Dairy prices rise; US retail sales up, US Govt tackles Google; Chinese house prices rise, Taiwan exports rise; Aussie jobs shrink; RBA signals cut; UST 10y at 0.79%; oil and gold unchanged; NZ$1 = 65.9USc; TWI-5 = 69.2

Dairy prices rise; US retail sales up, US Govt tackles Google; Chinese house prices rise, Taiwan exports rise; Aussie jobs shrink; RBA signals cut; UST 10y at 0.79%; oil and gold unchanged; NZ$1 = 65.9USc; TWI-5 = 69.2

Here's our summary of key economic events overnight that affect New Zealand, with news American competition authorities are tackling the dominance of big tech, finally.

But first up today, there was another dairy auction overnight and another small rise in the overall price. This is the third in a row and the smallest gain of the three. Rises for WMP (+0.3%) were smaller than the futures market had indicated. But there were good rises for butter (+3.3%) and cheese (+3.0%). In New Zealand dollars the gains were slightly better. Still, since this time last year, prices are still -9% lower in New Zealand dollar terms. It is very unlikely today's event will change any farm gate milk price forecast.

American retail sales were up +2.5% last week compared to the same week a year ago and that is better than the prior week's result.

US housing starts and building permit data for September recovered from the unexpected August stumbles - although for housing starts it wasn't a particularly strong bounceback, one made weaker because the August data was revised lower.

The US Justice Department filed an antitrust lawsuit against Google, claiming the US$1 tln company uses its market power to fend off rivals and said nothing was off the table, including a breakup of the giant tech company.

Across the Pacific, Chinese house prices rose on average +4.6% in the year to September, marginally less than the +4.8% rise in the year to August. Among the 70 big cities in this survey, that range was from -2.9% to +16.8% annual change. Increases in both Beijing and Shanghai were mid-range.

Taiwanese export orders rose +10% in September, building on the very strong gains of July and August.

Hong Kong's jobless rate worsened in September to 6.4% and extending their dismal run.

In Australia between the week ending March 14 and October 3, payroll jobs decreased by -4.1% and wages fell by -3.3%, according to official data. That means -440,000 jobs were lost over that period. Over the two weeks to October 3, the number of jobs fell almost -1% and wages paid fell -2.2%, reversing improvements in the previous fortnight.

And last weeks revelation that the RBA would set its monetary policy based on their actual inflation, rather than inflation expectations was given more sunlight in yesterday's RBA minutes release. It is a major dovish shift and the AUD is taking a hit after the policymakers highlighted concern over its relatively high value. The NZD is sinking in sympathy. The RBA is now "certainly" going to cut its 0.25% policy rate on November 3, probably to 0.10%.

Wall Street has started today with the S&P500 up +1.1% in early afternoon trade. Overnight European markets fell by an average of -0.5%. Yesterday, Shanghai ended its Tuesday session up +0.5%, Hong Kong ended up +0.1%, and the large Tokyo exchange was down -0.4%. The ASX200 ended down -0.7% while the NZX50 ended up +0.6%.

The latest global compilation of COVID-19 data is here. The global tally is 40,550,000 and up +364,000 in one day. It is first-world countries that seem to be having the most difficulty containing the new wave. Global deaths reported now exceed 1,120,000 (+6,000 per day).

And Europe is locking down again and that will further embed their economic recession. They are closing its borders to most countries. The only exceptions are Singapore, Australia, China, Japan, New Zealand, Rwanda, South Korea, Thailand and Uruguay.

The largest number of reported cases globally are still in the US, which rose +78,000 in yesterday's update to 8,472,000. They are clearly now in a third wave (initial was in April, then a larger one in July, and this new one threatens to be larger again). The number of active cases is at 2,732,000 so many more new cases than recoveries. Their death total is over 226,000 and still rising at +1000 per day. If they choose 'herd immunity' as a goal, this will rise very dramatically because that will require about six times more infections than at present.

