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US retail sales sizzle; American job claims plummet; Canada's economy struggling; UST 10yr at 1.55%; oil steady, gold up; NZ$1 = 71.7 USc; TWI-5 = 73.7

US retail sales sizzle; American job claims plummet; Canada's economy struggling; UST 10yr at 1.55%; oil steady, gold up; NZ$1 = 71.7 USc; TWI-5 = 73.7

Here's our summary of key economic events overnight with news that things are on the up in the United States, with very strong retail sales figures and much lower job loss figures.

The stimulus cheques have been in mail from the US government and Americans are spending them. US retail sales bounced a whopping 9.8% last month to US$619 billion. Compared with the pandemic-hit March 2020 the sales were up a mammoth 27.7%. The rise for March 2021 was the biggest in 10 months. The big rebound was felt right across the retail sector. Standouts included: Motor vehicles up 15.1%, sales at clothing stores up 18.3% and restaurants and bars were up 13.4%. This comes of course as many households have received additional U$1,400 payments, part the massive stimulus package approved in early March.

And after a surprise rise in the number of official jobless in the US last week, the number of people making initial unemployment claims this week dropped a stunning 193,000, to 576,000. That's the lowest level for initial claims since March 2020. The previous week's level was revised up by 25,000 from 744,000 to 769,000. The four-week moving average was 683,000, a decrease of 47,250 from the previous week's revised average. This is the lowest level for this average since March 14, 2020 when it was 225,500. The four-week moving average for total claims is now 3,763,000, a decrease of 98,000 from the previous week's revised average. This is the lowest level for this average since March 28, 2020 when it was 3,611,750. The previous week's average was revised down by 1,000 from 3,862,000 to 3,861,000.

In March, total industrial production in the US increased 1.4%. The gain in March followed a drop of 2.6% in February, which largely resulted from widespread outages related to severe winter weather in the south central region of the country.

For the first quarter as a whole, total industrial production rose at an annual rate of 2.5%. In March, manufacturing production and mining output increased 2.7% and 5.7% respectively. The output of utilities dropped a record 11.4%, as the demand for heating fell because of a swing in temperatures from an unseasonably cold February to an unseasonably warm March.

And, separately, the US has imposed a broad array of sanctions on Russia, including curbs to its sovereign debt market, to punish it for interfering in last year's US election, cyber-hacking, bullying Ukraine and other alleged "malign" actions.

In Canada, it's officially estimated that the economy shrank a record 9% in March from February as the coronavirus outbreak forced the shutdown of economic activity during the course of the month, Statistics Canada said in a flash estimate on Wednesday. The monthly decline in gross domestic product (GDP) would be the most since the series started in 1961, Statscan said in its first-ever release of a flash estimate for growth. “Economic disruptions have been both deep and widespread in the month of March,” Statscan said. “Overall for the quarter, this flash estimate of GDP leads to an approximate decline of 2.6% for the first quarter of 2020,” Statscan said without specifying whether the decline was from the previous quarter or a year earlier.

Also in Canada manufacturing sales fell in February, after enjoying the largest increase observed in seven months in January (+3.4%), manufacturing sales fell 1.6% to $55.4 billion in February on lower sales of transportation equipment. The declines were partially offset by higher sales in the petroleum and coal product, chemical, and wood product industries. Since January, motor vehicle and motor vehicle parts manufacturers have faced a semiconductor shortage, which has led to production slowdowns or shutdowns at several auto assembly plants. The tight supply of semiconductors also impacted plastics and rubber products manufacturing in February as a result of lower demand for plastic products from the auto industry. These declines brought total manufacturing sales down 0.8% year over year in February.

China needs to halve carbon dioxide emissions from its coal-fired power plants by the end of the decade if it is to remain on course to become carbon neutral by 2060, according to new research published by British-based climate data provider TransitionZero. It believes the carbon neutral target is achievable, but says the "implementation gap" between the China government’s net zero target and what is happening on the ground "is a cause for concern from both a climate and economic perspective". The report recommends China: Cancels all new coal immediately and issues guidance on a net zero aligned phase out; uses satellite imagery and machine learning to help reduce its Emissions Trading System enforcement costs; and reforms the ETS to drive abatement consistent with their net zero goal.

