-backed securities at least at the current pace to sustain smooth market functioning".

Take it away Dick Fisher

MR. FISHER. In summary, I want to mention that, as I said earlier, most of these variations that have been suggested are very un-Bagehot-like. And what I mean by that is, twisting [or QE] entails purchasing assets that investors are fleeing toward, not assets that they are fleeing from. Link

Moral of the story : Buy / Invest / Speculate as much as for fed is backing up and will never allow it to fall so the only way is up, come what may for Fed has the mint to print to eternity.

New Economy = QE

And that makes it difficult for China to 'punish' Australia for its foreign policy tensions.

Is this an admission Australia deserves to be punished by China for it's diplomatic errors of judgement.?

No, that's why it's in quotation marks. It's tongue-in-cheek as China likes to whip smaller nations into submission

In that case Australia should withhold the supply of iron ore to China as an act of defiance and that would end the speculation.

Trade often marches on, despite politics as the country's population depends on it e.g. China importing food from US despite rising tensions.

Past time to choose politicians aligned with the needs of the citizens and not those of the US and other five eyes nations.

Problem being is they promise they'll meet the needs of the citizens but fail or refuse to do so once in the driver's seat.

That's democracy - always has been - a plaything for the entitled and the rest can eat cake.

What's the alternative/solution to getting outcomes that align with citizen's needs?

Define 'citizens'. Define 'needs'......

Citizen - born in that country
Needs - equal opportunity, food, shelter, freedom of choice

Very narrow view that is

How so?

Most countries allow people not born in that country to become citizens. Also, many countries do not grant citizenship to babies born in their country (to prevent citizenship shopping by pregnant women).

Is that not a wise idea though to deter people entering a country to take advantage of healthcare, benefits, infrastructure etc?

You're the one calling them citizens. Ask yourself.

Thanks for wasting my time. Its been a pleasure

The Kiwi$ can only strengthen against the US$ in light of whats going on .

88 cents to the $ is still my magic thumb-suck number

The dollar and US government bonds have been losing their appeal as safe-haven investment destinations of late. Instead, gold and alternative currencies, like the Swiss franc and Japanese yen, have become preferred sanctuaries for investors looking to shelter from the economic fallout from Cobvid-19.

Over the past week, trends that had already begun to appear in financial markets accelerated. The dollar fell to a 22-month low and general consensus is that the world’s reserve currency may remain under pressure for some time to come. Gold surprised even the most optimistic expectations when it broke through $1,900 – a record high – and headed towards $2,000 before taking a breather.

Central Bank moves metals and markets. diectly and indirectly. Again and again. What is new ?


Our problems are just starting .

This impending depression is somewhat like the pattern from 1929 to 1933 , the collapse is not linear , rather its staggered , and has brief moments where everyone thinks things are back to normal

The stock market punters behavior is like someone with a severe gambling addiction .

Boatman in your eyes, are we approaching a period of sustained deflation? If so, cash is king then?

youngdumbandbroke it's very hard to predict anything in this sort of climate and it massively depends on how much money you can afford to lose and your risk appetite/exposure. Do you have dependants, what's you % savings rate, DTI, how far are you from retirement, jobs security, access to credit etc.

It's always good to have some cash on hand so that you can ride out inclement weather but beyond that, it really depends on what your risk appetite, vulnerability and goals.

Personally, only debt we've got is a mortgage of 370,000 at 3.55% and combined gross earnings of 150,000. 38 years from retirement, no dependents, secure jobs with progression opportunity. Trying to save between us at least $500 a fortnight. Our mortgage is coming up for renewal October.
Main goal is to move to a place with a bigger shed and more outdoor space. Other goal is to find another income stream, just unsure at the moment with all the uncertainty if I should just hang fire for 12 months and save.

Get on Onlyfans mate!

You may have a valid point!

@youngdumbandbroke ..........I really dont know., and you are asking someone near the end of their working life

But if you ask me what I have done , I have sold almost all of my equity portfolio in 2017/18 ( way too soon ) and I am 100% in cash , and even my Kiwisaver is in the most conservative fund possible ( and has lost almost no value )

So even if we end up with deflation , your cash is not losing value , in fact its buying power is enhanced if prices fall .

I would suggest the best thing to do is pay down any debt , and build up a nice cash reserve to take advantage of opportunities that come up in 2021 .

I also dont see the property market bouyancy lasting , FHB's will be in the market for a while but that sector will decline as those who have a deposit and the income enter the market . Once they have bought a first -house they are not likely to buy another for some years .

What I am suggesting is there is a finite number of FHB's

Will be interesting if we see deflation in consumer items but inflation in asset prices - which would typify the problem with the current form of economics.

(i.e. CPI falls so we drop interest rates further, asset prices rise, CPI falls further so we drop interest rates further, asset prices rise...repeat until too much debt enters system and decouples).

@independent _observer are correct , but think about this .......... that self -reinforcing cycle of lower interest rates and asset price inflation cannot go on forever.

Or can it ?

I think not, and here's why ........It needs the Banks to keep lending more and more and more against assets that have no logical or intrinsic reason or justification for the rise in value , it becomes reckless lending at some point , and that will have consequences .

At some point the music will stop playing , and hopefully the RBNZ caps bank lending long before it gets that far out of hand .

We are seeing it now with banks tightening lending and will only get tighter if as you say house prices start to fall. For me, I already have one asset (house), so won't be looking to acquire any additional ones for a long time so looking to just pay debt and save the leftovers. This should shield me from asset price inflation but allow me to take advantage of the deflation (hopefully) in consumer goods.

