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US jobless claims fall; US factory orders rise; China foods prices rise; EU retail sales up; Aussie imports fall more than exports; UST 10yr at 1.14%; oil unchanged and gold tanks; NZ$1 = 71.6 USc; TWI-5 = 73.6

US jobless claims fall; US factory orders rise; China foods prices rise; EU retail sales up; Aussie imports fall more than exports; UST 10yr at 1.14%; oil unchanged and gold tanks; NZ$1 = 71.6 USc; TWI-5 = 73.6

Here's our summary of key economic events overnight that affect New Zealand, with news some core data is showing signs of a turnaround in fortunes.

US jobless claims fell last week from the prior week, but the fall in actual numbers was minor. There are now 5.1 mln people on these programs, also a small reduction. But all the same, these are considered 'good' results mainly because analysts had expected rises.

All eyes are now on tomorrow's non farm payrolls report and a modest gain of +50,000 jobs is expected after the December decline of -140,000.

The story is similar for December factory orders, which also came in better than expected - not by much, and also a lesser gain than for November. But the 'above expectation' tone makes these results seem positive.

Vehicle sales in January slipped on a year-on-year basis and are still well behind the equivalent Chinese market. But they did bring a good gain from the prior month.

McKinsey & Company, the consultant to blue-chip companies and governments around the world, has agreed to pay NZ$800 mln to settle investigations into its role in helping “turbocharge” opioid sales, a rare instance of it being held publicly accountable for its work with clients.

In China, meat and vegetable prices have increased significantly since the start of the year, driven by both their cold winter and distribution issues around their sporadic coronavirus outbreaks over the last few weeks. Pork prices, which had been in retreat after a rapid recovery in pig numbers following the African swine fever outbreak, have returned to near their September highs.

EU retail sales grew more than expected in December, and this is after they fell sharply in November. It is an encouraging sign.

The Bank of England reviewed its policy settings overnight and left everything unchanged. It said its negative interest rate policy needs more time to work. It also downgraded the country's growth prospects.

Australian exports for both goods and services rose +3% in December from November, while their imports fell -2% on the same basis. Year on year for December however, these are -7% and -13% lower respectively. For the calendar year 2020 they are down -12% and -15% respectively. But the mix change did enable them to post much larger trade surpluses as a result of imports falling much more than exports.

Wall Street is posting another rise today with the S&P500 up +0.7% in early afternoon trade, and rising. Overnight European markets rose about +0.8% (although London fell again). Yesterday, the very large Tokyo market fell -1.1%, Hong Kong was down -0.7% and Shanghai retreated again, down -0.4%. The ASX200 fell -0.9% yesterday while the NZX50 Capital Index fell -0.8%.

The latest global compilation of COVID-19 data is here. The global tally is still rising, now at 104,573,000 and up +530,000 in one day. It is still very grim everywhere except in our region. Global deaths reported now exceed 2,274,000 and +16,000 since yesterday.

More countries (75) have started their vaccination programs. And although 105.5 mln doses have been given so far (+1.6 mln more overnight), nowhere has the tide turned on infections - except perhaps in Israel and the USA. However, there is clear evidence the vaccines are working to reduce or even eliminate deaths for those who have taken it.

The largest number of reported cases globally are still in the US, which rose +121,000 overnight for their tally to reach 27,162,000. The US remains the global epicentre of the virus. The number of active cases fell overnight and is now just on 9,790,000 and -38,000 less in one day, so more recoveries than new infections. And there are now more vaccinated people than active cases in the US, which is a milestone. Their death total is up to 462,000 however (+3000). The US now has a COVID death rate of 1392/mln, rising still but made to look 'good' by the disastrous UK level (1619) where deaths are still rising fast (110,000).

In Australia, their community control is impressive. Their all-time cases reported is now 28,838 and only +9 more cases overnight, one in the community, the rest from new arrivals and all in managed isolation. 52 of these cases are 'active' (-3). Reported deaths are also unchanged at 909.

The UST 10yr yield is up another +1 bp at just over 1.14%. Their 2-10 rate curve is steeper at 103 bps, their 1-5 curve is up at +39 bps, while their 3m-10 year curve is also steeper at +112 bps. The Australian Govt 10 year yield is up +5 bps at 1.23%. The China Govt 10 year yield is also up +3 bps at 3.26%, while the New Zealand Govt 10 year yield just keeps on rising and today is up +4 bps at 1.38% and a new yearly high.

