Wall Street falls sharply; eyes on Q3 GDP; Singapore, China and Taiwan deliver upbeat data; Australian housing market booms; UST 10y at 0.79%; oil drops and gold firms; NZ$1 = 66.8 USc; TWI-5 = 70

Wall Street falls sharply; eyes on Q3 GDP; Singapore, China and Taiwan deliver upbeat data; Australian housing market booms; UST 10y at 0.79%; oil drops and gold firms; NZ$1 = 66.8 USc; TWI-5 = 70

Here's our summary of key economic events over this holiday weekend that affect New Zealand, with news the combination of bad pandemic policies and a coming winter look worrying for northern hemisphere economies.

First up today, Wall Street is falling rather sharply, and is down -2.7% in mid afternoon trade and getting worse by the hour. Overnight, European markets were also down sharply with Frankfurt down -3.7%, Paris down -1.9% and London down -1.2%. There was no indication these markets would drop from Asian trading yesterday; Shanghai was off -0.8% but Hong Kong was up +0.5% and Tokyo was flat. The ASX200 ended yesterday down a minor -0.2%.

But terrible European pandemic developments are setting back the European economy in a major way, and it threatens to be is just as bad in the US.

However, looking back, the American National Activity Index released by the Chicago Fed shows a small improvement from August, but it just seems to be the final bounceback echo from the huge March and April dive.

The latest Fed regional factory survey to be released is from Texas and that reported expanding conditions. New orders are rising, but employment growth seems to have stalled there.

Although new home sales dipped in September and the August data was revised lower, the 2020 levels are still very high and very much higher than the same level a year ago. This part of their housing market is booming just like the existing home market as the demand for 'more space' rises in the pandemic.

At the end of this week, the first estimate of the US Q3-2020 GDP is due to be released. Analysts see a +32% rise from Q2, making back much of the -31% fall in Q2. (It's an intricacy of arithmetic, but to make back all of the Q2 fall, the Q3 rise would need to be up +46% - so they will still be running very much slower than the year-ago level.)

In Singapore, their September industrial production came in surprisingly positive. After rising a sharp +15% year-on-year in August, they were expected to hold that increase with a modest +2.5% rise in September. But in fact the September gain was a spectacular +24% leap and largely driven by their drug industry ("biomedical manufacturing").

China's full-year crude steel output in 2020 is expected to jump above 1 billion tonnes for the first time ever.

In China iron ore prices are staying high (+40% in 2020) but have stopped increasing. However, steel making coal prices are back rising fast again (+16% in 2020). And prices for corn are racing higher as the local grain harvest is late (+30% in 2020) even if officials claim it will be a full one.

Chinese import demand is causing shipping rates to stay high.

In Hong Kong and Shanghai, the world's largest IPO is about to take place, bigger even than the US$29 bln Saudi Aramco listing. Alibaba's Jack Ma is floating his Ant fintech company and it is expected to value the enterprise at US$35 bln.

More data out of Taiwan is impressing. Their September industrial production rose by more than +10% compared with the year-ago levels, and much faster than the good +4% growth in August. Export orders are driving this. By comparison, their nearly +3% rise in retail sales looks tame.

In India, onion and potato prices have suddenly risen, doubling in ten days. Rains damaged crops and now their government has imposed stock limits on traders. India's festive season demand is also driving prices up.

In Australia, their housing market is surging, with last weekend's auction clearance rates exceeding 80% in Sydney and 73% in Melbourne. Victoria is now set for a pandemic re-opening and that will bring an economic rebound which will no doubt include housing.

The latest global compilation of COVID-19 data is here. The global tally is 43,216,000 and up +386,000 since yesterday. It is first-world countries that seem to be having the most difficulty containing the new wave. It is raging in France, the UK, Spain and Italy again, and Belgium also has a very bad outbreak. Authorities in all these countries have lost control and it is hard to know how they will regain it. Italy and Spain have reintroduced sweeping new curbs. Global deaths reported now exceed 1,156,000 (+4,000).

