Here's our summary of key economic events overnight that affect New Zealand, with news global food prices are rising as China gobbles up supplies as its food security concerns widen.
But first in the US, consumer sentiment posted a surprising increase in early December due to a partisan shift in economic prospects. Following Biden's election, Democrats became much more optimistic, and Republicans much more pessimistic. And as there are more Democrats than Republicans in the country that has raised this index. However, this index is still -18% lower than where it was a year ago.
The December versions of the USDA WASDE report says Australia, Canada, and Russia all will have their second largest wheat production on record, filling a rising global demand. They also see US milk production rising and prices falling as they forecast out to 2021 (pg 33).
The US federal budget deficit widened by a quarter in October and November from the same period last year to a record -US$429 bln. For the full year, it is a deficit of more than -US$3.2 tln and up from -US$1 tln in the equivalent period in 2019/20. That raised it from a high 4.9% of GDP to 15% of GDP and a suddenly and increasingly dangerous level. The incoming Administration has been handed a toxic situation from an incompetent four years of mismanagement. The Trump Administration ignored the advice to "fix the roof when the sun shines" insteat flogging it off to its mates. Tax cuts for the rich have seen revenues stagnate at just above 2016 levels while spending has grown by +60%. It is mismanagement on an epic scale and leaves them very disadvantaged to handle the pandemic consequences.
Bipartisan US Congressional negotiations for an extension of aid for the jobless don't look like they are going anywhere, undermined by Republican leaders in their Senate. And unreported elsewhere, it appears the US Federal Government may have to shut down in about a week because they will have run out of funding, and this authorising legislation is stuck in the partisan gridlock and the move to lay waste for the incoming Administration. Usually these approvals come at the last minute (which is now), but it may be less likely this time. A one week extension has just been agreed however.
In Canada, their have set a track for sharply rising taxes on carbon. The price on carbon will be increases by +C$10/tonne until it reaches C$50 per tonne in 2022, and then it will rise annually until it hits C$170/tonne in 2030.
In Australia, AML regulator AUSTRAC says Australian casinos have been exploited or infiltrated by criminals and even foreign agents.
Brexit deal prospects dim and the hardest of separations seems the most likely outcome for December 31, according to both sides in these ongoing talks. And London's days as a global banking hub may be coming to an end.
Globally, food prices are rising. The November increase did not only mark the biggest month-on-month rise since July 2012, but it also resulted in the FAO index reaching its highest level since December 2014. China seems to be crowding out others with aggressive buying, driven by a slowly deteriorating food security issues there. This is particularly true for dairy and meat, the FAO notes.
Chinese futures pricing for corn, palm oil, and rice are all at historically high levels. And Chinese prices for iron ore and coal round out the rising evidence that Chinese demand is stoking all commodity prices. Copper is at a seven year high, and aluminium prices are rising sharply too. All this is happening while the US and Europe are in the demand doldrums. But it is a boom lifting the AUD (and to some extent the NZD as well).
China’s car sales increased more than +12% in November from the same period a year earlier to log the highest monthly sales this year as the world's largest car market continues to bounce back. Almost 2.8 mln vehicles were sold in the month, and NEVs ("new energy vehicle") sales are on the rise. China's steel production is at a record high.
The S&P500 is down -0.7% in early afternoon trade and heading for a weekly loss of -1.5%, wiping -US$½ tln from market values in the past seven days. But since the start of 2020, it has still gained a net +US$3.4 tln. Overnight European markets closed about -1% lower with Frankfurt down -1.4% for the week, Paris down -1.8% for the week, and London down a mere -0.1% on the same basis. Yesterday, the very large Tokyo market ended its session down -0.4% and ending its week also down -0.4%. Hong Kong was up +0.4% yesterday but for the week was down -1.2%. while Shanghai was down -0.8% yesterday and that locked in a weekly loss of -2.8%. The ASX200 closed out yesterday with a -0.6% loss and locking in a weekly result of just a +0.1% gain. However the NZX50 Capital Index was the star of the week, ending yesterday with a +0.5% daily gain and a weekly rise of +2.2%.