The price of gold will start today down sharply, down -US$46 at US$1790/oz. Silver has followed.

Oil prices are unchanged at just on US$56/bbl in the US while the international price is now just over US$58.50/bbl. But they have been quite volatile in between.

And the Kiwi dollar will open today giving back much of yesterday's rise. It is now at 71.6 USc. Against the Australian dollar we are also softer at 94.2 AUc. Against the euro we are just under at 59.8 euro cents. That means our TWI-5 is down marginally to 73.6.

The bitcoin price has changed little overnight and slipped only very slightly to US$36,987. Volatility has been a relatively low +/- 3.5%. 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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61 Comments

David
A minor:
"And although 105.5 doses have been given so far (+1.6 mln more overnight) . . "
Should that be 105.5mln doses?

A likely carry-over from yesterday: "And although 103.9 doses have been given so far (+2.5 mln more overnight) . . "

Yes, thanks. Fixed now.

Those 0.4, 0.6, and 0.9 bits could possibly be rationing of the vaccination? Or just how far in they stuck the needle?

11
up

Unsurprisingly if you take away the Whitehouse conspiracy monger who encourages people to get together and protest or come to a large superspreader rally, the number of new cases of COVID drops. Looks like Biden was exactly what they needed, the butt hurt Trumpsters have gone back to their basements to keep watching conspiracy porn rather than gathering in large groups.

15
up

Not really, Biden has only been in office for 4 weeks and his policies have not had time to take effect.

13
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Are protestors gathering in large groups? Are there massive rallies being held where lots of people gather together against all intelligent advice? Biden has one thing going for him - he isn't inciting people to gather together so he can re-affirm his ego. In a time when gathering together is literally deadly, that is exactly what is needed.

I would have thought it's the thanksgiving/xmas/new year gatherings related surge of cases that would have happened regardless of the leader in charge. Though i do think the scale of the surge could have been much lower if you didn't have a president telling people not to listen to the government advice

if you look at the case numbers
https://www.google.com/search?q=us+covid+cases&oq=us+covid

There's a very clear rise that plateaus about 10 Dec, two weeks after thanksgiving.
And another 10 Jan, two weeks after xmas/ny

The way that people behaved over the holidays is not isolated from what their leaders were telling them.

The world is already past the top of the 2nd wave bell curve.
Nothing to do with Biden.

16
up

Once again bureaucracy shows its incompetence of process, first Aurora Energy and now water testing. If Dunedin City Council was a privately owned company it would have been hung out to dry by the public, but because its not, and there is no longer any individual accountability in local/central govt, when people's lives are put at risk, its a case of 'move along folks, nothing to see here'. I hope the blood tests of the community show no unusual lead levels. If there are consequences, Public Health NZ and DCC are where the buck stops. In Central Otago we have to test for copper for potable water - how many other horticultural areas do that? There are some in the community who want to see livestock farming reduced in favour of horticulture and arable planting. Do the public really understand what that means in regards to increasing use of contaminants like copper, higher nitrogen and synthetic fertiliser use as a result of cropping and more pesticides etc?
https://www.odt.co.nz/news/dunedin/residents-offered-blood-tests-lead

10
up

Local government It is getting well beyond the pale with concern to ignoring basic services in favour of grandiose and window dressing schemes. In Christchurch we used to have a seperate independent authority Water and Drainage Board. That was swallowed up by the council and all that management was shoved into the basement of priority. Same with weeds, noxious plants that adorn roading and sidewalks all over town and the hills.

12
up

Agreed CO, yet more evidence of imbedded incompetency in LG (not that it was needed). No followup testing appears to have been done after the August results and now it's a game of "pass the parcel" between the PHA and the Council. No system to route emails to another staff member during absences. In a word - hopeless.

13
up

Dunedin Mayor Aaron Hawkins not visible on this one. His head is well down. It's officials who are getting pushed out into the firing line.
Meanwhile he spends his time trying to make us carless. Never saw a carpark he wouldn't eliminate.

No one was punished for the campylobacter outbreak in Hawke's bay either, even though the council knew the nearby pond full of sheep sh*t was being sucked in to the water supply and they also put off upgrading the bores when they were warned about the risks. The people then elected the responsible mayor as their MP!
Having said that, privatising the water supply in the UK has been a total disaster: more leaks, higher bills, more outages...

