Days to the General Election: 19
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China reverts to old but unsustainable playbook; EU posts ugly Q2 GDP; US household data unsustainable; Victoria in 'state of disaster'; UST 10yr yield at 0.53%; oil holds and gold near record high; NZ$1 = 66.3 USc; TWI-5 = 69.6

China reverts to old but unsustainable playbook; EU posts ugly Q2 GDP; US household data unsustainable; Victoria in 'state of disaster'; UST 10yr yield at 0.53%; oil holds and gold near record high; NZ$1 = 66.3 USc; TWI-5 = 69.6

Here's our summary of key economic events over the weekend that affect New Zealand, with news markets are starting to worry that the Chinese economic revival may not be sustainable.

In China, their official factory PMI expanded marginally faster in July than in June. Their service sector PMI is expanding much faster, but slowed marginally in July than June. Both were boosted by construction activity, on official stimulus priority so it may not be sustained. And new order growth was modest in both sectors even if they were expanding. But we should note that the rival private sector survey, which will be released later today has been recently posting more expansive results that these official surveys.

China has reverted to its old playbook of local construction projects and encouraging exports to weather this economic crisis. In fact, new data shows it granted NZ$175 bln in export tax relief in the first half of 2020. These rebates “effectively reduce the funding pressure on export companies in China and reduce their cost of funds.”

Elsewhere in Asia, June industrial production in Japan has come in better than expected and positive from May. And retail sales in South Korea came in much better than expected and a large +6% rise compared with the same month in 2019. Both are positive early signals, just like the Chinese PMI data.

However, Taiwan GDP growth for Q2-2020 didn't eventuate and there was a surprise small contraction for them.

In Hong Kong, their jobless rate has risen to its highest in 15 years. And Beijing is pulling some crude strings, banning liberal candidates, postponing their election for a year, and allowing the existing Assembly to expire so they can appoint interim legislators. It is a pretty disgraceful sham, using the pandemic as cover. But it is what autocrats do.

In the EU, GDP dropped -14% in the June quarter from the same period in 2019 in the steepest one quarter drop in history. That follows a -2.5% fall in Q1-2020 on the same basis. Both German and French results were ugly.

The other large economy, Japan, is yet to report GDP results, but they are expected to show a Q2-2020 fall of -26% annualised rate (about -9% in the second quarter alone).

The US released personal income and expenditure data for June and the results seem unsustainable. Personal income fell -1.1% on top of the -4.4% fall in May. But personal spending rose +5.6% in June on top of the +8.5% rise in May. Dipping into household reserves and savings to maintain spending can only last so long, and this data suggests they are much closer to a widespread earthquake in the way American household budgets are managed.

American consumer sentiment is slipping too. It sank further in late July the coronavirus weighed increasing on the population. In the last four months, this sentiment Index has recorded a decline of -25% from the same period in 2019. The ending of some income support in the next month or so isn't going to help sentiment.

There is some good news on the industrial front however. The bellwether Chicago PMI rose more than expected and is now expanding after twelve months of continuous contraction. Particularly encouraging was the snap-back in new orders.

But the inability of Federal authorities to control its debt and the ongoing deterioration has seen ratings agency Fitch warn it could downgrade US Treasuries to a 'negative' outlook.

In Australia, Victoria declared a 'state of disaster' over the weekend and imposed stage four lockdowns for six weeks, including a 8pm-5am curfew imposed on Melbourne, and people are restricted to 5km from their home. However workplaces are to stay open. Regional Victoria will shift to a lighter stage three lockdown.

The pandemic crisis in Victoria is dashing expectations of a V recovery, or in fact any recovery in the whole country. Aussie complacency, right down to individual household levels, is undoing them fast now. The Victorian state government is at a fiscal cliff, appealing to Canberra for emergency financial support. But the fiscal cliff is closer for all Australia now.

In Australia, there have now been 17,923 cases reported, another +1018 over the weekend, and still very much concentrated in Victoria but also small and growing pockets in both Sydney's suburbs, and now Queensland. Their death count is up to 208 (+12). Their recovery rate has slipped to 58%. There are now 7295 active cases in Australia (+566) and almost all are community transfer.

The latest global compilation of COVID-19 data is here. The global tally is 17,852,000 and that is up +517,000 since this time on Saturday. Global deaths reported now exceed 680,000 (+6,000).