The latest global compilation of COVID-19 data is here. The global tally is 69,874,000 and a +734,000 rise in one day. At this rate, we will top 100 mln by the end of January. It is still very grim in Russia, the UK, Eastern Europe, Brazil, Turkey and Indonesia. It does seem to be easing further in Europe generally although not in the UK, Sweden, or Germany. Global deaths reported now exceed 1,588,000 and up a very sobering +13,000 in a day as death rates spike everywhere.
In Sweden, after making an emergency u-turn from their disaster herd-immunity strategy, things have turned gruesome. Stockholm was reported today to be running ICUs at 99% capacity. Now, 80+ year olds are not being admitted to ICUs any more. These folks are just denied care and are being left to fend for themselves. They have run out of options given the surge in serious cases, and the age limit is likely to be lowered progressively to ration ICU bed availability.
But the largest number of reported cases globally are still in the US, which rose a record +251,000 overnight to 16,117,000. The US remains the global epicenter of the virus. The number of active cases is surging and now at 6,460,000 and that level is up 131,000 in just one day, so many more new cases more than recoveries. Their death total now exceeds 301,000 and up +3000 in one day. The US now has a COVID death rate of 907/mln, and now higher than Argentina and approaching the disastrous UK level (927).
In Australia, they are not getting any resurgence. There have now been 28,012 COVID-19 cases reported, and that is just +12 more cases yesterday. Now 49 of their cases are 'active' (+2). Reported deaths are also unchanged at 908.
The UST 10yr yield will start today softer, now at just under 0.90% and a -3 bps retreat as global recovery hopes fade. Their 2-10 rate curve is a little flatter at +77 bps, their 1-5 curve is also flatter at +27 bps, and their 3m-10 year curve is much flatter at +82 bps. The Australian Govt 10 year yield will start today back down -3 bps at 0.97%. The China Govt 10 year yield is unchanged at just on 3.32%, while the New Zealand Govt 10 year yield is down -2 bps at 0.88%.
The price of gold is firmer today, up +US$6 to US$1842/oz.
Oil prices are -US$1 lower today, now at just on US$46.50/bbl in the US, while the international price is up slightly more at just over US$50/bbl.
And the Kiwi dollar is little-changed and still at 70.8 USc. But against the Australian dollar we have slipped again, now down to 94 AUc. Against the euro we are little-changed at 58.5 euro cents. That means our TWI-5 is still at 72.8, at the upper part of the tight range it has been in over the past month.
The bitcoin price has fallen another -1.1% today and is now at US$17,992 and its lowest in two weeks. 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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41 Comments
A long long way still to go. Listening to Mr Arnold on News Talk, it won’t be until the fall 2021, the light at the end of the tunnel, vaccines will actually light up matters so to speak, to any real significance as far as the USA is concerned. Europe too undoubtedly. So in a much smaller and definitive manner NZ too will be somewhat inward looking, unless there is a will to buddy up to Chine even more so than now?
That’s the problem with tax cuts - they are very easy to give but hard to take back. Borrowing for tax cuts is always a stupid policy that for some reason makes sense to the supposedly economically conservative right wing. Tax cuts are like a one off pay rise - it is kind of nice when you get those few extra dollars a week but after a while it’s just the new normal. But the government debt keeps growing year after year.
"In Britain, for example, we collected almost 50% more money last year with a corporate tax rate of 19% than we did when it was 28% under the last Labour government. When we cut the top rate of personal tax from 50% to 45%, the amount raised from the richest taxpayers went up rather than down."
https://moneyweek.com/488331/tax-cuts-the-laffer-curve-strikes-again
Linklater. DM bro.
https://www.nber.org/digest/mar08/tax-increases-reduce-gdp
Tax changes have very large effects: an exogenous tax increase of 1 percent of GDP lowers real GDP by roughly 2 to 3 percent.
https://www.hoover.org/sites/default/files/uploads/documents/Sowell_Tri…
I would suggest you read Tom Sowell.