Thanks for the link to the McKinsey/Purdue saga David, it's quite mindboggling how morally corrupt they are.

For anyone that hasn't see 'The Pharmacist' it's well worth watching, Dan Schneider the main subject is a very 'unique' individual but it's an amazing story.

From the NYT link above
McKinsey’s extensive work with Purdue included advising it to focus on selling lucrative high-dose pills, the records show, even after the drugmaker pleaded guilty in 2007 to federal criminal charges that it had misled doctors and regulators about OxyContin’s risks. The firm also told Purdue that it could “band together” with other opioid makers to head off “strict treatment” by the Food and Drug Administration.

That is what happened with McKinsey at Purdue, said Phil Weiser, the attorney general for Colorado. Two McKinsey senior partners led the firm’s effort to implement plans to drive sales, working with members of the Sackler family and even overruling Purdue executives, Mr. Weiser said.

“When you see the actions of these McKinsey partners, they were almost acting as executives of the firm,” Mr. Weiser said.

The records highlight McKinsey’s close relationship with Purdue over many years. In 2009, the firm wrote a report for Purdue saying that new sales tactics would increase sales of OxyContin by as much as $400 million annually, and suggested “sales ‘drivers’ based on the idea that opioids reduce stress and make patients more optimistic and less isolated,” according to a lawsuit filed in 2018 by Massachusetts. McKinsey worked with Purdue executives in finding ways “to counter the emotional messages from mothers with teenagers that overdosed” on the drug.

In 2013, the federal government reached a settlement with Walgreens, the pharmacy chain, to crack down on illegal opioid prescriptions. Sales to Walgreens began to fall. According to the Massachusetts lawsuit, McKinsey recommended that Purdue “lobby Walgreens’ leaders to loosen up.”

and this might be their finest work...

And in a 2017 slide presentation for Purdue, McKinsey laid out several options to shore up sales. One was to give distributors a rebate for every OxyContin overdose attributable to pills they sold. The slides are notable for their granular detail. For example, McKinsey estimated that 2,484 CVS customers would overdose or develop an opioid use disorder in 2019 from taking OxyContin. CVS said the plan was never implemented.

Amazing! They actually set a target of causing harm with these drugs! And they "agreed" to pay US$800 mil, so one wonders how much they actually made from this? Likely in the billions. So even though they were totally unscrupulous they still profit and walk away with little else to constrain their future behaviour.

It is stories of greed like these that make me wish we had a dictator that just sends those individuals responsible straight to the gallows. That would certainly constrain their future behavior.

14
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A black man gets caught selling a single OxyContin pill = 5 years jail. White businessmen pumping up pill sales resulting in the deaths of thousands = fine. This is what white privilege looks like.

McKinsey turn my stomach.

14
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They turn my stomach too Te, but I disagree that it is "white privilege". It is "Elite privilege". You could bet that a low socio-economic white person peddling the pills as you indicated and they'd likely get nailed just as bad as the black man. This is more about what side of the railroad tracks you come from than the colour of your skin (although I wouldn't be surprised if the black man did get hammered harder than the white, there likely is a racist component in it)

I do realise that not all whites are privileged and it's a lazy theme, but there is some truth to it.

And when black America suffered from the crack epidemic nobody really cared or did anything. But when white America got hooked on Oxy suddenly it was a big issue.

You're spot on KS.

But it wasn't really an issue that anyone was going to take any notice of until Dan Schneider's son got killed and he went on a multiyear mission to do something about it.

You probably couldn't say if it wasn't for an obsessive/compulsive type like him there might have been nothing done about it, but it almost certainly would have taken years longer for something to be done.

The guy should get some kind of honour for what he did, it is a total David and Goliath story.

Beanie,

if you think Mckinsey's behaviour was bad, you should read Dark Towers, the recent history of Deutshe Bank. it will really raise your blood pressure. Their dealings with Russia and the Trump/Kushner tribe makes interesting reading.

linklater01

off the thread here but read quite a bit of Eric Linklater’s fine novels in my younger years. Just came across a few of his military history columns, his experiences and others, in a collective volume for same. Recall your Scots background? Any connection?

Fines big enough to send the offending company straight to the gallows would be a good start. Some jail time for the directors in to the bargain too perhaps.

I have watched it couldn’t help think about the similarities to mortgage lending in New Zealand from the aspect of systemic failure and corruption of institutions.