The largest number of reported cases globally are still in the US, which rose +46,000 since yesterday to 8,899,000 as a weekend tally. The number of active cases is higher at 2,887,000 so many more new cases more than recoveries. Their death total is nearly 231,000 and still rising at about +1000 per day.

In Australia, they are not getting any resurgence. There have now been 27,527 COVID-19 cases reported, and that is +7 more cases than we reported yesterday with zero in Victoria. Reported deaths are unchanged at 905.

The UST 10yr yield is down -5 bps today at just on 0.79%. Their 2-10 rate curve is much flatter overnight at +65 bps, their 1-5 curve is also flatter at +22 bps, along with their 3m-10 year curve, now flatter at +72 bps. The Australian Govt 10 year yield will start today down -3 bps at 0.81%. The China Govt 10 year yield is up +2 bps at 3.22%. But the New Zealand Govt 10 year yield is unchanged at just under 0.61%.

The price of gold has had a slight rise, up +US$3 to US$1904/oz. And that is little-changed from the same level it was this time last week.

Oil prices are very much lower today, down -US$1.50/bbp to now at just on US$38.50/bbl in the US, while the international price is now just under US$40.50/bbl.

The Kiwi dollar is still at 66.8 USc and little-changed. Against the Australian dollar we firmed yesterday to 93.9 AUc. Against the euro we at 56.5 euro cents. And that means our TWI-5 is now at 70.

The bitcoin price starts today a little softer at US$12,919 with a -0.8% slip. 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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51 Comments

When will the worlds media challenge and pursue the Chinese Government on their accountability for the SARS2 pandemic?
Or is the narrative now all about the USA and it’s handling of it?
Maybe Europe will come out the other side, while NZ stays cut off.

15
up

Appears to be from the Chinese perspective, that the problems in the West are solely attributable to their own decadence.You know the sort of doctrine that issued from the Soviet Union during its heyday. Even on here, not so long ago, there was a rather pointed post by regular poster Comrade X describing the difficulties in the USA, India etc in containing CV19. Gloating comment in fact , most unwelcome. Unlikely there will ever be any acknowledgement let alone apology provided by the Chinese, for the global carnage caused by the virus outbreak in their country.

11
up

The Chinese are correct in part that the problems with COVID in the west are of their (the west's) own making. But that does not absolve the Chinese of the responsibility that they failed to contain it effectively in the beginning. Had their response been more effective then, then the cost to the Chinese economy, and to the rest of the world would no doubt be vastly different.

Well it's certainly highlighted the incredibly irresponsible Governments; Trump has already waved the white flag of defeat. BBC Covid: Trump's chief of staff admits US cannot control pandemic. "A senior aide to President Donald Trump has conceded that the US is "not going to control the pandemic". According to Biden; "It showed that the Trump administration had "given up on their basic duty to protect the American people". https://www.bbc.com/news/election-us-2020-54687096

Does it matter? If you're relying on a developing nation to immediately recognise and isolate a novel coronavirus, then you're going to fail at some point, it's a force of nature. There needs to be some Plan B that's not pointing fingers.

11
up

China a developing nation? Do you work for the World Bank? This false narrative regarding the worlds 2nd largest economy needs to STOP!!! Don't often agree with Tump BUT this is China gamming the system to avoid WTO rules and get special treatment.

It is a bit of a problem to say when a country has 'developed', but stop acting like it's all cut-and-dried. There is some extreme wealth in China, but also very poor labour protections and abject poverty, similar to India and Brazil. They have their strengths, but quickly designing and implementing large-scale public health initiatives don't come to the top of my mind.

Those lack of protections and poverty are because of the nature of the Government, not because it is 'undeveloped'. I agree with the comment above that China is a developed country that is gaming the system.