In Japan, their central bank Governor Haruhiko Haroda says their economy continues to be in a difficult situation due to the effects of new coronavirus infections both inside and outside Japan, "but the trend is picking up". He says the economic outlook is expected to improve, supported by recovering external demand - but the pace of improvement will be moderate while caution continues about the pandemic.

In Australia, the economic news just keeps getting better. Following on from some stunning business and consumer survey results, Australia's March employment figures have beaten forecasts by a long way.

The number of jobs added (71,000) was about double that expected, while the unemployment rate also fell more than expected to 5.6% from 5.8% in February. Some 27,000 fewer people were unemployed. It's worth noting though that there seems to be quite a shift in work and employment patterns as in March full-time employment actually decreased by 20,800 to 8,874,200 people, and part-time employment increased by 91,500 to 4,203,400 people. The participation rate increased by 0.2 percentage points to a historic high of 66.3%. Employment and hours worked were both higher than the March 2020 start of the pandemic crisis.

On Wall Street, the S&P500 is up a strong +1.0% in early afternoon trade. Major European markets were up an average of +0.4% overnight. Yesterday, the Shanghai market ended down -0.4%, Hong Kong was also down -0.4%, while the very large Tokyo market closed up +0.1%. The ASX200 rose +0.5% yesterday, and the NZX50 Capital Index dropped -0.8%.

The latest global compilation of COVID-19 data is here. The global tally is still rising, now 138,581,000 have been infected at some point, up +769,000 in just one day. Global deaths reported now exceed 2,977,000 and up +12,000 in one day. Vaccinations in the world are also rising fast, now up to 844 mln (+19 mln) and in the US more than half of their population (193 mln) have had at least one dose as they achieve a very fast rollout. However, the number of active cases there rose again to 6,888,000 and up another +9,000 overnight as new pockets of infection variants take hold.

The UST 10yr yield is down a sharp -10 bps at 1.55% and its lowest in more than a month. The US 2-10 rate curve is much flatter than yesterday at 139 bps. Their 1-5 curve is flatter too at +74 bps, as is their 3m-10 year curve at +154 bps. The Australian Govt 10 year yield is also down -10 bps at 1.64%. The China Govt 10 year yield is holding lower at just on 3.19%. And the New Zealand Govt 10 year yield is also holding at 1.69%, unaffected yet by the benchmark bond price rally.

The price of gold starts today at US$1765/oz and up +US$29 in a day.

Oil prices are holding their higher level at US$63.50/bbl in the US, while the international price is still at US$66.50/bbl.

The Kiwi dollar opens today a little higher again as the risk-on mood stays, now at 71.7 USc. Against the Australian dollar we are unchanged at 92.5 AUc. Against the euro we are firm at 59.9 euro cents. That means our TWI-5 is just under 73.7 and its highest since March 22, 2021.

The bitcoin price will start today at US$62,564 and very marginally lower from this time yesterday, essentially holding on to its recent rise. Volatility in the past 24 hours has been moderate at +/- 1.7%. 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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55 Comments

27
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A lot to comment on this morning; but starting with an omission - the stuff article that Amazon is coming here due to Government subsidies. This is very concerning when a large corporation comes here to make big profits and it's overall contribution to the country is bugger all. Surely there's got to be a better way?

30
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The performative nature of politics on full display for all to see. Changing a law about contractors = bad when National does it. Rolling out the red carpet with taxpayer cash to one of the world's biggest corporate overlords with widespread documented labour and union suppression issues = fine now, for some reason.

11
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Maybe there are some details to this agreement that we aren't aware of yet.
Maybe Amazon are going to help us become carbon neutral? (LOL)

Or even better build affordable homes, so our young people can get on with working hard, living with dignity and starting families.

Yeah Amazon could get people to return their empty cardboard boxes so people in NZ can use them to live in.

Probably better quality than Wellington's housing stock

I think you are being a bit naughty and either misinterpreting the article or misrepresenting it, murray.
'Amazon' is the film arm of 'Amazon' - this does not contribute "bugger all" to the economy. It is a enormous. Whether the BS subsidy is justified is another story, though.

Part of the deal of the subsidy is to 'scout for other opportunities' in their traditional business model - Which, given my background, I know they most definitely are. I however doubt that their model would work too well here; pretty much their working hypothesis to start with. That's why the extra 5% subsidy is BS - business shouldn't need a subsidy to identify whether a market is viable for them.

