Here's our summary of key economic events overnight that affect New Zealand, with news we are entering the holiday season with jitters just about everywhere.
First in the US, Wall Street is slipping lower as investors wonder whether pandemic infections and worsening economic data will actually result in a Federal coronavirus aid package. There is still no deal. The latest snag is over a last-minute Republican bid to curb the Fed’s ability to restart pandemic relief programs and fight future financial crises. Meanwhile more than 1.1 mln Americans have already had a vaccine shot.
In the next few hours, the US Federal Reserve will announce the results of their latest bank stress tests. Some analysts are sceptical about the part politics will play in these results.
In a review of hundreds of global CFO comments at their earnings call, Bloomberg has noticed that an outsized number of them are planning to shrink their workforces in commercial office space. The trend is so large, they say, that it threatens the valuation of commercial real estate and that will have an international knock-on impact in 2021.
Microsoft said it found malicious software in its systems related to a massive Russian hacking campaign disclosed by American officials this week, adding a top technology target to a growing list of attacked government agencies. But Microsoft was not a key target in this attack.
In Canada, their October retail sales numbers came in better than expected, up +7.5% from the same month a year ago. And that is much better than the September +5.6% rise.
In China, demand for coal is high and rising in their winter due to demand for extra electricity, and as their economy booms especially in steel making and for building materials. They are now ignoring their recently-touted GHG climate goals. The price of iron ore and coal rose even higher over the past week, enriching the miners.
They are now targeting an +8% growth goal for 2021, and at the current Central Economic Work Conference, it is clear that Beijing is going full-steam ahead with stimulus ("necessary support") to try and embed their recovery.
In Australia, the NSW community transfer outbreak of COVID has authorities on edge and other States on alert. There is a desperate scramble on to trace infected people who are on the move for the holidays. It is an event that took billions off their share market yesterday, (and not helped of course by the ATM disaster).
In Europe, the "moment of truth" is said to have arrived in the EU-UK Brexit negotiations. What 'truth' that is is still uncertain but we should know soon.
The World Bank has released an audit of its rankings system for "ease of doing business", the one where New Zealand is scored #1. It turns out in earlier years, managers pressured staff to improve the rankings for China, Azerbaijan, Saudi Arabia and the United Arab Emirates.
In New York, the S&P500 is down -0.7% in its opening session today, but is on its way to a full +1.0% rise for the week. Overnight, European markets were lower by about -0.3%. Frankfurt ended the week up a strong +3.9%, Paris was up a more modest +0.4% for the week, while London fell -0.3% over the week. Yesterday, the large Tokyo market closed its Friday session down -0.2% although for the week it was up +0.4%. Hong Kong fell -0.7% on the day for an unchanged week, and Shanghai fell -0.3% in its Friday session to end the week up +1.4%. The ASX200 fell a sharp -1.2% on the day to close its week up +0.5%, while the NZX50 Capital Index ended its Friday session down -1.6%, driven by ATM and that ruined the week, which ended down -1.8%.
The latest global compilation of COVID-19 data is here. The global tally just keeps on rising, now at 75,179,000 and +711,000 more overnight. At this rate, we will easily top 100 mln by mid 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, notably in Belgium, although not in the UK, Sweden, or Germany. Global deaths reported now exceed 1,667,000 and up +13,000 in one day as death rates spike everywhere.
But the largest number of reported cases globally are still in the US, which rose +249,000 in one day to 17,670,000. The US remains the global epicenter of the virus. The number of active cases is still surging and now at 7,055,000 and that level is up +126,000 on a day, so vastly more new cases more than recoveries. Their death total is surging now and exceeds 319,000, up almost +5000 in a day. The US now has a COVID death rate of 960/mln and approaching the disastrous UK level (971).
In Australia, they are getting a small Sydney-based community resurgence based on a border breach. There have now been 28,094 COVID-19 cases reported, and that is just +22 more cases overnight. Now 70 of their cases are 'active' (+16). Reported deaths are unchanged at 908.
The UST 10yr yield will start today unchanged at 0.94%. Their 2-10 rate curve is marginally steeper at +82 bps, their 1-5 curve is at +28 bps, while their 3m-10 year curve is marginally flatter at +86 bps. The Australian Govt 10 year yield will start today still unchanged at 1.00%. The China Govt 10 year yield is also unchanged at 3.32%, but the New Zealand Govt 10 year yield is up nearly +2 bps to 0.965%.
The price of gold is -US$2 lower today at US$1883/oz. Silver is down a bit more to US$25.80/oz.