There's some enthusiastic China-bashing going on here. As for as I can see, both Chinas (the red one and the blue one) have handled the Covid-19 epidemic quickly and efficiently, as have neighbouring countries such as Vietnam, South Korea, Japan and Thailand (and New Zealand, of course). The devastation in the United States and some European countries is the consequence of indecisive early action by governments, and the behaviour of It's-a-free-country-and-I'll-do-what-I-want populaces. Now they must live and die with that. Nothing to do with China.

you can see the same thing in australia the infighting amonst the states to stradgy, they now have no community transmission in all the states but NSW, but NSW is backed by the federal government, so rather than tell them to get on with it and get it out of the community, so they can open the whole country up, they are telling all the other states to open up and let the virus circulate and rely on systems to keep under control.
they just did a survey in NSW and 63% of the population think they will end up in lockdown like victoria over summer
Fears of a second COVID wave and another lockdown on NSW voters' minds
Fears of a second wave of COVID-19 in NSW and being forced back into lockdown are top of mind for three out of five voters in the state, with most also worried about a drawn-out recession.
An exclusive Ipsos poll for The Sydney Morning Herald and Nine News reveals 63 per cent of voters are concerned that NSW could follow Victoria and be hit with a high number of COVID-19 cases.
NSW had one new locally acquired case and three cases in hotel quarantine on Monday while Victoria recorded its first day in four months of no new cases, allowing it to ease restrictions.

Blaming China for viral mutations appearing in human populations IMO is pretty dumb and ill thought out.

Viruses will mutate over time and jump from species to species. It's what happens, it's basically an inevitability. Blaming a country because it happened within their borders might make people feel better, but I don't think it's particularly wise.

I wonder if you would be happy for NZ profusely apologising if the source was a possum trapper in NZ? Remember this is a virus with a long incubation period that is likely airborne. It is novel and not much was known about it until mid Jan (science takes time).

In many ways we should be thankful it was China. Once they really knew what they were dealing with, they shut down entire cities then most of their country to avoid the spread (you can see how that is going in less compliant democracies such as US/Australia when they try the same). If the rest of the world had followed China's example, we would have been COVID free months ago. Instead we all decided to do our own thing and on it goes...

Viral mutations and species jumping happens all the time, mostly with benign consequences. Best we can do is prepare for the bad ones, not just blame a country when it originates from within their borders, which IMO is pointless and distracts from dealing with the issue. I find this a lot working with some people, they are more interested in identifying blame for expected problems, rather than creating solutions or building resilience. If they spent half the energy screaming about who to blame with actually dealing with the problem, they would have it fixed very quickly.

We may as well demand apologies from pangolins, since that is the likely source. Would it help? No. Would it make you feel better? Unknown.

I'm sorry eating bats is just wrong and any language. Leave the bats alone..eat chicken instead or better still tofu.

Maybe ask Hindu friends about eating beef or Muslim friends about eating pork. Or dog in Nth Vietnam, cat in Laos, whales in different places, bugs etc etc.

People eat different stuff all over, get used to it. It doesn't even have to come from weird animals and usually doesn't. Did we demand Mexico apologise for the swine flu outbreak in 2009? If we had, would it have made us all feel better?

Viruses are just doing what they do, to assume that some government is responsible for their behaviour and should therefore apologise profusely is a bit of over-reach.

So are you saying that the Chinese authorities didn't try to silence that Doctor when he raised the flag? He then went international to ry to get someone to listen? That's efficiency?

Still no explanation as to why Wuhan and surrounds were sealed off domestically, but outward international flights continued.

Let's be clear here - the Wuhan administration were stupid, they censured Doctor Li and they did some really dumb stuff, like throw a massive Chinese NY banquet while the virus was starting to spread. As far as I can see, once the Central Government got involved, things appeared to go as fast as humanly possible. The Central Government then fired the Wuhan officials for being dumb and good on them. This included the head of the Hubei CCP and the head of the Hubei health commission. Did everything run perfectly? No. They even admitted as much by saying there were shortcomings and deficiencies in their handling of the virus.

Would the response have been similar anywhere else in the world? Who knows, probably? I mean the US CDC completely bungled their initial tests, with contaminated reagents in early Feb and told everyone else for almost a month that they couldn't make their own tests. My point here is to show that a few officials who rush things or try to hide stuff can screw things up at the start, which has lasting consequences, no matter where you are. Should those officials who made obvious screw ups apologise? Well yes, but people do make mistakes, even shockers. Should a whole country be held to account because some idiots in that country acted poorly? Should that blame then also encompass not just their people but also their system of government? Overreach.