The article has these comments in it; "and a deal for potential future investment in areas as diverse as drones and healthcare." and "agreement with the government to secure the higher-than-usual subsidies attached to the film, Amazon agreed to send a team of senior staff to New Zealand to look for “opportunities”."

Now we are being told by the MSM that NZ is considered one of, if not the most, desirable places to live in the world currently, not to mention it is considered one of the better places to do business, so why then does the Government need to pay companies to seek business opportunities in NZ? I am not talking about the film industry, that is a different kettle of fish.

They have no obligation to 'come here'.
The agreement is to show some token interest in NZ. Which they will. But that 'interest' will not amount to anything near the value of the extra 5% subsidy. I agree, it is BS. But you original sensationalized comment was just inaccurate.

There is no obligation as to what they should or shouldn't do. I was talking about what our government is doing, so please don't try to twist what i say. As it is Amazon is reporting an increase in profit of 84% on net income of $21.3 billion. So what did I sensationalise about that? I just heard Stuart Nash interviewed on Radio NZ who said they would connect with existing NZ business's. So not new business, just existing ones.

My expectations are that our Government looks to establish long term sustainable jobs for ordinary Kiwis, and not giving away the kitchen to high profile short term ventures.

The subsidies were referring to the film industry though, as Amazon Prime are making the most expensive (Lord of the Rings) TV production ever made in NZ. And some Amazon bigwigs are coming here to look for future opportunities. I found the article to mostly be about nothing and simply click-bait, implying the Amazon we all know (the online store) was confirmed.

I would say the filming side of things is great and (as the original LOTR and Hobbit showed) is a huge boon to the tourism and film industries.

The only part of their other businesses we should encourage is Amazon Go - to provide real competition to Progressive and Foodstuffs. Retail stuff though may end up destroying local retailers and as they like to locate their distribution centres in out of the way places, it's workforce ends up in caravans. Not really something we should welcome here as we already have housing issues.

Exactly. Ever seen the movie Nomadland? Van dwelling modern day nomads in America.

"The only part of their other businesses we should encourage is Amazon Go"

And AWS. They already have a sizeable team in NZ. It would be great to build out a datacentre here as well.

It's pretty easy to stimulate lots of business. You just give stuff away at half price - like to Amazon Prime.
But it's not so easy to do business that benefits you rather than costs you.

Biden's sanctions against Russia are of interest, but they are about the election and of course Putin just doesn't care. In the meantime the troop build up on the Ukrainian border continues to the point that many analysts are starting to say the an invasion is not far off. Ukraine has been trying for some time to join NATO, and has been given some modest assurance from the US but nothing substantive that would give Putin pause, and of course the world pretty much stood by and did absolutely nothing when Russia unilaterally annexed the Crimea by force, and since then have maintained a 'rebel' force in the Ukrainian east. War is coming, and the consequences will be significant. I suggest Putin essentially believes that today the US and NATO are paper tigers and will twiddle their thumbs while he causes chaos, giving him the opportunity to establish a foothold and entrench it.

Russia is of course a nuclear power, and in line with Putin's 'strongman' stance he will be prepared if necessary to threaten and even possibly use that capability. Any action here could be the spark that touches off other areas, such as China against Taiwan, and other south China Sea nations, North Korea against South, Iran against Israel and any other 'infidels'.

NZ cannot escape any of the consequences. A very strong defensive stance is called for now more than ever.

Don't worry Murray, civil rights losses during Covid have paved the way for compulsory military training & eventually the draft as the world marches towards war. I've predicted such things on this forum some years ago.

I'd also say vaccine rollout in the USA shows they can still be efficient & gear up their industry rapidly as they did in WWII.

There is certainly a unsettling similarity to Nazi Germany’s build up against Czechoslovakia, on the face of it to protect “their people” and then shortly thereafter annex the entire territory. If that goes ahead, what’s next, the Balkan States. History does have a habit of coming round the mountain.

You gave been watching to much "Wars in Colour" on Netflix

No not that, but if I may explain. My father was a professional soldier. We had a large library, a large percentage military volumes, mostly non fiction. I think growing up, I read the lot and have continued the interest. For example of late VD Hanson’s The Second World Wars has been enlightening. But to respond to what I think your point might be, yes sometimes I get to thinking I may have read too much.