A Marxist radicalized into a free-market libertarian by a year working at the U.S. Labor Department, Sowell is now the go-to black academic for conservative media outlets. The son of a maid, he earned his way in the old-fashioned style to and through New York’s elite Stuyvesant High School, Harvard College, Columbia and the University of Chicago. He has waged a relentless crusade against those who would try to alleviate poverty or equalize opportunity through welfare, affirmative action or anything else that interferes with the operation of free markets.
Tull..There is a case for making that argument under certain restricted circumstances.....but how do you explain US tax revenues declining to 2016 levels after the uneducated corporate tax cuts of the chump. Debt to GDP Dec 2016,103%... Dec 2019 107%. There is a line that needs to be recognised and chump has no training for it. He is a simple criminal who steals other peoples money by mismanaging whatever he touches, filing bankruptcy so he doesn't have to pay it back. And he has pushed the US to the brink. He should have been doing what he promised to do leading up to the 2016 election, you know, drain the swamp and reduce debt..but of course he has no economic training to govern this..not to mention the common knowledge that he is a pathological liar and a totally incompetent economic and monetary theorist, and so he decided to spend the taxpayers money to reward his equally corrupt cronies by giving them not just a tax break but an enormous one, at a time the economy was doing well when he took over, and he should have been introducing policies to trim down the debt level pre covid. He did exactly the opposite and a high school student could have figured where that was going to lead. $4 trillion dollars of additional debt in 3.5 years of mismanagement, BEFORE covid struck. Economics 101. when times are good, save for rainy day. In 2020 the rainy day arrived and turned into torrential downpour with no where to go but into the chumps normal backup...bankruptcy. I don't think that can happen because the US is just too important an economy so it will be left for far more competent p[people to try and reduce the damage done by the chump and his corrupt and economically myopic senate republican sheep.
In Australia, AML regulator AUSTRAC says Australian casinos have been exploited or infiltrated by criminals and even foreign agents.
Ditto Wall Street, Lombard Street, etc?
Regulations and regulatory arbitrage; it was purposefully made much easier to do monetary business in the offshore network of which London’s Lombard Street had been the key node. British authorities long ago decided in order to be a player in the growing international currency regime of the eurodollar system they’d let international banks setting up shop in The City do a whole lot more of what they wanted so long as their customers weren’t British persons. Link
Has anybody checked the trail of possible transactions that could be associated with the growing RBNZ bond lending facility?
The UST 10yr yield will start today softer, now at just under 0.90% and a -3 bps retreat as global recovery hopes fade.
Unsurprisingly, the various consumer price indices have joined the slowdown/stall-out chorus singing in dark tones about this very evident and destructive macro slack. The US CPI, despite oil prices rising, its headline rate managed to decelerate a single bip during November 2020. Up just 1.17% year-over-year, it’s less than the 1.18% put up during October.
The core CPI rate was just 1.65% last month, four bips higher than October’s 1.61% but remaining among the lowest rates of the entire series history (and that goes for other “core” measure, like services less rent).
But that’s not what Inflation Hysteria #2 is really about. Like Inflation Hysteria #1, it’s all about tomorrow because there’s no data for tomorrow. You can make next week and next month into pretty much anything you like. What’s at issue is always how plausible your future scenario might ever be.
Thus, when Inflation Hysteria #1 turned to absurd anecdotal stories about a LABOR SHORTAGE!!!! which would, at some always distant forward point, lead to this inflationary recovery stuff you already knew it was bogus. If it had been anywhere close to a realistic chance, there’d have been some corroborating data supporting the unemployment rate setting up that accelerating trajectory.
Now, as we’ve said all week, there isn’t even a fraction of it for Inflation Hysteria #2. Most of all a labor market still experiencing more – not less – slack and destructive tendencies. All the ungodly, massive, inflationary monetary and fiscal “stimulus” so far have done little to bend the summer slowdown back up in the “V” direction.
Trillions of feds and Fed, nary a sniff of inflation. Only ongoing disinflation.
More will suddenly work?