And is any of that blaming at all useful?

Wuhan city officials live and act in fear of the CCP.
That is why the evidence of origin was destroyed, and the truth was suppressed for so long, and why various Drs and whistleblowers were ‘removed’.

Would wager that on average if you offered a good citizen of Wuhan a menu choice between a deep fried bat and a medium rare char grilled NY cut sirloin, that they would be likely to opt for the latter.

More news that should be out weeks ago.

Seems a group between the victims and the donation are pressing for victim hardship donation funds be spent on a religious school, rather than victim hardship.

https://i.stuff.co.nz/national/christchurch-shooting/123068130/hardship-...

In a letter signed by 35 people representing the bullet-injured and deceased and sent to the Qatar Charity, said they “strongly disagree” an Islamic school is the top priority in the community.

The imam understood there were victims who disagreed, but he had advised them to “sacrifice some money for the community for a project like an Islamic school”.

Enter Megan Woods...
In emails Stuff received under the OIA, Fouda requested an endorsement from March 15 attack minister Megan Woods, so it could “supervise the release and distribution of the donation” for the Qatar Charity.

Woods had the Office of Ethnic Communities sign a letter confirming the group were “key stakeholders” and leaders who “know the needs of their communities well”.

Woods told Stuff while Fouda was a friend and Labour Party member, she denied playing a role in the funds’ distribution.

“Nobody did endorse them.
That is not a matter for the government...”

& PM.
The factions between the injured and family of deceased and the leaders were outlined in a letter sent from a victim representative to Prime Minister Jacinda Ardern in June, asking for help sorting out the “predicament”.

So - failing to get traction with your covid based anti labour propaganda, you now pivot to try the old anti muslim tactic.

Oldoke1, sounds like you have a bone to pick with Stuff.

Whats your position? would you like the generous donation be dispursed to victims in hardship, or spent on a schools project?

The Fouda link, being a party member, & friend of Woods, requesting and getting Woods to procure from Office of Ethnic Communities a letter of commendation, seemingly? in order to get control of the donated funds disbursement, feels crook.
OB1 whats your understanding? Are Stuff correct?

And, again, more news that should have been out weeks ago...

https://www.odt.co.nz/star-news/star-schools/ministry-accused-toxic-cult...

In the 2017 election campaign, Labour promised to form a new governance group to help the rebuild. It has not done that, but told RNZ that concerns had been addressed.

He found the ministry to be "very evasive when it comes to addressing any of the issues at the school".

Aim said he thought there were "systematic" issues in the ministry's property division.

In the thick of the to-and-fro in 2018, the ministry told Mike Lay a staffer had laid a formal complaint against him; in this email it uses the words "intimidation", "harassment" and "bullying".

But it was not true - there was no formal complaint.

The Ombudsman, in May this year, described what happened when Mike Lay asked if it had applied for more money: "The ministry's initial responses were misleading, and appeared contradictory," the Ombudsman said, adding staff were not dishones

Lay in June this year sought to raise the problems of school rebuilds with the education minister, but Chris Hipkins told him no, "the matters of concern to you are operational".

# part time minster has no idea

Busy day today....

Cabinet was repeatedly told prior to the August outbreak that the regular asymptomatic testing of all border-facing workers was still being rolled out, despite ministers claiming ignorance, Marc Daalder reports

https://www.newsroom.co.nz/pro/cabinet-knew-about-lack-of-border-tests-b...

#joke is on us.

imagine him being your GP probably recommend a fried mars bar every night before bed

He'd appeal to a certain demographic I guess, likely the same demographic as NZ Advance.

.

covid death rate in France,Italy and Spain

https://lockdownsceptics.org/wp-content/uploads/2020/10/Screenshot-2020-...