In Australia, there have now been 27,430 COVID-19 cases reported, and that is a jump of +31 more cases than we reported yesterday and a big spike in Perth. Deaths are unchanged at 905.

The UST 10yr yield is firmer this morning by +3 bps at just on 0.79%. Their 2-10 rate curve is steeper at +64 bps, their 1-5 curve is also steeper at +21 bps, along with their 3m-10 year curve, now up at +71 bps. The Australian Govt 10 year yield will start today with a +1 bp rise at 0.76%. The China Govt 10 year yield is down -1 bp at 3.22%. And the New Zealand Govt 10 year yield is little-changed, remaining at 0.54%.

The price of gold is little-changed from this time yesterday and now at US$1910/oz.

Oil prices are also little-changed today, just over US$41/bbl in the US, while the international price is still just under US$43/bbl.

The Kiwi dollar starts today nearly -½c lower at just under 65.9 USc, although most of that fall came late yesterday. Against the Australian dollar we are also little-changed at 93.3 AUc. Against the euro we have also dropped -½c and to 55.7 euro cents. And that means our TWI-5 is still at 69.2.

The bitcoin price is +1.6% higher today than this time yesterday, now at US$11,960. 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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71 Comments

Rabobank

' the RBA’s Kent today giving a speech suggesting rates could go below zero, while the last set of minutes backed the view of another cut ahead in November. Recall Aussie 10-year yields are now below those of the US as the RBA talks about long-end bond buying, and today it said that the government’s AAA credit rating is not more important than the need for fiscal support. RBNZ Governor Orr is of course further ahead of the RBA on the same path. Want to be long AUD and NZD on that basis?'
https://www.zerohedge.com/markets/rabobank-imagine-if-covid-vaccine-does...

Both reserve banks are now openly admitting that the only way forward is by boosting stock and house price till economy gets back to normal - which is definitely few years away, if not more and by that time assets price should be 40% to 60% from now all time high if not double.

11
up

Yes but the kicker is that your money will be worth 40-60% less.

That exactly it. Price may be going up, but its value remains the same.

" till economy gets back to normal ..."

you mean pre 08?
pre 1984?

It is back to normal
Massive stimulus, huge deficits, zero growth

Indeed. Normal gets thrown around a lot, with no definition given at all.

18
up

Doesn't matter what length you are - at least in financial terms.

What we are witnessing is the knock-on from the fact that society can no longer 'afford itself'. That transfers back down the fibre to the key-stroke issuers of forward bets (sorry, I meant debt-issued 'money' - silly me).

And we are still fed words like 'rebound' and 'normal' and 'back on track' and 'growth' and 'the economy' - heck I even heard a 'compared too the OECD'the other day. Still peddling the horsepoo, long after the horse has bolted. The interesting thing to note - and by implication, watch - this next elective term, is how the strong 'safe' instinct of our PM addresses the progressions of global collapse. Will she/they go for sustainability? Or continue attempting 'growth' even as the wave breaks? If we stay cohesive - a big 'if'- what will they do about debt?

Interesting times

"The interesting thing to note ... this next elective term, is how the strong 'safe' instinct of our PM addresses the progressions of global collapse."
Precisely.
This is our last chance, and if Jacinda has any sense - she knows it.
Even Sir John Key knows it, although he has al along. He's out and about waving the warning flag, and one just has to wonder "Was that why the ANZ economist was publicly espousing the same last week? Is that why ANZ advertising has subtlety shifted to 'Pay the loan off faster'"
The answer to all of the above is, hopefully, Yes.

except paying the loan off faster is the LAST thing the economy needs
its deflationary

IMO negative interest rates = deflation.

Question PDK semantics and underlying issues; you used the word 'sustainability' while I looked at your comment and thought yes we need resilience. What is the difference? I see resilience encompassing sustainability, but also building self-sufficiency, improving employment and standards of living while being less reliant on the rest of the world, but also becoming a supplier to the rest of the world. It is a big topic and must necessarily include topics like population size, rebuilding the environment into one that is not toxic and so on?