So, Inflation Hysteria #1 leaned heavily on the LABOR SHORTAGE!!!! which didn’t exist. Inflation Hysteria #2, way short of even that, is constructed instead upon STIMULUS SHORTAGE!!!! before it can ever hope to get near a fake labor shortage which hadn’t done it back then. Good luck with that. Link
Here's some thing NZ can feel positive about: BBC How New Zealand's film industry boomed during the pandemic. "According to the New Zealand Ministry of Culture and Heritage, the industry supports about 21,000 local jobs and contributes $NZ 2.7 billion (£1.4bn) to its GDP every year. The government has also announced a NZ$50 million (£26million) production grant that Annabelle Sheehan hopes "will lead to a surge in New Zealand led stories." She also reports "about a doubling" of international inquiries for filming in the country in 2021". https://www.bbc.com/news/entertainment-arts-55272486
Another problematic week headed off with talk of the Cook Islands travel bubble. Meanwhile the Aussies have quashed outbreaks and are ready for Kiwis to come visit. This played out misdirection won't work if other countries continue to open their borders and we are stuck in limbo.
DC - "Gruesome" "disaster" in Sweden? Getting a bit tabloid? I agree their Covid resthome policy earlier in the pandemic was a disaster but so was NY, UK, Spain, Italy...
Excess deaths in 2016 and 2017 where higher than current, with a lower population - see figure 7. Also note the winter of 2018 and 2019 had below average excess deaths so perhaps there are currently more frail people in the population and could expect higher excess this winter?
"To date, 156 new intensive care patients with confirmed covid-19 have been reported for week 49, which is about the same number as the previous week (164 patients). The number can be expected to increase slightly due to delayed reporting. In order for healthcare not to be overburdened, it is important that everyone is helps to prevent the spread of the infection, regardless of age and risk factors." Sounds all very common sense to me - as opposed to gruesome.
To say 80+ year olds are not being admitted is based on what? Far more are being admitted now than at the height earlier in the year. Current 80+ ICU is the same as earlier in the year. See Figure 5B.
https://www.folkhalsomyndigheten.se/globalassets/statistik-uppfoljning/…
Have a play around this website and click on the "show other years" option. Mortality, and stress on ICU, goes up at this time of the year.
Tim cast.
But be quick.
https://youtu.be/oQgAwaefiC8
It is worth a look thanks Henry. I didn't watch all, took bites of it. School yard behaviour alright. But look at is as a trend mate, my prediction is that it doesn't get better from here. We go dark side, for a long time, and it doesn't get better until we come out the other side. Could be decades, could be centuries.
What I am seeing is the smartest guys in the room are being shut down (but this same behaviour). When you see that be worried, it is the equivalent of the burning of books.
So the SCOTUS has rejected the Texas case, interesting. The problem I still see is that the allegations of fraud are still untested, and really for any sort of acceptance of whatever the outcome the evidence needs to be interrogated. Guiliani is saying it is Trumps intent to get it tested, in which case he'll start at District Court level.
Options for Trump include the "Failed Election" provision, or Martial Law.
Chairman West is suggesting the Law Abiding States form their own Union of States. Wow, that is stepping up a level. But this is already looking destabilising, with no outlet valve in sight.
Only problem about the allegations of fraud are that the evidence is weak @ best. Don't forget one person claimed that 120% of people voted - yet looking at the statistics only 51% of people voted in that district or in one state where 10,000 people had illegally voted because they had moved. Turned out most were in the military and state law allowed them to vote in that state while residing elsewhere. Other claims are unprovable - they rely of logical fallacies. As much as you like to claim voter fraud the burden of proof is on the GOP. Then comes the question of which votes do you invalidate. In one case the GOP are seeking to invalidate only votes cast in two districts that are Democratic strongholds. As even those in the Supreme Court who indicated that they would hear the case but grant no relief.
Many of the issues should have been raised before the election. Why weren't they ?
This article has a very good explanation of why Tump (and some in the GOP are acting the way they are)
https://www.politico.com/news/magazine/2020/12/12/trump-grievance-addic…
The GOP are just aggrieved they didn't win the election.
Having just finished reading
https://www.amazon.com/Righteous-Mind-Divided-Politics-Religion/dp/0307…
Jonathan Haidt does provide an interesting way to look at the world which does provide some clarity on peoples beliefs and behaviours.
