Here's our summary of key economic events overnight that affect New Zealand with news company earnings are mixed but generally support the idea that the giant US economy is mending quickly.
The US Fed has been meeting and as expected made no change to their policy positions. But their mood was upbeat about the trajectory of the US economy and suggesting a tapering is in their plans. And they repeated that they see the current inflation impulse as temporary.
And it seems that the Biden Administration will pull off a bipartisan infrastructure deal very soon.
Separately, the US announced a massive -US$94.3 merchandise trade deficit, driven by surging imports which were up almost +5% from May, up +35% from the pandemic-affected June 2020, and up +17% from June 2019. Exports are up too, but not like this.
One of the early pandemic victims was aircraft manufacturer Boeing. But it is now in recovery mode and back in profit, shelving plans to shed another 10,000 workers by the end of the year. It is also now boosting production of the 737 MAX jetliner amid the airline industry’s recovery.
And in other corporate earnings news, Pfizer says it now expects to make US$34 bln in revenues from its COVID-19 vaccine by delivering 3 bln doses, up from its previous estimate of US$26 bln.
US mortgage applications jumped last week, and mortgage interest rates fell, and quite noticeably and taking them back to early 2021 levels.
Canada reported its June CPI inflation which came in at +3.1% which was lower than expected (3.2%) and lower than for May (3.6%).
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In Australia, they released their June CPI result yesterday. It rose +0.8% this quarter and over the twelve months to the June 2021 quarter, the CPI rose +3.8% exactly as expected.
The increases there were led by petrol (+6.5%). The last time weekly earnings data was released it showed wages up +3.2% in a year. The next time this gets updated is August 19. They are expecting the base CPI effects to unwind quickly.
There were 177 new community cases in NSW yesterday with a record 103 not assigned to known clusters, so still going backwards fast there. Their lockdown has been extended by four weeks.
In Victoria their lockdown has been lifted and they reported 8 in the community (and all in isolation). But the border with NSW remains closed. South Australia is also out of lockdown. Queensland has closed it's border with NSW, which is a last-resort action for them.
On Wall Street, the S&P500 has turned negative on mixed earnings reports after starting off ahead, and is down -0.2% so far. Overnight, European markets were mixed with London up the least (+0.3%) and Paris up the most (+1.2%).
Yesterday, Tokyo fell a sharp -1.4% on the day. However Hong Kong clawed back +1.5% on the day, but Shanghai shed another -0.6% in a continuing sell-off. Beijing gathered 'the home team' for a pep talk at the end of yesterday's session.
The ASX200 ended yesterday down -0.7%, while the NZX50 Capital Index ended flat in its Wednesday trade.
In the US, a blue-ribbon group has concluded the US Treasury market needs urgent reform. They are proposing sweeping changes to prevent repeated market meltdowns like those seen in 2020.
The UST 10yr yield starts today at just on 1.26% and a +2 bps change. The US 2-10 rate curve is to now at +105 bps and marginally steeper. Likewise, their 1-5 curve is steeper at +68 bps, while their 3m-10 year curve is +3 bps flatter at +122 bps.
The Australian Govt ten year benchmark rate starts today at 1.18% and unchanged. The China Govt ten year bond is at 2.94% and +3 bps higher. The New Zealand Govt ten year is now at 1.51% and -2 bps lower.
The price of gold is now just over US$1797/oz which is down -US$5 from this time yesterday. This continues the recent yo-yo pattern around the US$1800/oz mark.
Oil prices have risen by +50c and in the US they are now just under US$72/bbl, while the international Brent price is still just under US$74/bbl.
The Kiwi dollar opens today just on 69.3 USc and another -30 bps lower than this time yesterday. Against the Australian dollar we are another -10 bps lower at 94.4 AUc.
Against the euro we are also another -10 bps lower at 58.7 euro cents. That means our TWI-5 starts today at 72.3 and a further backslide.
The bitcoin price is now at US$39,313 and back up +3.5% since this time on yesterday. Volatility in the past 24 hours has been very high again at +/- 4.7%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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47 Comments
Ashley Bloomfield was just on RNZ and said even with Pfizer vaccine you can transmit the Delta virus (although less) and we will need to carry on with border controls and contact tracing. So with no light visible at the end of the tunnel, what will this mean for our economy....a lot of businesses would look at that and just pull the pin to stop throwing good money after bad.
That fact has been around for a while - '...the absolute risk reduction (ARR), which is the difference between attack rates with and without a vaccine, considers the whole population. ARRs tend to be ignored because they give a much less impressive effect size than RRRs: 1·3% for the AstraZeneca–Oxford, 1·2% for the Moderna–NIH, 1·2% for the J&J, 0·93% for the Gamaleya, and 0·84% for the Pfizer–BioNTech vaccines.'
COVID-19 vaccine efficacy and effectiveness—the elephant (not) in the room
https://www.thelancet.com/journals/lanmic/article/PIIS2666-5247(21)0006…
It's not simple enough to dismiss with your well memorized Pavlovian response to anything that challenges your paradigm HG.
ARR (not the crypto) is just saying if you get the vaccine you go from really unlikely to be hospitalized to really really unlikely to be hospitalized. It unfortunately reminds people that the disease is on the whole not going to hospitalize you, but it's not exactly the fear you need to compel the population to go out and line their blood vessel endothelium with spike proteins.
Your link is about some tweets. One wonders why reuters would bother.
'Both ARR and RRR are helpful to assess trade-offs between benefits and harm, because evidence is still limited on whether or how they change across the range of individual responses and risks related to age, comorbidities, behaviours, and level of exposure, as well as over time—with risk of COVID-19 decreasing with vaccination scale-up or altering due to virus variants. Real-world implementation studies, reporting both relative and absolute benefits, are needed, including subgroups with different background risk, to inform tailored public health decisions.'