Have you been watching CNN ?

Multiple sources, but now that you mention it, an Intelligence report presented to the US government the other day identified that increased instability can be expected in the wake of the COVID pandemic. More fuel to the fire?

A stance of denial will not prevent disaster from happening Chamberlain demonstrated that in 1938. And there is plenty of his disease extant today. NZ has been effectively disarmed, so what ever happens in the coming times we have no ability to protect ourselves or even contribute much to others who may help.

What's your view on NATOs expansion eastward since the cold war and the unilateral move by the US to pull out of the various arms control treaties? You're painting Russia as a belligerent but there are two sides to every story no?

The withdrawal from treaties is Trumps work and completely goes against the trends of recent administrations. the US presence in those exercises is at the request of the Ukraine and in response to the early parts of the Russian build up.

Entry into NATO is at the request of the countries themselves and is a mutual DEFENSE pact. If there was no threat to these countries, they would feel no need to ask for membership. Plus membership has a fairly high bar to meet in standard of Government and requires significant contribution to defensive capabilities, so it is no small thing for countries to feel the pressure to need to request that membership.

So yes Russia is the belligerent, and has been for a while.

The view of NATO is interesting, because after the Berlin Wall fell, and the period of Glasnost, NATO even questioned the need for it's own existence and actually initiated studies about its future in the modern world. But then Putin came along .....

I think you're marginalizing US efforts in Ukraine to install a client state and understating Russia's concerns. I also think you mischaracterize the US as a responsible state when most of it's actions are unilateral and destabilizing. I offer Afghanistan as a case study in US foreign policy fallibility.

Afghanistan is an outlier and not an indication of general US Foreign policy because it was a reaction to 9/11, the attack instigated by Bin Laden who was hiding in the Pakistan/Afghan border region, supported and sponsored by the Taliban who ran Afghanistan at the time. The Taliban at best are a bunch of savage psychopaths hiding behind a religious cloak and will always be a threat to the world at large. But yes the US went in there without an exit strategy, as they did in Iraq, or an real understanding of the people and culture and what it would take to enable their exit. Even today the Afghan people say that now is not the time for the US to leave, and believe that their departure will have dire consequences.

While US policy is fairly questionable a lot of the time, it does not generally have that impact on NATO because all the members have an equal say. Yes the US is the largest single contributor, but the cannot and don't dictate to NATO as Trump learned.

An outlier? The bones of Libya and Iraq bear testament to the same truth. The US does not build nations, it levels competitors to the hegemonic influence of the US dollar and runs very influential public relations campaigns to obfuscate that truth.

If the USA move to 'protect' Ukraine, then Ukraine is doomed. Afganistan, Iraq, Lybia, Syria etc etc.
They know not what they do.

Biden Calls the "Killer"

According to Defense Minister Shoigu, the US/NATO have about 40,000 soldiers along the Russian border (ostensibly as an exercise) and about 15,000 weapons systems. In response to that threat, Russia deployed 2 Armies and 3 Airborne Divisions along her western border. That is something of the size of 200,000 soldiers.

NZ can't even manage to afford ammo to train its police officers. We have no defense other than being kind.

Well the Labour party is still managing to kill the Kiwi dream with just a smile so just imagine what they could do with guns & ammo.

I think we could muster some strong language, maybe even call them liars.

Even S&P talking about action on DTI and interest only loan.

https://i.stuff.co.nz/business/124851267/standard--poors-predicts-an-ord...

Wonder what sort of hairbrained responses will be introduced to stave off this calamity.

The Same Roubini ""Risky, volatile bitcoin doesn't belong in the portfolios of serious institutional investors. Many of its retail backers are suckers being manipulated by an army of self-serving insiders and snake oil salesmen," Roubini said.
"Tesla's Elon Musk and MicroStrategy's Michael Saylor may be betting the house on bitcoin. That doesn't mean you should," he added.

The same one who loves to call people coke addicts.. hahah hes such a joke
https://coinmarketcap.com/headlines/news/crypto-critic-nouriel-roubini-m...

Yup. Will not have to leave the house, can work from home, permanently social distanced from every one, no chance of catching anything, with all deliveries by Amazon, and for entertainment watch Amazon film.

Impressive US data, I hope they've not 'peaked' too soon or it'll be "Sell in May and go away."