As Kendrick is anti sugar I doubt he would ever recommend eating a mars bar.

I regard you as a useful contributor to this site. Your musings on farming give a townie like me a valuable insight and your comments seem rational and grounded. So I just can't fathom why you persist in posting links to this fringe conspiracy-theorist.

For my sins I clicked on your link and it's just nonsense, as is typical for Dr Kendrick.
As illustration, he correctly calculates that his figure of a 0.1% fatality rate would result in 67,000 deaths if everyone in the UK became infected. Their official figure is currently about 45,000, not including the 5000 they knocked off the total a couple of months ago because they didn't die quickly enough. And that is almost universally accepted to be an underestimate as many were not tested, particularly in the early months. So the reality is that the UK is getting close to his figure already. For him to be correct, the vast majority of the UK population would already need to have been infected yet new infections are currently around 20,000 a day and they keep dying in large numbers, currently about 1000 a week.

Kendrick is a charlatan, and thanks to having Dr in front of his name, a very dangerous one.

I am always a skeptic, I have my doubts that we will be able to control this virus, I think the nature of us as individuals won't help either. It's going to go through the USA and Europe no matter what they do. It's going to damage economies and I'm not sure that was ever necessary.

https://lockdownsceptics.org/wp-content/uploads/2020/10/IMG_3762-2.jpg

I share your scepticism with regard to the US and Europe controlling the virus, but that's down to human behaviour, greed, an ingrained sense of self-entitlement and a depressing lack of leadership. However, misrepresenting the science and spreading misinformation as Dr Kendrick does can only make things worse.

I disagree with your position on lockdowns. Simply put, effective lockdowns are effective. What we have seen overseas is a patchwork of on-the-hoof measures by desperate and clueless governments. The UK being a stark example with a confused and frustrated population struggling to grapple with the ever-changing instructions and increasingly unwilling to stick to the rules. Whereas, Taiwan and NZ are examples of where lockdown can be effective.

Yes, economies have been and are going to continue to be hit. That's the reality of the virus. But the best way to protect the economy has always been to deal with the virus. We have an open and functioning economy (for those lucky enough to be in the country). Overseas that is not the case. I note Sweden, who decided against lockdown has an economy that has fared worse than all of its neighbours while also having a far higher death toll and who now have increasing case numbers, giving the lie to any notion of herd immunity, https://covid19.who.int/region/euro/country/se

Lock downs well and good but it is the border/travel flow that is the real problem. The USA for example 50 states more or less 50 countries. Flight tracker never stopped recording flights daily to all points of the compass, and down below there are of course, trains,buses, cars ditto. Every person on every vehicle a potential carrier/spreader. NZ demonstrated lock down effectiveness assisted by isolation and remoteness, but even here that success has been threatened to be breached by border activity, minuscule compared to say Nth America & Europe.

I'm leaning the same here, the recent vaccine news.. pretty much back into 3-6-9months resistance, which left to the barrage of good news on the coping level mechanism (treatment) - Sadly, in my view our 'winning' streak months of buying time doesn't match with the more rigorous advance prep within our healthcare systems.. the treatment facility; beds, staff, protective gears, training, lab test & medication prep was still in the level of public relations, but nothing much happening in the core treatment systems .. (I'm previously exposed to 2 small DHBs & 1 larger one, & ask old mates.. the answer is same old things, PR level changes). The effective treatment pattern is started to emerge, reduce mortality BUT the capacity to handle a sudden surge? due to our relax attitude, it's still not there - nationwide.

"First up today, Wall Street is falling rather sharply, and is down -2.7% in mid afternoon trade and getting worse by the hour. Overnight, European markets were also down sharply..."

Terrible Terrible it's over kaput markets are crashing.... no mate 4 steps forward and one step back so far lets just wait and see. There also happens to be a particular election is under two weeks... if George er trump doesn't get reelected then you can possibly have something to worry about.

The only scenario that will make any difference is if it’s too close to call and the US erupts. The dementia and elder care patients running for president are both playing the same agenda - print print print. They have nothing else.