COVID-19 vaccines: effectiveness and number needed to treat – Authors' reply
https://www.thelancet.com/journals/lanmic/article/PIIS2666-5247(21)0012…
Profile
It is important to recognise that RRR is a measure of vaccine efficacy, measuring the percentage of vaccinated people relative to unvaccinated people who got infected. For the mRNA vaccines the risk is reduced by more than 90%.
In contrast the ARR relates not just to the vaccine itself but is a function of the level of infection in the community at the specific time of the trial. These numbers are low simply because the level of the disease circulating in the general community was still low when the trials were undertaken.
As one of my American colleagues said to me just this morning, it is becoming increasingly obvious in the USA that there are two groups: the vaccinated and the infected.
The essence of the difference between RRR and ARR is presented here.
https://www.reuters.com/article/factcheck-thelancet-riskreduction-idUSL…
It is unfortunate that the Lancet article has been misinterpreted within the antivaxxer community.
The authors of the Lancet communication have themselves clarified that they are supporters of vaccination.
KeithW
Vaccinated people can still get mild infections, typically asymptomatic, and shed some virus. Wearing the masks is mainly to protect the unvaccinated from these shed viruses. Also, there are big social problems when you ask some sections of the population to wear a mask associated with being unvaccinated. That sets off big social divisions. Much easier to ask everyone to do it.
KeithW
So, protecting the unvaccinated from the vaccinated. Heard it here first folks. Also, I'd like it to be broadcast that as explained above, you still spread the virus when vaccinated. So they should reword those advertisements saying getting vaccinated can keep those people you love safe. No. You are still a carrier. Vaccinate the vulnerable. Open the borders.
I suspect the main way a vaccinated person such as myself will spread Covid-19 is by over confidence. For example by touching a shiny surface that an infected person has breathed on and then failing to wash my hands before touching another metal surface such as the counter at the local coffee shop or the support poles on the bus. Whether I have a mild infection of Covid-19 is almost irrelevant since I wear a mask on public transport; what I do like is that adjective 'mild'. Before vaccination as elderly with a medical condition I was very high risk; now that risk is low. Given the chance I'd visit my family in France and England. Probably will do so next year.
Would you travel overseas if you had to do 2 weeks isolation on your return?...maybe being retired you would, but would a working person?
When I started this thread I was hoping for an intelligent discussion of the economic effects of Bloomfields statement (not looking at you Lapun). If the border won't be thrown open when vaccinations to those who want one are all done, then that is massive for anyone pouring money into their tourism business to keep it afloat. Think also airlines, sport and entertainment industry, hospo etc etc. Throw on top the almost inevitable outbreak of delta here...what will that do to plans to raise interest rates?
No. That is why I'm waiting - probably until next year. Pre-Delta I was optimistic this year. Who knows what variant may appear next. I still hope for a workable vaccination visa (which may need a new vaccine). What will be interesting given the risk of mistakes (as per NSW today where my son is stranded) is which countries vaccination data will be trusted.
Inevitable out break of Delta - given a certain high level of vaccination, (maybe with boosters for the socially mobile and the elderly), then an outbreak will die out naturally with only a handful of people affected. Defining that 'high level' is interesting and so is achieving it given anti-vax beliefs.
How many are intubated?
On raw numbers you have a 1/41 chance of catching covid globally.
But you have a 1/2 chance of having no symptoms, a 1/3 chance of having minor symptoms, and a 1/10 chance of being hospitilised.
If you are one who is hospitalized, then it is a further 1/10 chance you are intubated.
Factor in age, and those under 50 will be laughing just fine. Something like a 1/250,000 chance of being intubated.
On raw numbers, in time without precautions you have a near 100% chance of getting Covid over time, not 1/41.
10% are thought to get long-covid. regardless of age.
Huge numbers can overwhelm the best hospital resources in the world, (our's can't cope even without Covid.)
The dead can't laugh, but they may haunt you vaccine sceptics one day.
What's the exit strategy then? There is some probability, however remote, that a further booster in the distant future would reduce the spread of Covid-19 however it's more likely that it just fades to become endemic in the human population like any other flu virus.
Well the UK is providing a test case of more or less wide open borders if you can prove you have been properly vaccinated. If that is not a disastrous outcome, given the UK’s immensely greater population and international passenger transit, then surely NZ, once its own population has been sufficiently vaccinated, has no reason not to adopt the same policy.
As Mr Chaston mentioned yesterday ."Oddly, there is an expectation that the RBNZ will raise its OCR soon to tame the inflation impulse, but the RBA is not expected to raise their official rate even though their inflation rate is running faster. They are expecting the base effects to unwind quickly."
Why is there such divergence between the economists of the same banks and the view of the markets as to the RBNZ trajectory.
The got cold feet after the last time OPEC+ crushed them. You'll need to see oil it at or above this price for a long time before shale drilling comes back to pre-pandemic levels. The good news for driller is that demand is strong.
It makes you wonder, wtf happened in 1971?
www.wtfhappenedin1971.com
The FED is full of shit and is trying to talk up the market, nothing new in that. The USA will continue its downward slide. The final outcome will be a war, its almost inevitable. Biden just setup cyberattacks as a possible starter only the other day, but there will be plenty of other excuses just to start one.
Lines up with Dalios work on the long economic cycle - end of that cycle sees new world power win that war (China) and become the new leader who in turn gets to dictate the rules of the new financial system. Typically this happens every 75 years on average - and it just happens to be roughly that since Bretton Woods.
Boeing may have plenty of orders on the books but they screwed themselves this time, their workforce is walking away after years of overly agressive cost cutting:
https://www.bloomberg.com/news/features/2021-07-26/can-boeing-starliner…
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