A quarter of all reported cases globally are in the US, which is up +122,000 from this time Saturday to 4,791,000. US deaths are now just over 158,000 and a death rate of 478/mln (+7/mln). And the net number of people actively infected in the US rose +44,000 over the weekend to 2,261,000.

The UST 10yr yield is little-changed changed but softer at just over 0.53% and now a new record low. Their 2-10 curve is marginally lower at +42 bps. And their 1-5 curve is flatter at +9 bps, while their 3m-10yr curve is unchanged at +44 bps. The Aussie Govt 10yr yield is down -1 bp at 0.83%. The China Govt 10yr is up at 2.99%. But the NZ Govt 10 yr yield is sharply lower and now at 0.75% after another sharp drop at the end of last week.

The gold price will start this week at a very high US$1,976/oz. Headlines will no doubt light up as soon as it crosses US$2000/oz.

Oil prices start the week firmer than this time last week. They are now just under US$40.50/bbl in the US and the international price is now on US$43.50/bbl.

But the Kiwi dollar is starting the week with a softer tone and back at a similar level to this time last week at 66.3 USc. Against the Australian dollar we are softer than a week ago at 92.9 AUc. Against the euro we are -¾c lower in a week at 56.3 euro cents. That means our TWI-5 is at 69.6 and about -50 bps lower for the week.

The bitcoin price is little-changed today at US$11,279. 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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Obesity = a likely bad case of the Covids.
those rest home bosses were ahead of our civil servants; they deserve knighthoods but all they did was watch the news from Italy and act.


Crazy that people who were watching the international news knew the dangers of CV long before the our Govt knew.


Crazy that for some reason New Zealand is essentially Covid free when we did completely the wrong thing, huh.


Aparentally we must swallow the PR spin and not point out what actually happened.
If the rest home's hadn't taken those steps we would have had a lot more deaths.
If the Govt had acted, our LD and economic effects would have been a lot less.
You say it's done, I say, yes it's done but it could have been done a lot better.

Let me guess... you are voting for Advance NZ party in the general election.


Point out failures, get attacked. Didnt you mention the CCP above.

The MoH should not allowed to rewrite history. Here is the on the ground at the time descriptions on what and how MoH left:
Today's submitters are:
- NZ Medical Association
- NZ Aged Care Association
- Pharmacy Guild of NZ
- NZ Disability Support Network
- NZ Dental Association
- Professor David Skegg

submission to Parliament- 22 April 2020.

Fortunately it's on the record.

CCP? Where did I mention CCP?

You aren't pointing out failures, you're trying to validate your points with hindsight while ignoring the sh*t tonne of other considerations which makes such a decision far from the black and white proposition you claim it to be.


If we had actually gone 'hard and early' like MOH wanted then we would have had far lower transmission and the damage would not have been so great. Fortunately we have media outlets giving the PM Op-eds during a campaign period to make statements like 'the borders were closed on March 19th' which is blatantly false.

Exactally G V. PR whitewash.


But why stop there... the whole world f&#ked this up and could have done better. Imagine if the WHO had suggested border controls, moderate mitigation strategies and contact tracing back in late Feb when Wuhan was locked down and everywhere in the world had just actually done that without all the drama and political nonsense? We'd probs be globally Covid free by now.

But no, instantly there were geo-political tensions. Even when NZ closed it's borders early to China it was accused of racism. Imagine if the whole thing had been geo-politically neutral and we could have rationally scrutinised the science, erred on the side of caution for 3 weeks till we knew more without conspiritard alt-righters obsessing or rabid, lefties harassing everyone?


Imagine if the WHO wasn't a corrupt entity who's leader has some seriously questionable history in Tanzania and with Robert Mugabe?

After all the dust has settled, we probably need a proper look at the WHO. They have some culpability in this mess.

They screwed up big time.

Well said. Across the board the response was pretty terrible. Most countries acted too late, based on poor information and a lack of strong guidance from governing bodies but mostly through a lack of planning and preparation.

But I'll guarantee that the majority of the people bitching about the response weren't identifying the potential risks of a pandemic in the years before covid, so have no grounds to say "you should have done better".

In that respect we should start talking about NZ lack of PM holdings when centeral banks have been buying up large arround the world for the last couple of years.
We take it that our leaders sit down and make provisions for the future without being asked to. Maybe we should start micromanaging to make sure we are prepared for the future.

