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US payrolls growth disappoints again in May; Canada jobs shrink again; India turns dovish; Singapore retail subdued; Aussie home loans rise sharply; UST 10yr slips to 1.56%; gold and oil firm; NZ$1 = 72 USc; TWI-5 = 73.6

US payrolls growth disappoints again in May; Canada jobs shrink again; India turns dovish; Singapore retail subdued; Aussie home loans rise sharply; UST 10yr slips to 1.56%; gold and oil firm; NZ$1 = 72 USc; TWI-5 = 73.6
Takapō / Tekapo hot springs, Mackenzie Basin

Here's our summary of key economic events overnight that affect New Zealand with news of another soft jobs report from the US.

The widely anticipated May non-farm payrolls report for the US has come in decidedly 'average' with employment growing by +559,000 from April. This comes after a surprisingly weak +278,000 rise in April from March. In both months analysts had expected the gains to be very much higher, at almost +1 mln in each month. The net result is disappointment. The participation rate is little-changed. Job growth is bouncing along at a modest rate and may continue its uneven progress through their summer months. That is the revised expectation now.

Stocks rose and benchmark bond yields fell as this suggests policy makers will need to retain easy money policies for longer.

This hiring data is in contrast to the strong expansionary PMIs we have been reporting earlier in the week, both for factories and their service sector. Those other reports indicated healthy employment growth.

So how are the two reconciled? Firstly you should note that the reported payrolls are 'seasonally adjusted' - and perhaps the historical basis for this isn't quite right now, post pandemic. A look at the actual data reveals a more up-beat situation. In March, non-farm payrolls were actually 143,315,000 according to the unadjusted B.1 table. In April they rose to 144,412,000. In May they rose again to 145,345,000. That means in April, payrolls actually rose by +1,097,000. In May they actually rose by +933,000. These are far, far different changes than the seasonally adjusted numbers reported. Seasonal adjustment makes sense to get rid of the noise in month-on-month data, but when an economy is upended by a pandemic, perhaps it creates its own new distortion? Time will tell - the seasonal adjustment process has been reliable though many economic crises over the years, But the bald fact is, American payrolls have actually risen by more than +2 mln in the past two months. And in any assessment, that is significant and a lot more than how most news outlets are reporting it.

But then again, perhaps some of those PMI reports were overdoing it. The official April data on US factory orders has them slipping slightly, down -0.6% from March. Looking through the pandemic base effect, the April level is -2.1% lower than in April 2019. So either way, factory orders are weaker than you would expect in a recovering or recovered economy. Still, this is April data and the PMI and payroll data is for May, so we need to be careful about jumping to conclusions.

In Canada, they also reported May payroll data, and there was only disappointment there. In April they had a large drop in payroll employment (-207,000). Unfortunatley the May data follows this with another -68,000 fall. Their participation rate, while higher than for the US, fell. Their jobless rate is a high 8.2%.

Overnight, the Indian central bank reviewed its policy positions and made no change. India is in a tough COVID fight and that is battering their economy as well as their health systems. The central bank made no formal policy rate changes but it did turn dovish - the economic expansion they were expecting will now be a more subdued version in 2021. Their GDP forecast was trimmed from the recovering +10.5% to +9.5% and their inflation forecast was raised from +4.9% to +5.1%. These seem heroic adjustments in the circumstances but local analysts suggest these are realistic.

Singapore has reported uninspiring retail data for April, a clear sign normality is a way off for them yet. But Singapore still seems on track to achieve a +6% economic expansion despite recently going into another lockdown. The industrial sectors driving their growth are not likely to be affected too much by the new restrictions.

In Hong Kong there has been some extreme bravery on their streets overnight as people publicly mark the anniversary of the Tiananmen Square massacre, holding on to a Hong Kong tradition. For many, it is no longer just about Tiananmen. Local reporters are risking much to document the extent of the protest.

In Australia, home loan growth has been strong, according to the latest data for April. This is adding to the eye-catching trend that started in October 2020.

And with the publishing of Q1-2021 GDP data, we can now get a sense of the changing fortunes COVID has brought to various nations' economies. Australia is on the rise, now larger than Brazil and equal to Russia (which is falling behind). But to keep things in perspective, Australia is still only about half the size of California's economy. But these comparisons to reveal the fall in economic relevance of counties like Russia. Autocratic countries might have seemed immune to some of the initial challenges of the pandemic, but almost universally they have had stunted recoveries with future prospects uncertain. It hasn't been easy-going anywhere, but open and transparent economies have seemed to struggled through much better.