Yep; borrow today to get us out of the current hole, assuming that we will be able to pay back the debt in the future. But selling bonds to commercial and international institutions is not the smart alternative, surely governments could borrow direct from their own central banks? profit from interest goes back into govt coffers and some of the debt could be written off. Japan now owes over half its govt debt to its reserve bank and Chinas' growth from debt is much less of a problem because the debt is reserve bank issued. Socialcredit.nz

our own RB holds 61 billion of the govt debt issued, makes for a bit of a money go round, the govt pays interest to the RB, the RB pays tax and a dividend to the govt.
https://www.rbnz.govt.nz/statistics/d30

Thought so you're a Rabo real productive economic fans - By my amateurish calcs be long to AUD is makes sense more than NZD right now, just make sure it's Not tied up to the 4 OZ banks that have high exposure to 'darling RE productivity'. Vaccine news works as immediate dowse of placebo for any market on the planet, from Healthcare professional viewpoint? we're slowly wish to relegate this Covids into seasonal Cold cycle, just with more impacts to the patients(worst), so in parallel the treatment improvement also being shared, but so far? the holy grail proven Vaccine still..... in prayer/hope of every world central/reserve bankers. Their respective govt just watching, in numbness.

Don’t be fat or locked down.
.
"A country level analysis measuring the impact of government actions, country preparedness and socioeconomic factors on COVID-19 mortality and related health outcomes.

...Increased mortality per million was significantly associated with higher obesity prevalence (RR=1.12; 95%CI: 1.06–1.19) and per capita gross domestic product (GDP) (RR=1.03; 95%CI: 1.00–1.06). Reduced income dispersion reduced mortality (RR=0.88; 95%CI: 0.83–0.93) and the number of critical cases (RR=0.92; 95% CI: 0.87–0.97). Rapid border closures, full lockdowns, and wide-spread testing were not associated with COVID-19 mortality per million people.”
https://www.thelancet.com/journals/eclinm/article/PIIS2589-5370(20)30208-X/fulltext

It's everyones choice to be obese profile.. ask Judith.

A much more serious comment is thus:
Yes, to not exercise and to eat fatty or sugary foods is your human right. Plain and simple.
However I think that there should be more education given to those who are not aware that high fructose corn syrup and palm oil are just downright deadly.

Agree..and also the body was not designed to sit on your arse all day

We exercise too little and consume too much poor quality food. It's not rocket science

"to eat fatty or sugary foods is your human right. Plain and simple."
Is it really that plain and simple? By that logic isn't it also a human right to use Cannabis, Cocaine, Heroin?

If you want to abuse your own body, that's your choice. It's when you start endangering others with your actions it becomes a problem for society.

Just like driving around in an unwarrantable vehicle, disregarding many/all directives in the road code. Yet we all pay the same ACC levys on petrol at the pump and on the rego.

I'm with you on that

Tech visionaries suggest IoT as a possible solution to that.
Actuaries will data on how many days your car was driven around unwarranted, speed limits were broken, etc. and come up with a levy / premium accordingly.
I would've preferred to have the personal choice between freedom and safety/wellbeing but our tech overlords will make that decision for us.

Maybe true for herion, but do cannabis or cocaine really cause much harm to others? Surely less than alcohol.
I'm sure you are more likely to be endangered by an obesity induced overloaded health system than by a pot smoker.

Maybe less harmful than alcohol, but not always nil. Cocaine is a terrible example, just ask Columbia and Mexico. The point I was trying to make is that if your actions negatively affect other around you, we have a problem regardless of any personal bias you may have.

Columbia and Mexico have issues because of prohibition. Legalise cocaine and drug cartels are gone from the market.

