Here's our summary of key economic events overnight that affect New Zealand with news a global tax deal seems to have been finally adopted.
But first in the US, the expected +500,000 gain to their non-farm payrolls didn't eventuate for September. The headline number was only a +194,000 gain, the smallest rise in 2021 and a big miss.
However we may be the only one noting this, but we need to be extra careful of following the herd and using these seasonally adjusted numbers, when perhaps the pandemic twists are screwing around with seasonal adjustment mechanisms.
The actual data is far more positive and more consistent with the falling jobless claims data. There are now actually 147.7 mln people employed in the US as at the end of September, up +654,000 from the end of August, and up +5.7 mln from a year ago. That paints quite a different picture than the seasonally adjusted monthly +194,000 gain. The same distortion happened in August (actual = +492,000 whereas the s.a. result was +366,000. Actual employment is what is important. By this data, US hiring is actually rising, not slowing.
Either way, over the longer term there were 151 mln people employed in the US in February 2020 before the pandemic. They are still underwater with -3.3 mln net jobs lost as at September 2021. They still have a long way to go, even if recent gains are actually more than most media are reporting.
In Canada they reported very positive employment data for September, with a gain of +157,000, and topping both estimates and for August. It is the inverse story in Canada when you look past seasonal adjustment however. They actually only added +8,300 jobs from August. But from the pre-pandemic benchmark of February 2020, their current employment levels are ahead by an impressive +376,100.
In China, their services sector is expanding again, and at a moderate pace, and bouncing back from a weak August. At least, that is according to the private Caixin services PMI released today. Still, it can't hide the general softer trend evident in 2021. And their 'Golden Week' travel activity is down -40% from last year, suppressing service sector enthusiasm in October.
However Taiwanese exports impressed again, rising +29% above year-ago levels when a +25% gain was expected. These are now +37% higher than for September 2019. It is a standout export success story.
In Australia, their central bank issued its latest update to its Financial Stability Review. One aspect stands out: it thinks it is only a matter of time before a large bank is crippled by a cyber attack and "the defences of a significant financial institution will be breached". (p 39). They are also directly concerned about the "risk of excessive borrowing due to low interest rates and rising house prices".
The OECD has achieved its big reform of how and where multinational companies will be taxed; their BEPS reform. It is an agreement between 136 countries, and brings a reluctant US on board. The deal included a 15% minimum rate for corporations and the main parameters of how much profits of multinationals would be taxed in more countries: 25% of profits over a 10% margin. The bottom line is it should see countries collect around US$ 150 bln in new revenues annually. That will be massive for many countries, and will be felt in the largest corporate boardrooms. In the US, anti-tax Republicans are already lining up to try an neuter it.
And the UN-FAO released its September food price data showing another rise in overall prices globally. In nominal terms prices are approaching their highest ever levels achieved first in September 2011. In real terms, they are the highest since 1974 when droughts, an oil crisis and raging inflation all conspired to hit food at the same time.
Back in Australia, the explosion of Delta cases in Victoria has risen to 1838 cases reported there yesterday in a relentless rise. There are now 15,074 active cases in the state. In NSW there were another 646 new community cases reported yesterday with another 518 not assigned to known clusters. They now have 7,589 active locally acquired cases which is lower, but they had 11 deaths yesterday, now featuring younger patients. Queensland is now reporting zero new cases. The ACT has 40 new cases, including babies. Overall in Australia, more than 59% of eligible Aussies are fully vaccinated, plus 22% have now had one shot so far.
The UST 10yr yield opens today at just over 1.60% and up another +3 bps from this time yesterday and a +13 bps rise in a week taking it to its highest in 20 weeks. The US 2-10 rate curve is steeper at +129 bps. Their 1-5 curve is also steeper at +95 bps, while their 3m-10 year curve is much steeper at +159 bps. The Australian Govt ten year benchmark rate is +10 bps firmer at 1.67%. The China Govt ten year bond up by +3 bps at 2.92%. And the New Zealand Govt ten year is also up sharply, by almost +6 bps at 2.06%.
Equity markets are lower on Wall Street with the jobs data taking the wind from their sails, with the S&P500 now up +0.1% in early afternoon trade in their Friday session and taking the weekly gain to +1.2%. Overnight, European markets fell about -0.5% on most bourses, although London rose +0.3%. Yesterday, the very large Tokyo market rose +1.3% to restrict their weekly loss to -3.3%. Meanwhile the Hong Kong rose +0.6% on Friday to be +1.5% ahead for the week. Shanghai will reopened to a +0.7% gain for the only day they traded this week. The ASX200 ended yesterday up +0.9% to take their weekly rise to +1.9%. The NZX50 fell another -0.1% yesterday to be down -1.5% for the week.
The price of gold will start today little-changed again, down -US$1 at US$1757/oz. Over the past week, the gold price has also changed very little.
And oil prices are also little-changed at just under US$78/bbl in the US, while the international Brent price is just on US$82/bbl. But that is a +US$3 rise in a week.