Amazing (sarc) what results can be acheived when you give everyone stimmy cheques.

Record number of vacancies pushing wages up and forcing businesses to take on apprentices.
I guess the decision to create a travel bubble with Aussie has a lot to do with opening up spaces in MIQ for foreign students and imported workers.

https://www.stuff.co.nz/business/124850089/its-a-job-hunters-market-as-s...

Thought for today: never believe a Central Banker

https://www.youtube.com/watch?v=INmqvibv4UU&t=307s

IN reply to Ezys commment from yesterday

"Exactly right ham - austerity is incoming whether we like it or not. We're reaching the natural conclusion of keynesian economic theory, because the current level of consumer demand is unsustainable. As PDK will tell you, we live in a finite closed system and the pedal is right to the floor. So try as the government might it can't actually magic up consumption anymore - we've hit the straps. Based on howe strauss theory we're right on schedule for this as the current seculum comes to an end. "

Agree with all that

"So we have to look at the emerging toolset that will define and underpin the next seculum. My pick is that energy production and consumption are going to be the direct drivers of this next 80-100 year cycle. Bitcoin is a network designed to capture, store and transmit the value of energy so it is perfectly poised to be the new underlying standard in this environment. This in turn will drive efficiencies in energy production and supply chains as electric everything takes the floor. The sooner we do away with deficits and debt that claws opportunity out of the future into an ever hungry present the better. In between there will be a lot of necessary hardship for a lot of people, as we pay down the debt deficits created over the last 40 years. But as always the human race will come out stronger, better and more resilient"

Energy is always the driver. Trouble is, take away the mass demand, you remove all economies to scale and LOWER prices for all commodities. Suddenly overheads become oppressive for businesses.
If Oil companies cant take $50 a barrel, you want to tell them to take $20?
Doesnt work.

Again, the money system is NOT the underlying problem.
The problem is we are way past overshoot.
When we step back down the ladder, complexity goes with it.

agreed H&E.

And more; in news articles and debate in the last few days the discussion around productive land being taken up for housing has been worrying for what is not in it; sustainable population. None of the so called 'experts' come even close to suggesting that it should be a topic for discussion or study. Worrying really.

we will regret paving good soil when we have to access it again with a pick

I agree Ham - energy demand and supply are linked and scale together with commodities by use and cost. But I think the oil argument is a red herring, because the efficiencies that the Bitcoin energy network will drive will be in developed nations around the production of sustainable energy as btc value rises and is reinvested in the same networks. For the same reason you're pointing out, an increasing demand for electricity linked to a financial network, will increase means of production and lower the cost of renewables which will in turn lower the cost of production and commodities. We've seen this with solar panel production over the last 10 odd years. There is more than enough wind, solar, tidal and hydro energy to replace oil. Scandinavia is leading the charge in this regard with 85% of power being generated by renewables. So our problem isn't using more energy per se, but rather driving fundamental change in the energy sector to meet the demand. Proof of work Crypto networks will do this, because for the first time in history energy can be converted directly into an asset and stored with a realtime index of value. In my opinion BTC is the perfect vehicle to be the reserve asset of a new economic system based on finite resources, energy production and the resulting global economic constraints.

Gary Ginsler was confirmed as chair of the SEC yesterday. I don’t think it’s coincidental that he has a background in teaching blockchain tech at MIT. Hopefully there is a constructive approach to the integration of this technology which will go a long way for mainstream adoption. Also interesting to see Republican House leader McCarthy double down on the US leading the way with adoption.

“Those who regulate … those who are in Government that make policy better start understanding what it means for the future because other countries are moving forward especially China,”

https://www.forbes.com/sites/jasonbrett/2021/04/14/republican-house-lead...

I wonder if the penny has dropped for US bankers - how do the clip the ticket on Bitcoin or ban it? BTC sidestepped them completely rendering them a ATM and nothing more.

Could be time to load up on Hedera.

So far the SEC look to be losing their battle against XRP too. Albeit that ripple are a centralised organisation so quite different from a completely decentralised blockchain solution. But very telling for crypto/govt integration.

I don’t think it’s coincidental that he has a background in teaching blockchain tech at MIT.

He spent more time working for the Vampire Squid than teaching at MIT.

The latest free money handout in the USA is going to be the shortest sugar hit in history.