The G7 finance ministers are meeting ahead of the full leaders meeting due to start this weekend. The French and German delegates say agreement on the 15% minimum corporate tax rate proposed by the Biden Administration is very close. And pressure on countries like Ireland and other tax havens will grow intense to respect the deal. In addition, the G7 is rushing to set rules for digital currency issues, partly to counter China's lead in this area.

On Wall Street they see looser money policies for longer and they like that. The S&P500 is up +0.8% in late trade. That means they are heading for a minor +0.6% gain for the week. European markets closed up about +0.3%. Yesterday, Tokyo closed yesterday -0.4% lower on the day and ended the week down a net -0.7%. Hong Kong closed yesterday down -0.2% lower also capping a -0.7% dip. Shanghai closed up +0.2% but for the week it was down -0.2%. The ASX200 ended its session up another +0.5% and a new record high which took the fill week rise to +1.6%. But there were no new records for the NZX50 Capital Index but it did rise +0.5% in its Friday session and it ended the week with a creditable +2.5% gain.

The latest global compilation of COVID-19 data is here. The global tally is still rising, now 172,293,000 people have been infected at some point, up +499,000 in one day. Global deaths reported now exceed 3,705,000 and up +11,000 in one day. Vaccinations in the world are still rising but at a slower pace, now up to over 2.05 bln. In the US half of their population (51.5%) have had at least one dose. More than 40% of Americans have been fully vaccinated (138.4 mln people). The number of active cases there has fallen to 5,540,000 with fewer new infections than recoveries recently and steady progress. We are retiring this daily COVID update now and this is the last one in this format. We will replace it with the occasional newsworthy events relating to the pandemic. The pandemic is far from over globally, but it has now become normalised from a news perspective.

The UST 10yr yield starts today down a sharp -6 bps at 1.56%. The US 2-10 rate curve is noticeably flatter at +141 bps. Their 1-5 curve is also much flatter at +74 bps, while their 3m-10 year curve is flatter at +156 bps The Australian Govt ten year benchmark rate is -5 bps lower at 1.58%. The China Govt ten year bond is +2 bps up at 3.13%. And the New Zealand Govt ten year is up +6 bps at 1.86%.

The price of gold starts today at US$1892/oz, and recovering $20 or about half of yesterday's sharp drop.

Oil prices start today up +US$1 at just under US$69.50/bbl in the US, while the international Brent price is up a little less at just under US$71.50/bbl, and new two year highs.

The Kiwi dollar opens today at 72 USc and a recovery of +¾c overnight. Against the Australian dollar we are down to 93 AUc however. But against the euro we are almost +½c higher at 59.2 euro cents. That means our TWI-5 starts today at 73.6 and a -50 bps fall over the past week.

The bitcoin price is now at US$37,087 and -4.4% lower than this time yesterday. But it is +6.3% above the unusually low point this time last week. Volatility in the past 24 hours has been extreme again at +/- 5.2%.

The easiest place to stay up with event risk today is by following our Economic Calendar here ».

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22 Comments

NZ is poster child ...indicates how bad the situation is in NZ......still no action and that is after NZ treasury forcast of another 17% growth, comming after 24% last year (actually is 30% to 60%).

Still wait and watch in anticipation of house market may cool (obviously will cool at some time and are waiting for it but When..and how much will they wait ...from here where...even now Orrs and Robertson's are not satisfied)

https://businessdesk.co.nz/article/property/nz-poster-child-for-global-h...

Will they accept that removing LVR was blunder specially when had plans to reduce OCR to near zero.

https://www.tvnz.co.nz/one-news/new-zealand/housing-market-got-so-cooked

When pandemic hit, aim should have been to support existing home owner and not promote new housing ponzi as removal of LVR - was to support ponzi as removing LVR was not for existing house owner but to promote pronzi.

The TVNZ explanation of the bubble seems to be a collection of the same old reasons trollied out time and time again. Of course, no mention of how banks can lend mortgages into existence; expansion of the money supply; and monetary debasement. But why? It's almost become taboo to talk for the media to talk about such things, even though those reasons seem to define everything about the fabrics of Anglosphere societies and economies.

The reason the media avoid is obvious - the ramification are scary. Some folk just need to keep their heads in the sand.