Oil prices are about +US$1 higher again and now just on US$49/bbl in the US, while the international price is to just on US$52/bbl. Rig counts are still rising, both in the US and internationally.
And the Kiwi dollar is a little softer today than yesterday at 71.2 USc. A week ago it was 70.9 USc. Against the Australian dollar we are marginally softer too at 93.6 AUc. Against the euro we are holding at 58.2 euro cents. That means our TWI-5 is little-changed at 72.7 with a small dip from where it was at this time last week.
The bitcoin price has slipped off its highs, now at US$22,712, a -3.8% fall from this time yesterday. A week ago it was at US$18,137 and so it has gained a remarkable +25% in that time. 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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21 Comments
Listened to this topic being discussed a while back on Teal Vision. An unprecedented number of CEO’s are leaving globally.... again this is not a problem unique to NZ. Word has it they know what’s around the corner and have decided as they’ve made their money it’s time to leave and hunker down.
Microsoft said it found malicious software in its systems related to a massive Russian hacking campaign disclosed by American officials this week, adding a top technology target to a growing list of attacked government agencies. But Microsoft was not a key target in this attack.
Secret, Invisible Evidence Of Russian Hacking Is Not Actually Evidence
I believe I saw a report that a deal was consummated with Indonesia.
Not at all.
Could China replace Australian iron ore with metal from Africa?
Can't see us ever sustaining a bubble with Australia while they are relying on people self isolating when they come into the country. There are just too many selfish idiots who think that they can ignore all that as we found out our selves. Managed isolation maned with police and soldiers is the only thing that seems to work. And even then, occasionally not.
One thing we've learnt is that Australia is a collection of independent states with a lot more autonomy than any federal umbrella. NZ should open to SA, WA, Tasmania and maybe Queensland as they have shown they are very tough. NSW is dysfunctional however, letting flight crew wander around is a joke.
Rhonda Alvarez, a dental assistant, told NPR: "I don't feel like, even if I'm saving, I'm saving ... I'm ever going to get ahead of anything. I feel like it's a constant struggle, you know what I'm saying?" Link
by Audaxes | 3rd Dec 20, 6:11pm
The RBNZ cut interest rates in half five times since July 2008 and has proposed to do so again. When interest rates are cut in half the present values of future cash flows are doubled for both assets and liabilities. This assumes variable cash flows maintain their historical values as time passes, which is not always the case in low interest rate environments. Bank leveraged speculators can over capitalise the higher discounted net present value cash flows associated with residential property, or not.
by Audaxes | 3rd Dec 20, 11:21pm
I have a recurring annual $10,000.00 liability in need of funding.
I deposit $100,000.00 in a one year bank deposit account paying 10% annually.
Annual interest rates are cut in half to 5% during the deposit term.
How much do I have to deposit for one year next year to be in receipt of $10,000 to liquidate the same value annual liability?
by Audaxes | 4th Dec 20, 3:17pm
The adjusted PV discount factor for the original $10,000 cash flow @ 10% for the cut in half 5% rate is 0.95 x 2 = 1.9 x $100,000 = $190,000.
Yes. You now have a convicted criminals (Flynn) and various mentally deranged conspiracy theorists advising the criminal in chief in the Whitehouse how to set policy. Is there anything here that is a surprise under the current inept and corrupt administration and the GOP enablers?? Indeed a sad and embarrassing time for America with long term negative consequences.
Frazz...agree. I am in the US right now. Sothern CA ICU beds completely full in some areas. People being turned away. Hundreds of thousands not going for checkups for other illnesses because they don't want to be anywhere near a hospital and possible EXTRA exposure to covid. Personally, I have put off dentist, chiropractor, annual blood tests for specific issues etc, because my immune system is low and have had pneumonia twice and other respiratory issues, so don't want to risk a trip to the doctors office or hospital........The end result will not just be covid related but thousands upon thousands of deaths and illnesses that could normally have been prevented because the hospitals are turning them away or the people don't want to go anywhere near them.
On another side of the coin, I also personally know of certain young people who have contracted it but have mild symptoms and do not get in the system as if they report it they have to isolate for two weeks, and if they are lucky enough to have a job and don't have health ins they cannot afford that time off, especially with an incompetent Whitehouse administration ending unemployment assistance soon.
I would like to see people who have not been wearing masks to be refused service at hospitals as their total selfishness and "its all about me" attitude is causing massive infection rates to others. Morons. Id like to see them volunteer to have surgery from a surgeon who doesn't want to wear a mask...after all, its all fake news....................
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