The Kiwi dollar opens today unchanged at just on 69.3 USc. Against the Australian dollar we are also unchanged at 94.8 AUc. Against the euro we marginally softer at 59.9 euro cents. That means our TWI-5 starts today unchanged and down just on 73, and right in the middle of the 72-74 range of the past eleven months. It is also unchanged over the past week.
The bitcoin price is marginally higher than this time yesterday, up +0.4% to be now at US$54,353. A week ago it was at US$47,496 so it has risen more than +14% in the past seven days. Volatility in the past 24 hours has remained moderate at just over +/-2.2%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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27 Comments
Victoria 1800 daily cases and rising. Army on standby to drive ambulances and tents set up outside hospitals to triage.
This dispute exceptionally long lockdown conditions.
Wellington outbreak showed that Delata can be contained. Auckland has failed and unable to contain it . . . unfortunately gangs and a prostitute couldn’t give a stuff.
... bargain of the day , took Mummy Gummy & my Covid vaccination cards to the Post Office Bookshop , $ 1 to be laminated .... looks great ... and , it's our proof of being civic minded citizens , doing our bit to ease the stress on the nation's hospitals ....
Anti-vaxxers be warned : if we have massive outbreaks of Covid as Victoria has , there may be no medical assistance available for you ... that's the risk you're running ....
The hospital's will be fine
Doesnt look like The vaccinated will need them..
https://www.telegraph.co.uk/news/2021/09/24/analysis-thousands-usual-dy…
Shame on you .... peddling that anti-vax rubbish ! ... check the facts ... being fully vaccinated means being 10 times less likely to catch Covid-19 , far less likely to transmit it if infected , and 29 times less likely to need hospitalization if fully vaccinated .... just the facts ...
No
Shame on you for peddling anti vax rubbish about no hospital treatment ... you people are determined to dehumanize and insult anyone who is doing some actual research rather than lining up for Guinea pig nuts....
I suggest you might want to read up about ADE before you start swallowing your boosters...
pt8. It was obvious that the “quarry” event that required 7 police personnel to self isolate, was the finger coming out of the dyke. inevitable as it was predictable unfortunately. interesting though WP’s comments on media this morning, that the government aware days ago, explains largely the more than usual stuttering and stammering of minister Hipkins when being interviewed by Heather Du Plessis- Allan on Wed evening.
... at 93 , a little lamination could help her regain that youthful sassy look she had ... when she was just 85 ... the glory days ...
Winsome Peters claims Ms Dyke was a Mongrel Mob prossie , sent from Hawkes Bay to Whangarei by her bosses ... and , that Jacinda Ardern knew of this , several days ago ...
... little wonder the government seem to be in panic mode ... and are now in hiding ...
The Wellington outbreak is incomparable to the Auckland one. Wellington got lucky, as usual.
Comparing it to the Auckland one is only useful if you're a Wellingtonian looking for a reason to be self-congratulatory, which to be fair is usually what Wellington does best.
When you say the US was reluctant to get on board the BEPS system, did you mean the "Tax the rich and corporations" Democrats who are now running the US government were the reluctant ones?
Also did you see the highly ironic and likely very expensive designer dress AOC wore to the gala event for the rich emblazoned with the words "Tax the rich"? The same event where corporate lobbyists, tax lawyers and accounting firms are waiting to court her...
Cost was $995 from a black designer not very ironic?
AOC fans hit back by explaining that AOC had been invited to attend the Gala for free, and that she didn’t have to pay for the dress either; both her dress and her attendance were little more than a publicity stunt.
But first in the US, the expected +500,000 gain to their non-farm payrolls didn't eventuate for September. The headline number was only a +194,000 gain, the smallest rise in 2021 and a big miss.
Worldwide, April and May continually show up at the very least like short run inflections that have now extended through summer and by some measures now into autumn (like commodity prices and that perplexing increase in the dollar’s exchange value).
Even the Economist, a magazine dedicated to the thorough cheerleading for, well, mainstream Economics, even they are struggling to get a handle on what all this appears to indicate. In the latest issue, as Emil Kalinowski hits me with on our last podcast (next week), the mainstream can’t help but notice:
"So far this year economic growth across much of the world has been robust and unemployment rates, though generally still above pre-pandemic levels, have fallen. But the recovery seems to be losing momentum, fueling fears of stagnation."
Of course, they still foresee more “inflation” because their orthodox worldview is inseparable from the central bank-centered monetary model. So, they predicted recovery and inflation but are now beginning to realize maybe not the first part.
The Economist considers this as higher potential for “stagflation”, a term popularized during and about the Great Inflation of the 1970’s. It also made a comeback around 2010 and 2011 – not that anyone remembers now. Quite simply, without the money for inflation what’s left is just the stagnation; which very succinctly and accurately describes the decade which followed 2010 and 2011.
Is this time really different? So far, the stagnation is proceeding almost as if right on schedule; the non-central bank schedule.
No need to call it stag-deflation because that’s just redundant. In other words, as the renewal of stagnation grows larger on the horizon, settling the label’s other half is already being taken care of. Link
Banks still falling over themselves to bid the most pristine US Treasury debt offering (US 4 week TBills) down to 0.000% yield, while loading up on other US government debt ($3.286 trillion, just large banks) in preference to lending to productive GDP qualifying enterprises.