BRobot. Best you take a systems view. And a security systems view.
The system is only as good as its weakest link.
In this case, once observers were bullied & pushed away the system confidence was lost.
In this case, when the voting machine vendors says "you can't audit the software" system confidence was lost.
In this case once ballot chain of custody is broken, signatures removed unable to be checked, matched, system confidence was lost.
The evidence referred to in the court papers, needs be reviewed in court to determine fact.
The court procedurals run arounds are nothing to do with fact.
With our election, it would be good to have photo ID on the day.
Postal votes, There were cases of people being mailed postal vote papers for other unrelated people not of that address.
While the system isn't perfect - and none is - it doesn't prove fraud which is what the GOP want to say happened. Perhaps the inconvenient truth is that the GOP lost. Taking a systems approach seems like you are trying to ignore the human aspect - any systems issue is a human issue as the system is designed by humans. If these issues existed prior to the election
why weren't they litigated BEFORE the election. Don't forget some of these systems were put in place by Republican legislatures.
EDIT : Even if the system were perfect I don't think Trump would accept the result - he just can't accept that.
Frazzz, you win the comment prize,
like we discussed yesterday.
As you probably/should know, The evidence is presented to the Court.
Remember Your affidavit is lodged with the court for the court hearing.
In the US election. You will have seen the State presentations & hearings conducted over last 2 weeks.
And material put to Court thats made public.
https://www.supremecourt.gov/search.aspx?filename=/docket/docketfiles/h…
In your mind.......
In the real world however....
Giuliani did in fact present evidence of voter fraud today but many people simply didn’t want to hear it. He cited multiple Americans, one by name, who have signed sworn affidavits stating that they witness some type of fraud, whether it was pro-Trump ballots being thrown out without cause, ballots being backdated to before the election, poll workers being told not to ask voters for identification, and more.
As Giuliani helpfully pointed out, affidavits are considered ‘evidence’ in a court case. Whether you agree or disagree with them is a different question. And it’s reasonable that not all of the people who signed their names would be willing to go public. If you want to hear more of the evidence that was presented, just watch the first hour or so of the press conference.
https://spectator.us/evidence-actually-rudy-giuliani-voter-fraud/amp/
yes and those names were researched by reputable correspondents who giuliani said didn't exist but voted anyway. They were found and were surprised giuliani had named them in a lawsuit without their knowledge and they DID have the legal right to vote.. That news is days old.
60 judges in multiple jurisdictions appointed by both republicans and democrats have ALL agreed there is no evidence produced that would warrant a waste of the courts time, including his own lap dog attorney general and the chump republican appointed head of election security etc etc etc.
If you want to delve into crooked elections my suggestion would be to go back to 2016. A country really could not be so uneducated and stupid to vote in someone as pathetic and incompetent as the chump. This is like explaining to a 10 year old........over and....over....and over......
Because to date no evidence exists....
Karofsky asked Troupis to provide a single case of fraud in the Wisconsin election, which the lawyer was unable to do. He only said that the votes were cast in an “illegal form,” referring to absentee ballots. He admitted the ballots were used statewide, and not just in the two challenged counties.
Karofsky pointed out that the absentee ballot forms were exactly the same as they were in 2016 when Trump won the state, and he did not object to the ballots then
Frazzz you reading vice? Vice or Stuff, who knows.
https://youtu.be/x7CxM1anfPE
- get back to the person you once were.
The reason the Supreme Court is not taking this is not because of a lack of courage," Christie said on ABC News' This Week. "It's for the same reason that every court has thrown this out: It's a lack of evidence and a lack of any type of legal theory that makes any sense."
What is a bikie gang, Whats it mean.
The first Treaty of Waitangi claim filed by an all-female chapter of a gang has been lodged by the leader of the Mongrel Mob Wāhine Toa.
"It's about looking at the effects that gangs have had upon women and children, historically and to present day," says leader Paula Ormsby.
https://www.nzherald.co.nz/nz/mongrel-mob-wahine-toa-lodge-first-ever-a…
More a political group, out do the greens?
https://twitter.com/i/status/1336899416389603329
Mongrel Mob member Harry Tam
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