11
up

I love how you omitted this part! Don't ever change Profile. How's your hydroxychloroquine going?

The government policy of full lockdowns (vs. partial or curfews only) was strongly associated with recovery rates (RR=2.47; 95%CI: 1.08–5.64). Similarly, the number of days to any border closure was associated with the number of cases per million (RR=1.04; 95%CI: 1.01–1.08). This suggests that full lockdowns and early border closures may lessen the peak of transmission, and thus prevent health system overcapacity, which would facilitate increased recovery rates.

The buck stops with mortality Pluto. The only places where hospitals came under strain was where there was a policy of putting COVID sick in to resthomes.
Did you miss this bit?
"Our country-level model demonstrated that travel restrictions and containment measures put in place up till 01 May 2020 may have an impact on the total number of COVID-19 cases in a given country, but there was no observed association between public health policies and the number of critical cases or mortality. Importantly, low levels of national preparedness in early detection and reporting, limited health care capacity, and population characteristics such as advanced age, obesity and higher unemployment rates were key factors associated with increased viral spread and overall mortality."

So if we look at New Zealand:

* Low levels of national preparedness = check
* Limited health care capacity = check
* Advanced age = check
* Obesity = check.

Looks like we fit quite a few of the criteria regarding mortality risk factors. Funny how our current mortality is so low despite these... I wonder why?

Is it not blindingly obvious we are one of the most isolated countries in the world? Just ask Samoa. In the long run will it help? The needs to be an alternative strategy to sit around and wait for a vaccine - for a virus with a median age of death greater than life expectancy and recovery rate over 99%.

Fill your boots on HCQ e.g."However, we show that the use of HCQ - but not CQ - is associated with 53% decreased risk of transfer of COVID-19 patients from the regular ward to the ICU."

https://c19study.com/
https://www.sciencedirect.com/science/article/pii/S1201971220321755
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7315163/

To be clear - are you arguing that New Zealand at this stage in the pandemic, would be better off if we opened the borders and instead instituted very strict lockdowns on the ~10-20% of the population who are at risk of the virus? The rest of us would also be rather likely to catch what can be a fairly unpleasant disease with relatively unknown long-term consequences. The alternative is almost complete freedom except for the closed border.

mfd. We were just talking about this in RL.

We have NZ community.
We have overseas community.
At some stage the two communities come together.

Q: What the health event, of those 2 communities meeting going to look like? (in NZ).
Has NZ community been prepped, vit D, zinc, vit C etc.?
Has NZ health system got expert on therapeutics, (Trump medication - the Australian 3-way).?
Has NZ community with co morbidlities been assisted (drop weight, improve diet, get rest, no stress).?

Because, when the 2 communities come back together the NZ, will not influence the overseas one.... NZ is in the follower, trailer position.

+ we spent all the money, putting people on the sofa - nothing much has changed.

Just imagine - a totally closed border - what would be the consequences

(a) mass overseas tourism would disappear
(b) locals would undertake less overseas trips
(c) travel agencies would largely disappear
(d) hospitality, cafes, bars and restaurants would be dependent on local patronage

Could be done. NZ would survive - It would be a better place

Thanks for deciding on our behalf that it would be a better place.
I'm willing to bet that many people who work in tourism, business owners, families with relatives overseas, etc., would disagree.

I'm willing to bet there is also many people who would love to be able to afford to enjoy their own country and not have cheap imported labour undermine their wages and/or their housing prospects. They'd also benefit from the reduced environmental damage caused by mass tourism

https://www.cdc.gov/mmwr/volumes/69/wr/mm6942e2.htm?s_cid=mm6942e2_x

It seems COVID-19 deaths in the US are being vastly under-reported. Official stats say a total of 200,000 Jan-Oct 2020 whereas excess mortality seems to be 300,000 in this period. And "the largest percentage increases were seen among adults aged 25–44 years, and among Hispanic or Latino persons".