That fabric has been fraying at the edges - obvious to anyone looking on with any perspective - but what you do is give oxygen to those who still peddle the growth-forever message (sadly, this still comes from Universities, or at least, narrow-thinking parts of them) and hang your adjectival optimism on them.

Pity, just when we need the Fourth Estate, they b-ggered off down a rabbit-hole...

Senator Cynthia Lummis, “It’s important to have bitcoin underpinning the US dollar, as a store of value, the way gold used to be.”

A sitting member of the United States Congress just called for a #Bitcoin Standard.

https://twitter.com/documentingbtc/status/1400906005114986508?s=21

But its not underpinning anything is it in reality. The last free stimulus USD$1.9 Trillion handout was worth more than Bitcoin. On a worldwide basis, the total value of fiat currencies vs the value of Bitcoin is so low in percentage terms I cannot put all the zeros on this page. Its to volatile to under pin anything and you cannot even buy your lunch with it.

The internet wasn’t worth anything...until it was. Now we can’t live without it. All it takes is time. You acknowledge that there is so much fiat currency in the world, but none of it is pegged to anything fixed and this is the problem. Bitcoin is designed for this purpose, 1 bitcoin = 100 million units/satoshis. The supply is fixed, and the pure, decentralised, permission-less protocol is protected by a massive wall of encrypted energy (No army or military power required). The network is what will do the underpinning of currencies, not the other way around. Yes It is volatile because it is being priced in volatile fiat, and by free market forces, but this will stabilise over time. Bitcoin is the mountain that is not moving, we are the ones in economic free fall next to it, and we wonder why the price seems to be going up 200% per year for the past decade?
I don’t think it’s a threat to exisiting strong currencies (maybe weak ones), as it is a crypto asset, not really a currency, but it will provide a handbrake to the rampant money printing that has been going on.

This is like a Nz politician who already owns 5 rentals saying 'everyone go out and buy more houses please'.

When did everyone become so selfish - including those who are meant to be servicing society, not themselves and their own net worth...

Guess when your savings are being trashed by official policy, it's logical to invest in something they aren't making any more of?

Haha appear to be more cryptocurrencies being created on a daily basis and we have record new dwelling consents don’t we?

But it doesn’t stop people with vested interests promoting whatever it is that they own I order to financially benefit themselves.

IO, you keep confusing bitcoin with all the other shitcoins, and I thought you were smart enough to know the difference? Looks like El Savador will become the first sovereign nation to make Bitcoin legal tender. You need to go and educate yourself some more, rather thank commenting on what you don’t understand. It’s starting to make you sound like a fool.

https://www.cnbc.com/2021/06/05/el-salvador-becomes-the-first-country-to...

Nice troll from an insider wanting others to join the ponzi for personal financial gain.

Same same as property investors in most respects :-)

"everyone come and buy what I own so that I can be rich"

How does the world look from your ivory tower IO? You’re leaving the world in a far worse place than what you inherited, and the best you can do is rug pull a viable alternative to the status quo? What’s your solution to the unbanked poor of the world, with no access to property rights? Or are you just as your handle implies...an observer (all talk, no action?). I’d be ashamed if I was you.

You assume I must be old? I might be, but I may also be the same age as you.

Are you going to change the world by buying a digital coin and selling it to the masses? Or do you have another high horse to ride somewhere and to look down at me from upon?

Not sure if you've read Ray Dalios work on the long debt cycle. If you have and you understand that, you'll understand where my current view is coming from. If that looks like an ivory tower for you, then it might be best to change your glasses (paradigm) that you're seeing the world from.

Patience is a virtue. There is no one shot solution. I'd say to you own some gold, own some bitcoin, own some shares in multiple currencies, own some income generating commercial property and you'll be fine. But I wouldn't become a salesperson for one over another or say that a particular coin is nirvana and the salvation to all of the worlds financial issues.

The widely anticipated May non-farm payrolls report for the US has come in decidedly 'average' with employment growing by +559,000 from April. This comes after a surprisingly weak +278,000 rise in April from March.... Stocks rose and benchmark bond yields fell as this suggests policy makers will need to retain easy money policies for longer.

Hmmmmm..
Who's Hiring And Who's Firing In May: A Third Of All Jobs Were Waiters And Bartenders

The only thing you need to about bank reserves (QE residual central bank liability) : they go up, it's bad
Low rates do not signify stimulus nor abundant liquidity, they often describe just this sort of monetary tightness and chaos. Abundant liquidity means everyone gets funding; lack of liquidity, which does show up in low rates, means that money dealers are being prohibitively discriminating.