"If the Govt had acted, our LD and economic effects would have been a lot less" - can you expand on that sentence Kezza? 7 weeks lock down seemed to be the bare minimum around the world..are you suggesting we could have avoided it all together.

MOH pushed for events and such to be canceled in early March on the basis it helped with mitigating spread in China. Yet we persisted with the March 15th memorial (indoors!) and Pasifika until the 11th hour (and everyone had done all their travel to be there for them).

My question was on lockdown period and current economic affects? Would anything have changed as of today?


The point is that if the Govt had acted like the rest homes, it would have been less tahn 7 weeks. Most likely 4 weeks. That would have resulted in less borrowing and NZ would have been more resilient to the economic effects that are to come.
Just because 7 weeks was a standard, it dose not mean we need to be followers. 'If everyone jumped off a cliff, ... '.

Yes, is your answer.

Totally disagree ...especially more resilient to economic effects to come..we are are here due to good management and your daily rants will not change that (unless you are elected to office)


You don't agree that a faster action would have lead to less of a lock down and less borrowing.
Sorry but it is a fact, that paying people to be off work for 4 weeks instead of 7 weeks costs less.

If the government had not ignored the MOH on the 6th of March it is arguable that we would have had a lockdown at all. Note the word prevent in the title.
Rationale for Border Control Interventions and Options to Prevent or Delay the Arrival of Covid-19 in New Zealand:Final Commissioned Report for the New Zealand Ministry of Health

and the 40,000 per week returning NZers would still have returned to the country, but a country not in lockdown, spread it, and caused the neccesity for a lockdown ....

The subsidiary is still going and we are not in lockdown? Its a global world Kezza

Paying a good portion of NZ for 4 weeks of LD, costs less than paying out for 12 weeks. Unless they were paid 3 times as much...

Exactly if the boarders has been truly "Closed" 2 weeks earlier we would have had no community transmission and possibly we would have not even needed lockdown at all. Anyone watching the international news could see this coming but we are to reliant on overseas tourism so its did not happen in time.

Fairy dream thinking..with the amount of tourism we have it was here already - lockdown would always have been needed!

Upon announcing the closed borders, we had a Palmerston North sized cohort of returning kiwis still to absorb. We needed a lockdown regardless. By accident or design, it was actually perfectly timed. Returnees returned to a country in lockdown , no need to build 400 Whangaparoa naval bases to quarantine them off. The potential spread was stopped at each of their households.

You want perfection?
Thomas Edison failed 1000 times before he got it right

What he did do is he evaluated his failures and learnt from them. This is exactally what we should do instead of just accepting.

What are you list of five best elements or features of the management you find first class?

Nice question Henry.

If every country had implemented border controls and mitigation strategies back in late Feb/early March for 2-3 weeks this would have all been over months ago. Pretty much no one did. So here we are. Pandemic, economic shit storm and epic geo-political tensions. Classic homo sapien behaviour.

Wuflu was in most large countries in January. News junkies like myself were aware of the Wuhan lockdowns occurring in late Jan A HUGE RED FLAG! and asking for NZ border quarantine then, I bought pandemic emergency supplies at that point. We finally got proper border quarantines in second week of April, 10 weeks later. Either MOH were asleep at the wheel, had bad judgement, or government were incredibly tardy in acting on their advice (I'm picking the latter). All govt focus was all on the PR opportunity of March 15th memorial rather than heading off the economic disaster of wuflu. Slow and Soft.

Foyle yeah it was in many countries in Jan. I was also freaking out back then too but as a science junkie rather than a news junkie ;-) . It wasn't just our MOH who didn't respond early on, very few countries did. Taiwan clearly knew the shit storm that was about to be unleashed. I can't remember who it was, but someone else on here linked to the Taiwan CDC showing that they were on this in late December but ignored by everyone (for geo-political reasons obvs).

The earlier we had known and responded the better, as a global community. What i'm saying is, that we didn't, almost no one did. The virus was instantly politicised and then suddenly it wasn't just a novel virus we were facing but major diplomatic and trade crisis. NZ did respond comparatively early but got a telling off from the WHO and China for doing so. Which is tricky because NZ is heavily reliant on trade and diplomacy.