The excess mortality is not coming from resthomes.

plenty of covid denier's out there, we still dont know enough especially about long term effects of peoples health, so it could cost some countries that had a lot of cases a lot in the future vis their health systems.
https://www.cdc.gov/coronavirus/2019-ncov/long-term-effects.html#:~:text....
https://www.ladbible.com/news/news-influencer-who-thought-covid-19-didnt...

In 2018, a total of 2,839,205 resident deaths were registered in the United States. So if COVID adds 300,000 to that, then that is about a 10% increase. But only over half a year, so probably a 20% increase over a year. And that is with social distancing, lockdowns, etc - without those I wouldn't be surprised if COVID doubled the annual death rate.

13
up

Now even, one of the the architect of current housing bubble talks about crisis (earlier housing crisis was good crisis).

BUSINESS
ANZ chair Sir John Key, bankers fear Reserve Bank stimulation creating asset bubbles
21 Oct, 2020 05:00 AM

Still RBNZ is watching and waiting........Waiting for what

On a fully-occupied, rapidly being depleted, rapidly being altered planet, they had no physical choice other than asset-bubbles

The other option was virtual; IT, knowledge, added value etc. - but sooner or later the 'profit' from them expects to be exchanged for something physical; houses, cars, food. So those just slow the 'velocity of money' - in my words, they pushed the bets on to the next race-meet.

Until the TAB goes belly-up.

Asset bubble created by Reserve Bank stimulation, says ANZ chair? Really? Commercial banks created $35bn NZ last year and the vast majority poured into the mortgage market, this has created the current bubble, so maybe he should be careful what he wishes for. The Reserve Bank should tighten up on this lending, maybe limiting borrowing against housing assets to purchase housing, by only allowing borrowing against purchase price, rather than current value. socialcredit.nz

since when did private companies (the banks) advocate their responsibility to run themselves in an prudent economic way to a government department, they have free will to set higher capital requirements than required, they have free will to set ratios of lending above minimum levels set by the government department.
that is what the board and chairman are for , to make sure those below are not doing things just for a bonus that could spell trouble for the bank

Yeah but it's not the banks taking the risk. If any of the major banks go bust they've been bailed out in the past and there's no reason to think that they won't be bailed out again in the future.

"This is the third in a row and the smallest gain of the three. Rises for WMP (+0.3%) were smaller than the futures market had indicated."
No need to be down... the '+' symbol is a positive. I've heard on the vine there's an even higher payout on the way which is great for the dairy farmers but to benefit then production volumes must not drop. A drought this summer could be a deciding factor... let's wait and see

Q: Why do we think the UK is leaving the EU?
Answer: Because The System that's been in place since the 1970s ( when Britain joined a simple, sensible idea called the Common Market) doesn't work any longer; it's breaking down.
THAT applies to pretty much all of our Institutions today. They have failed or are in the process of doing so.
Those who see that; those that have the courage to change first, will mitigate the damage that's inevitable.
Let's hope New Zealand is in the leading pack.
(NB: For those who cry "We can't fix the NZ$!", what do you think the Euro is? It's a set of individual currencies Lira, Franc, Deutschmark, Peseta etc fixed to each other under a singular name. The Euro will likely break-up and individual countries will again have their own currencies to supplement their individaul economies. Change is in the wind, and it's big)

Thanks Bruce, maybe we need a big popular leader with a great and nice personality ... policy, pfft

There's mongrel in Ardern, somewhere. She has 3 years to let it loose, and starting today is as good a time as any. Tomorrow is one day less for whatever is needed to fix our economy/society, to work.

Go hard or go home... but watch for UI (those negative outcomes that were not intended at the beginning).

Need Leader to bring changes and not politicans.

Do we have any leader in NZ. Just need one leader to change like Lee Kuan Yew in Singapore.