"The only scenario that will make any difference "
What kind of difference are you referring to ... are you hoping for an economic meltdown, blackswan, social disorder event, so that you can afford to buy a home. To be honest that 'scenario' will not help.

And the biggest news over the weekend is Honduras is the 50th country to ratify the Treaty on the Prohibition of Nuclear Weapons. The treaty was passed by the United Nations on the 17th July 2017 and will now come into force on the 22nd of January 2021 making all nuclear weapons illegal.
Aotearoa was one of the first countries to ratify the treaty back on the 31st of July 2018.

And in practice will it make any difference at all?

Has our media given up and just now mouths the endless press releases from the industry groups wanting to break the Covid border controls.
It's both boring and dangerous.

Hard pill to swallow taking a job as a reporter at minimum wage with a salary ceiling of 85k. Can understand why we've got the bottom of the barrel in the 4th estate.

yes well that back fired for the fishing group 32 out of 247 infected , supposed to self isolate two weeks before boarding and a negative test 3 days out , stayed on the same plane all the way here.
i like australias new idea, they are flying them into a base up by darwin now, away from the main population, it was an idea that WP put forward for us
First repatriation flight from India landing today
By Mary Ward
The first repatriation flight carrying Australians stranded in India is due to land in Darwin at 8.20am today.
It is the first of four flights from New Delhi scheduled under a new federal government repatriation scheme, which began with a flight from London on Monday.
About 5000 Australians will be brought home on eight subsidised flights from London, New Delhi and Johannesburg in the coming weeks.
The group will complete their two weeks of hotel quarantine at the Howard Springs facility in the Northern Territory before travelling on to their home states and territories.
Last month, the Department of Foreign Affairs and Trade said more than 26,000 Australians had registered as wanting to come home, including 4000 who were classed as vulnerable.

Here's just the initial list: Wanted to open up: Students, Agriculture/Farming, Horticulture, Viticulture, Aquaculture, Fisheries.. half opening eyes while the winking eyes towards; tourism, hospitality, airlines, resto.. more on the list anyone? help yourself. - And where all those productivity funds being channeled into? for more profits... 4 OZ banks eagerness to squeeze further into NZ sole & only profitable of F.I.R.E economy. Almost every profit being made.. silently siphoned into our sole economic darling.

We're still unlikely to see the real consequences of our lockdown actions until Q4. And presuming the answer to this stock price fall is more stimulus. A shot of adrenaline straight in the heart works well reviving patients, as long as they're not already dead.

Surging house prices in AUS! Nah. If you pay any attention to the data driven DFA you will be aware he sees this as complete bollocks and data manipulation by core logic.

10
up

On an Interest-Only Basis at 0% p.a., a house costing $1 million is as affordable as one costing $1 billion or even $1 trillion. Until the day when interest rates rise by 0.1%....
The quantity of debt matters, and that applies to us as property buyers; to us as individuals and to the collective us, called The Government.

unless the debt is forgiven, in a normal monetary world yes debt must be paid back and you should be paying a fee (interest) for acquiring that debt.
but it has not been a normal monetary world since 2008 GFC,

Exactly - devaluing the purchasing power of earned income is not a sustainable economic strategy.

Correct, I've read yesterday on the OECD index level, median is 20, OZ is at 20, Canada is at 22... NZ? is at 26 - I stop reading the whole article.

Trump causes covid mismanagement across Europe (presumably):
terrible European pandemic developments are setting back the European economy in a major way, and it threatens to be is just as bad in the US.

We must support our RBNZ & current govt, prudent measures to sustain NZ F.I.R.E economic, OZ is a larger country, population & economic size. So they are allowed to have a little correction on their housing market. NZ? here's a fact, if we spook the market a bit? this is just like triggering a sudden domino chain effect, so at all cost NZ must maintain it's steady policy rhythm to sustain & push forward this housing market, remember for most Kiwis, it's that intrinsic value, peace of mind, long term, to raise kids/future tax payers.. so much can be said about it. Price correction? spooking the market? it's not of those words we want to hear here in NZ.