Low rates are not, repeat, NOT STIMULUS. They are the signal that "stimulus" doesn't work. If you have to keep doing something over and over, year after year, is that a sign of success? Nope. Bonds are kind enough to identify the cause, too. Tight money.

Low interest rates aren’t a central bank providing accommodation, they are instead its worst nightmare being shoved right back in their face. Well, our worst nightmare because for one thing despite repeated failures, rates that never rise testifying to that failure, central bankers are never held to account.

To correct this view, Friedman pointed out the basic, non-trivial distinction between a liquidity effect and an income effect. Low rates can be stimulative in the short run (the liquidity effect), but over the long run their persistence means something far different. A yield curve is supposed to be upward sloping given the core time value of money and investing. That arises from opportunity cost, meaning the more plentiful the opportunities the greater the time value and the steeper the curve (the income effect). Yield and/or money curves (the eurodollar curve and even the history of the OIS curve) that collapse and remain that way unambiguously demonstrate that "stimulus" deserves only the quotation marks. Courtesy of Alhambra Partners

What could possibly go wrong?

Officials punished for SARS virus leak
By Zhang Feng (China Daily)
Updated: 2004-07-02 01:06
"...The CDC's mistakes also include allowing researchers to experiment with biological materials infected with SARS in common laboratories, and the failure to immediately report the abnormal health conditions of its researchers."
http://www.chinadaily.com.cn/english/doc/2004-07/02/content_344755.htm

Even if 100% plus convincing, irrefutable proof is produced confirming that the outbreak of this pandemic had its origin in a Chinese laboratory, it is 100% plus certain that the CCP will never admit it.

“ Stocks rose and benchmark bond yields fell as this suggests policy makers will need to retain easy money policies for longer.”
And therein lies the problem, easy money to keep the ponzi going and the transfer of wealth to the rich.

If payrolls actually rose in May +933,000 then it would seem the ADP report was much closer to the mark – even if seasonally adjusted. Perhaps the ADP numbers should be given a bit more weighting by the markets.

ADP® National Employment Report™
Private-sector employment increased by 978,000 from April to May, on a seasonally adjusted basis.

https://adpemploymentreport.com/2021/May/NER/Report

The Civilian Non-institutional Population, this being the total of all potential workers, has increased by 26.6 million between October 2008 and May 2021. As the results of the Census Bureau’s latest decennial census (2020) had shown, this period includes the lowest rate of population expansion since – imagine this – the 1930’s. So, the labor market hasn’t exactly been flooded by young labor eager to get working (who can’t seem to find gainful employment, and therefore put off if not give up on having families in the first place).

Even as 26.6 million more potential workers arrived, given last year’s deep recession there were in May 2021 only 6.5 million more payrolls than there had been in October 2008. Where does that leave the other twenty-some million? Enjoying themselves on a beach somewhere cursing reopening and the end of $300 worth of unemployment generosities?

Again, not likely for the vast majority. Instead, the labor force total matches up all-too-closely with those others; the civilian labor force is up just 6.1 million in those same 151 months, including the last fourteen That’s twenty million who are pretty well assured there’s just not enough economic growth producing job opportunities for them to even bother looking for work.

And this is where inflation really comes into it. It’s not about consumer prices, per se, it’s what consumer price acceleration – sustained increases beyond a few months – would confirm one way or the other. In 2018, that purported LABOR SHORTAGE!!!! ended up being no such thing, no inflation pressures emerged whatsoever which only proved the macro slack remained too large and unfilled. Link

The West traded jobs for debt, that's what "free trade" was about. China got the jobs, we got the debt.

What's in store now from corporations and in particular their handlers?

Longweekend, best watching is
Utopia ABC
https://youtu.be/u8J51XZegsk
This is the current playbook!

Netflix etc....
Check whats goining to happen next with Aucklands walking bridge. Or any other Govt project.

https://youtu.be/-TBPomZrtWg
Task oriented....

On CNBC Melissa Lee admitted that there is a lot of selling of naked shorts on Wall Street (this is illegal). Interesting as GME has their Shareholder Meeting on June 9th and apart from voting for the Board, a count of shares will take place. Interesting to see if the share contracts equal more than the float. If so , GME will have evidence to take to the SEC. I am unable to link the video, however it is trending on social media. Interesting days as hedge funds will have to purchase legit shares