One quote I remember...”a whole lot of very smart people all made very dumb decisions”.

It’s a good insight into human nature and greed, sadly.

from https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2622774/

"From 1996 to 2001, Purdue conducted more than 40 national pain-management and speaker-training conferences at resorts in Florida, Arizona, and California. More than 5000 physicians, pharmacists, and nurses attended these all-expenses-paid symposia, where they were recruited and trained for Purdue's national speaker bureau. In 2001 alone, the company spent $200 million in an array of approaches to market and promote OxyContin."

Someone needs to have a look at the pharma industry here maybe....

We are, we are going into vaccines unquestioned, and it a in a big way, to support them.

"McKinsey & Company, the consultant to blue-chip companies and governments around the world, has agreed to pay NZ$800 mln to settle investigations into its role in helping “turbocharge” opioid sales, a rare instance of it being held publicly accountable for its work with clients." Surely they should be tried for treason? A middle class genocide

It's easier to be an arsonist and get away with it, when everything is already on fire.

David is anyone watching the banks here for exposure to the financial tsunami that is hitting areas of the horticulture industry at present? I hear some are becoming concerned about their potential exposure and the viability of clients as a result.

It may be unpleasant in Hort but the attacks on Meat and Dairy are starting to look like the attacks on our old friends in the Tobacco Industry.
German researchers claim the environmental damage of red meat justifies a 150% tax.
https://www.foodnavigator.com/Article/2021/02/04/Adding-climate-costs-to....

BP reports $12 billion loss
Shell-Dutch reports $22 billion loss
Sweden to build an artificial island wind energy to supply 3000 homes
Denmark to build $50 billion artificial wind energy island supply 80 million people

Heads in the sand of the climate and energy crisis coming home to roost?

Heads in the sand of the climate and energy alarmism coming home to roost?

this guy lays out the problems we face pretty well

"The Raw Material Challenges Facing the Energy Transition from Oil to Minerals"

https://www.youtube.com/watch?v=n_gvvj56rzw

Hard to sell petrol during a lockdown

The losses are probably more attributable to selling far less jet fuel cos of the global travel restrictions.

What does that tell you about the price of oil?

that its too cheap for producers

pretty crazy. Shell is still paying a dividend while loss making, and their share price has rallied ~50% since October last year.

Matariki public holiday is a free-kick to Amazon

How so? I don't see that it's going to be restricted trading.

Why?

“Bottom is in”
I will remember that one
EU and Japan make up around 35-40% of world GDP and are in recession. Uk up creek too. USA market rising not its economy. China stalling

12
up

Please be quiet. You're disrupting the music the 8 piece orchestra are playing on the upper-deck.

10
up

Can't hear you over the DJ and cocaine on my launch, sorry

The news from Israel is outstanding. Infections and sickness at virtually zero in their vaccinated population.

Amazing that they've got so many doses before we've got any. I'm sure I was told we were at the front of the queue.

To be fair though the doses are doing more good in places with raging outbreaks.

Yes, those that need it the most need to get it first, especially in a system that only responds reactively rather than proactively.

Govts. never do anything until it's too late, ie they know that their policies would result in this, but they won't do anything about it until it happens.

Our response to things like unaffordable housing is another example.

"Gold down sharply...Bitcoin price changed little".
Bitcoin sooooooooooooooooo volatile!

Seriously? Btc has one quiet day and you want to pretend it’s not extremely volatile?

https://twitter.com/pierre_rochard/status/1357374002302484482?s=19
The process of monetising a never before seen asset is always going to be volatile. Just zoom out and look at the long term trend.

Everyone's forgotten about volatility because since QE happened realistic price discovery has left the fiat markets.

You're all looking at this wrong. Bitcoin is not volatile at all. What is volatile is the USD.
It's value (And all fiat currencies value) vs BTC are extremely variable on a day to day basis.

But what is clear is that's they are all losing value against BTC at an incredibly fast rate. The USD has lost 16% against BTC since the start of 2021. It's dropped 283% against BTC in the past 12 months. 10,000% in the past 5 yrs.

A Tsunami is coming and most can't see past the fact the tide is going out.

Bitcoin is something about nothing, quite a strange phenomenon.

"sharply" for gold meaning down ~2.5%. Bitcoin price "changed little" meaning +/- 3.5%. Very different beasts.