The WHO totally f&%ked up and made the issue even more politicised from the get go. It was the WHO's job to issue global health policy but they were slow to do so, ignored Taiwan and criticised countries like NZ who tried to take protective early action. The WHO are supposed to be neutral. They are clearly not neutral. Only a neutral global health organisation is useful in a pandemic. Any kind of global health organisation that is corrupted politically or otherwise in some way is potentially more harm than good.

Trump's criticism of WHO is totally justified. He may be wrong most of the time, and a moron most of the time, but on this he was right.

Do some reading chaps - but I doubt you will give any credit as your voice sounds good in your echo chamber
Three reasons why Jacinda Ardern’s coronavirus response has been a masterclass in crisis leadership - Imagine, if you can, what it’s like to make decisions on which the lives of tens of thousands of other people depend. If you get things wrong, or delay deciding, they die.

The resthome mangers got the master class mark, Jacinda got a pass.

Ah, the ABJ!

She did delay deciding. The spin of 'hard and early' effectively comes down to 'Please don't ask questions about the period from 6/03/20 to 19/03/20'.

Well - so you say. What is your bias, again?

Are you going to respond to the point I've actually made or look for a way to undermine me for having made it?

He only replys with pro Labour.

Your list of 3 is elements of PR, remember the approx. 15 million spent on those same consultants, $3,200 a day?, $400 per hour.

Have you got anything else?


Give it a rest Kezza.

Nobody's listening, Kezza - we're living in the now.

kezza R:hosking :: xingmo:CCP ?

Can't stand the guy, is he pointing out the real events that happened as well?

Here are some real events for you:
NZ is essentially COVID (and restrictions)-free, while the rest of the world is still struggling.

We all know it could have been done better but somehow if you point out that fact you are lots of flavors of crap.
We must learn from our mistakes, instead of whitewashing over them so they never occurred.

Sweden is living in the now. "The country's healthcare system also initially struggled to cope with the impact of the virus, with 45 people at one point being admitted to intensive care every day, though that figure has now fallen to only a handful of people each week. ...Speaking to Unherd about his country's response last week, Tegnell said: “It is better to have a more complete discussion around this in say 12 months, after next summer.
"Then I think we can more fairly judge what has been good in some countries and bad in other countries."

The now is, it is election time and there are massive global issues going on and we need leaders that deliver.
Labour looks better than National at present but that dose not mean that we have to accept everything as perfect.
We must learn by looking at our failures, that is how we learn, not whitewashing over them.

That's odd - I was taught that we should learn from our successes.

We actually learn from both. If we only learned form our successes, we would have a lot less of them.

If you are talking about the COL successes did you learn much?????

Don’t waster your breath on the leftie troll.

Are cheap shots your answer to everything?

OB calling that others are making cheap shots.. lol

It is what autocrats do. Great summing up of China in general.

The Chinese 'export tax relief' is nothing but an incentive to fire up the old machines, manufacture in bulk and flood overseas market with cheap products.
Good time to raise anti-dumping measure before our quality retailers are replaced by dollar stores in every corner of our streets.

Too late for that.

"We are unlikely to return to the system of finance capitalism which is crumbling before our eyes".

Someone should educate Morning Report.

classic crypto pump and dump. It actually went to $99,964 USD on the futures markets on binance at one point:

I did laugh to see the weekends activity summed up as "little changed" above.

14% drop in less than two minutes!

Yes I smiled to myself after buying at NZD $5k as well

classic crypto pump and dump. It actually went to $99,964 USD on the futures markets on binance at one point:

Sometimes the crypto community is its own worst enemy. Rumours abounded y'day including one that suggested Ripple (XRP) was behind the dump. Coincidentally, XRP rebounded much more quickly than BTC or ETH.

Those DRC kids need to get busy. 'In 2019, the world produced about 160 gigawatt hours (GWh) of lithium-ion batteries. That's enough for a little more than three million standard-range Tesla Model 3s—and only if we use those batteries for cars, and don't build any smart-phones, laptops or grid storage facilities.
...That sounds like a lot until you see that the world produced nearly 100 million cars, vans, buses, and trucks in 2019 alone. There are around 1.4 billion motor vehicles in the world today.'

No one cared about lithium mining until petroleum countries had something to lose. A conscience of convenience for sure.

Yeah, just like no one cared about rainforest until the government mandated explosion in the "demand" for biofuels.