In the fourth quarter of 2008, the domestic US banking system totaled $14.4 trillion in assets; of which, $8.5 trillion were loans. On hand were only $102 billion in UST’s along with $1.4 trillion of GSE debt securities (a Treasury equivalent).
As of the latest data for Q2 2021, bank assets total up to $24.4 trillion comprised of just $12.0 trillion in lending while $1.3 trillion in UST’s along with an astounding $3.7 trillion of GSE’s. Loans which had made up about 60% of bank assets when Bernanke was “saving” the world, are now, for the first time since 1955, less than 50%.
And these totals don’t take any account for rates of growth which have declined substantially since 2007, a complete regime shift in the aftermath of “intense strains in the global dollar funding markets began to spill over to U.S. markets.” Like the thirties (if not to the same degree), the banking system has abandoned too much of its redistribution function in favor of the safest and most liquid. Link
Welcome to big govt, big corporate (bank/tech) world, where one creates money while the other buys it & loans it back to the other. Trading, once the main reason for transacting with money, is now a secondary activity. The big business is central banks creating money, getting the big fat banks to take it from them at very low rates to (they say) try & encourage real commerce & activity out there in real land. Only one problem, the big banks don't want to take the risk lending to real people for creating real value & so just send it back to the CB for safe keeping at even lower rates. This is a fundamental break down in confidence by both main parties in the current climate. One, by printing it because they perceive we don't have enough (wrong), while the other is taking it, for a margin, but will not lend it out to anyone wanting to create real jobs. Why? It's too hard. Too rsiky. This is the end game of this chapter of the book. By not letting things sort themselves out, they have created a huge imbalance, and one which keeps millions of small businesses outside the loop (other than govt subsidies). Welcome to big brother. Or should that be Big sister?
Lawrence Wong, Singapore’s finance minister and a chair of the country’s Covid-19 task force, said the lesson for “Covid-naive societies” like Singapore, New Zealand and Australia is to be ready for large waves of infections, “regardless of the vaccine coverage.”
They Had the Vaccines and a Plan to Reopen. Instead They Got Cold Feet.
https://www.nytimes.com/2021/10/08/world/asia/singapore-vaccine-covid.h…
And 11 deaths in NSW today despite aus now having 80+% single vax. Their population is a bit more than NZ, but still that would be about 10x our road toll, and that is with significant restrictions in place. God knows what is going to happen from here, maybe we should have stuck with level 4 and elimination.
Depends on our higher ups, how quickly they move to outpatients medication, letting GPs treat the symptoms they see in each of us and allow quick testing.
Look more at Singapore
Six free ART kits were mailed to all households between August and September. Students and employees of pre-schools, early intervention centres, primary schools and special education schools also received three kits each.
https://www.channelnewsasia.com/singapore/covid-19-pcr-art-test-kits-di…
More ART kits will be distributed by SingPost from Oct 22 to Dec 7, with each household receiving another 10 self-test kits.
Mr Gan, who is also Minister for Trade and Industry, said that the Government will continue to move towards making testing a "way of life".
Steven Van Meter sees evidence in the US employment stats indicating boomers are retiring, and younger generations don't see sufficient rewards in employment to replace them, despite rising compensation. So millions of unemployed, and millions of job openings. See first half of:
https://www.youtube.com/watch?v=L8CGtP_HV40
Asset prices get pumped up, so even labour gets malinvested, on the couch.
Indeed, only a fool would accept money as a worthy payment for work and services rendered.
Here we are again. The labor force. The numbers from the BLS are simply staggering. During September 2021, the government believes it shrank for another month, down by 183,000 when compared to August. This means that the Labor Force Participation rate declined slightly to 61.6%, practically the same level in this key metric going back to June.
Last June.
These millions, yes, millions (see: below), are being excluded from the official labor force therefore unemployment rate because they admit to the government’s data collectors they haven’t looked for work at any time during the last four weeks. The simplest, most intuitive reason to explain why is that those keeping themselves out of the labor force – like in 2017-18 – understand the macro situation in a way that central bankers and Economists (therefore the media) refuse.
There’s no point in seeking a job because there aren’t enough or enough good enough jobs available. Why bother wasting their time? Recent employment “growth” hasn’t been legit growth at all, just reopening of the last parts of the US which had remained closed the longest.
No. No. No, the media assured us. These weren’t really workers, they were lazy Americans sitting idle on government-funded vacations, fattened by extra-generous transfer receipts as well as unemployment benefits. And those who weren’t lazy had been parents stuck home babysitting their own children with so many schools shuttered by lawyers.
Everyone says the job market is somewhere between outright awesome and indescribably terrific. Positively overheated. Once the benefits ran out, and schools all open, they’d surely flood back into the labor picture.
That just so happens to have been September 2021; the same month when, as stated at the outset, the labor force dropped another nearly 200k. Maybe the employment situation – in reality – isn’t quite so rosy? Link
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