The thing about house prices is that its relative to the amount of debt that banks are willing to lend against the market - not necessarily the amount of inflation that is present in the economic system. High inflation should mean high interest rates, which would limit the amount of debt that can be serviced (rates rise, the quantity of debt will fall, unless wages rise at the same rate as inflation, otherwise its debt defaults...) - especially under stagflation which is where many think we could be heading.

When i was nearer your age and in a similar stage of life, the GFC hit. I used to leave my rainy day cash monies in a mortgage offset account.

When you remortgage in Oct, maybe you could consider moving some of your borrowing to a revolving credit facility? That way, the cash is working for you a bit better than it would in a TD but it remains completely liquid should you want to move or invest it. You will always have the option to fix it later and let's face it, rates are unlikely to be higher in the short term. I am all for paying off debt, but if there is tightening and debt becomes harder to get you may regret losing the option.

In terms of your goals though... do I assume you have no plans to start a family? Because you may want more a bigger rainy day fund if so.

What do you mean by revolving credit facility? I'm a bit naive in the financial area. And no plan to start a family.

Out getting a coffee and watch a customer walk in, buy a coffee and witness the chitchat go from cafe staff saying they can’t afford to buy a house to the customer recommending gold then teaching the entire cafe staff how to buy gold via their iPhones. The strange times we live in.

Is that the gold market equivalent of the shoe shine boy giving Joe Kennedy stock tips?

ginger - that was the thought going through my mind at the time.

Only just starting to be common knowledge, we are a long way off the shoe shine boy days yet. Once it becomes general conversation in mass, it will be time to down size and take some profits.
We are seeing a 'shoe shine boy' in stock market playing by Robinhood gamblers.

Uh huh. Definitely no PM bubble.

PMs are not in a bubble. They have been in a secular bear market since 2011. Silver isn’t anywhere near its 2011 peak and both gold and silver are seriously undervalued relative to stocks and real estate.

Agree Albert - its quite possible the current bull market for gold/silver is just starting. Could be a bit like a bitcoin rush given the way people are sharing information/trends these days and like I witnessed in a cafe this morning, a guy teaching the entire cafe staff how to buy gold via their iphones 5 min after simply walking in to buy a hot drink - I wonder how many other similar interactions are happening around the world as I type this? I then opened the paper to see multiple articles about gold, including Liam Dann, after barely seeing anything in papers about gold for the past decade.

Seriously undervalued relative to things that are seriously overvalued?

Given QE and central bank behaviour - how does one now determine what is overvalued?

So, so far, this year 0.009% of the world population has died from CV

I can only assume you're attempting to be deliberately misleading with that stat. Or perhaps mindlessly parroting someone with that intent.

Clearly a huge chunk of the world doesn't have the health systems to have any idea what their covid impact is. So taking deaths only from the first world and dividing by the lot is nonsense.

Just stating facts from the numbers that are known 662'000 deaths divided by 7'500'000'000 people = 0.0088%

Uh huh. Both above and below have already explained why this is meaningless and misleading.

@Yvil some countries , such as Zimbabwe for example only tested 20 people for a whole month ( in a population of 15,000,000, ) .About 40 deaths have been recorded there as COVID cases , but in the absence of testing they dont have a clue what people are dying from .

Australia on the other hand seems to be doing lots of testing , and have reliable stats . And breaking news today is that they are looking bleak in Vic.

We have very reliable stats here in NZ

If you take a look at South Africa ( a medium income quite sophisticated economy ) you will see they also dont konw whats going on there .

They have reported 6,000 COVID deaths as of today , but recorded something they now call " EXCESS DEATHS " which is the increase in deaths over June last year . Those EXCESS DEATHS are sitting at 22,000 for June 2019 v June 2020 . They really dont know the extent of the problem and their Death Certificates are , according to media reports, simply have the NATURAL CAUSES box ticked .

They dont actually know the cause of death , and in rural Africa, some deaths are only reported days later, and the local Police Station, District Commissioners office or Registry of births and deaths , often way after the burial has taken place

Even the WHO does not have the whole picture

With news reports of 17000 excess deaths in SA for 5 weeks to July 14, as well as a youngish median age of about 28 for SA (vs 47 for Italy Japan and Germany), that would point to likely several million people being infected in that period. Avoid the 3rd world for the time being.

Watch this space....

Officials fear further cases of COVID-19 after two 19-year-old women triggered a health emergency in south-east Queensland by returning from Melbourne and visiting schools, restaurants and a medical centre.

Given the Ark strategy.
It would be good to understand how the nz contract tracing has performed basis the passenger to Korea positive test. And 2nd test positive...
Like a system check.
Tuesday the airport Maccs was told passenger had dined in & they, Maccs reviewed the CCTV video

If passenger picked it up in Singapore, that's an unusually quick incubation period (timeline so far outside of usual). Info needed is if passenger gets symptoms, what date that.

Not good.

Dr Bloomfield says health authorities were doing further surveillance testing to rule out the possibility of community transmission around the case and urged anyone who was in Queenstown between 1 and 4 July and people in Manurewa to get a Covid test if they had symptoms.

It's fine. They're being cautious, which is the right thing to do. Plus it gives the contract tracers some pratice.

And a near miss

A man allegedly escaped from a managed isolation facility after claiming to be a worker.

The man arrived from Brisbane on July 29 and had not yet been tested for Covid-19, which was scheduled for August 1, Webb said.

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