Singapore was truly lucky in getting a Benevolent Dictator in Lee Kuan Yew. Most other countries weren't as lucky - take Zimbabwe, or even Italy, as an example.
People can debate whether New Zealand got a brief moment Lee in the form of David Lange. But what Lange did give us was courageous leadership. He did what he truly believe had to be done; politics be damned.
Ardern has to do the same. She has to forget about 'The 2023 Election and Beyond'. It won't matter if she doesn't perform now. And if what she comes out with is tough but fails, she's no further out that out.

If it ll goes to custard what are our options- bitcoin or gold?

Both

If it ll goes to custard what are our options- bitcoin or gold?

Wouldn't it be prudent to own either 'before' the custard, not 'after'? Both have shown that they can hold their value respectively. When (or if) the custard appears, everyone will want to jump on the bandwagon and price action could be easily as dazzling as NZ house prices.

Remember the slogan from 2019 'the year of delivery'. Ardent is famous for slogans but that is all...

What happened to the sensible EEC? Bureaucrats, that’s what. The EU cannot afford to run itself.

PC bureaucrats

Fox, the genesis of the idea was to lock France & Germany together in order never have a war on Europe soil again....

Then it took a life of its own.

The Uk has gone stark raving mad
https://www.youtube.com/watch?v=_GwdvaY91WM

surprised this was not mentioned, good on owen glenn he got to do what many hanover investors would have liked our law system to do
Businessman Eric Watson sentenced to a four-month jail term
https://www.rnz.co.nz/news/business/428731/businessman-eric-watson-sente...

I saw this and wondered if he had even turned up to court, was in the UK, be interested to follow this a bit further, going to jail doesn't get him out of paying, needs to be bankrupted everywhere so he has no where to hide.

yes he was there and in shock when the judge handed down sentencing as were his lawyers, it will be interesting how long the appeal takes to get him out.

Heard some concerning stats on the radio regarding meat exports. Lamb prices expected to be down 15%, beef down 9% = 26% drop in on farm profitability.

Question for Labour party experts.

Social media activity.
Speaking to 4 folk from 6 addresses in Brownlee's Ilam electorate. None had seen or heard from the Labour candidate. Nothing in the letter box, nothing online to them.

Question. Was the social media contact so specific so that to pick off voters one by one.
Leaving assumed hard nuts to crack well alone.

Same with PM in Christchurch large number of people never aware of her events.
PM has admitted that only party faithful told of public walk abouts...

Who cares Henry...election was over on Saturday? What do you do all day?

Not over as long as the queen of hearts keeps bleating on about the result being a mandate for 'acceleration' when it was no such thing. If she really believed this she'd have campaigned on significant reform. Instead it was a centrist business as usual with a little tinkering round the edges strategy; don't startle middle NZ as the clowns on the other side self destruct and it'll be a sleepwalk to re election.

Henry. If so the Labs were a whole lot smarter in their targeting strategy than the Nats - who also made some puzzlingly poor candidate selections in ChCh. Brownlee shot himself in the foot with dumb comments eg accusing her holiness of fibbing over front line C19 staff testing. More than a few believe she was economical with the truth on this issue, including serious investigative journalists but it was very poor judgement by the big guy given he was well aware the public was dazzled by Arderns media created halo.

Agreed, the social media, activist events organized, AOC like Trump like.
Engage with people at emotional level.
Covid 1pms were a fantastic platform.

Nats had no answer, took a knife to a gun fight, in that the Govt,. record of deliver, sex scandal etc would be enough. Foolish.

Here is a little bit of last week's news now.

https://www.rnz.co.nz/news/national/428832/thousands-of-managed-isolatio...

Can't of been on last weeks list of talking points.
#swampy_the_reporter

The time tested bureaucratic outright evasion of 'operational reasons' ( for half the quarantine rooms being idle) trotted out yet again. No insight is available as to how efficiently these expensive facilities are being operated, accountability questions contemptuously swatted away like this and how priority for entry is decided remains obscure, possibly deliberately.