No one cares about shit until it's on their own shoes.

We're a really short sighted species.

Just vote green, buy an EV, and then one can pretend it doesn't stick.

Profile that's just bollocks. Sheer, unmitigated bollocks.

NZ farming has rainforest depletion on it's conscience. Period. Spin on their behalf should be exposed for what it is.

As do the moa hunters - but to pretend no one cared about child labour until EVs started cutting petroleums lunch is in the weapons grade bollocks department.

I don't recall hearing concerns about the lithium in batteries of iPhones when we were throwing them away every year. Besides, there are plenty of sources of ethical lithium from around the world. The 'scandal' with EVs was actually cobalt, which the market has reacted to by coming up with chemistry that use a fraction of the amount used in previous cells or ditching it altogether. Currently manufacturers are trying to shore up nickel supply chains as well as ethical lithium for future expansion.

Yes, that is why I included the link about cobalt mining in the DRC above. Which somehow morphed into lithium mining downthread. You don't have to look hard to find out about the iPhone supply chain. This from 2016 when EV car sales had only just cracked a million units gloablly.

The pressure valve, I guess, in addition to price incentives to reduce usage is that the science behind lithium's behaviour in a battery setting isn't that well understood. It's conceivable we could get to a point where we need less of it and the batteries we build last longer. There's still quite a few gains to be had when it comes to making better use of the Li we do mine; leeching is effective enough but the recycling process is messy. I'm guessing we'll make inroads into that over time as well.

Compare to the alternative:

The NIWA Vehicle Health Effects Report estimated that 399 people above 30 years of age die prematurely per year due to exposure to emissions from vehicles in New Zealand

570,000 children under 5 years old died from respiratory infections, such as pneumonia, tied to indoor and outdoor air pollution. Sources of air pollution include smoke from household stoves using unclean fuel (such as charcoal, coal and crop waste), as well as secondhand smoke and emissions from vehicles

2 billion children live in areas where outdoor air pollution, caused by factors such as vehicle emissions, heavy use of fossil fuels, dust and burning of waste, exceeds minimum air quality guidelines set by the World Health Organization

Estimates range between 46 and 59 U.S.-wide excess deaths caused by VW's cheating diesel cars

Chinas PMI expanded. Hong Kong air quality is still exceptionally good.

These statements are completely nconsistent with each other.

Hong Kong air quality... yup not many tear gas canisters have been fired.

Not really. The events in HK have been very unlike the rest of china as of late, and HK is now a minnow compared with mainland china.

Melbourne Police hand out $250,000 in fines in 24 hours to 'appalling' COVID-19 rule breakers

This is really good indication of where the world is going.

Anyone who blindly thinks the Government handled this Covd thing well is blinkered .

They made a total hash of things , but were masters of spin , lies and deception..........with platitudes from Cindy at 1.00pm every day about how good they were doing .

Meanwhile no tests were being done on arrivals in NZ

We ought to have tested EVERYONE on arrival when we knew it was spreading at the end of January , and not waited until the end of March .

And then they continued to allow people in without testing on arrival into April and May !

I am fine with what happened but what really gets me is the PR whitewash painting ot as the best the world has ever seen ticks me off.
We need to learn from the events to do better in the future.
We get one shot at the coming economic bomb that will hit NZ. The message needs to sent that we know screwups were made and that it is not acceptable or the preparations for what is coming will be lack luster.

Maybe leave the 'Cindy' out mate. She did a hell of a lot better than anyone thought possible and we should give her credit for that.

I see five out of 9 COVID testing stations in Auckland are now closed, and the remaining 4 closed on weekends; despite Chris Hipkins urging more to get tested.
It is the DHB's fault but Bloomfield and Hipkins and the PM are charged with keeping these overpaid pennypinching DHB heads in line, we need a year or two of extreme vigilance to keep the bug out.
The cost of the clinics and the PR required to keep people swabbed is minute compared to ending up like Victoria.

Effective management mate. If we had effective leaders it wouldn't be an issue.
I know forsure taht if DHB's were going against my directive if I was running the show, I would be taking a serious look at their funding and if they were delivering the required services.

Boatman, and they released ? 1500 from quarantine/isolation without testing over a month ;just before Thelma and Louise lied and hugged their way to Wellington

Days to the General Election: 19
See Party Policies here. Party Lists here.