Here's our summary of key economic events overnight that affect New Zealand, with news it's all about economic emotions today, by markets, central bankers, and fiscal policymakers.
Yesterday's surprise Fed rate cut seems to have been an own-goal, spooking investors rather than reassuring them. "If they had to cut by -50 bps, it must be bad" seemed to be the reaction. Equity markets fell with the S&P500 down -2.9%. But today, this same market is up +2.8% in mid-day trade is a rally that seems to be all about domestic US politics and the rise of Joe Biden. Emotion and sentiment is driving Wall Street, rather than economic data.
Data from the world's airlines isn't positive. January passenger travel growth was down to +2.5% year-on-year, down sharply from the +3.8% rise in December. Air cargo volumes are now falling year-on-year, down -3.4% year-on-year. The industry expects both sets on numbers to be much worse when February and March data is released.
A UN agency said that China’s exports of parts and components for products ranging from cars to cellphones shrunk by -US$50 bln in February, costing other countries and their industries lost output. The shipping data is wildly negative too.
Employment levels in the US will also be in focus later this week with the February non-farm payrolls report released. Today we got the precursor ADP Report showing for February it dropped back to +183,000. Manufacturing jobs shrank and almost half the rise was for either healthcare or fast food workers.
The widely-watched ISM services PMI was very positive, showing a good expansion. The alternative, internationally-benchmarked Markit services PMI gave an opposite view, showing the fastest contraction in the US since October 2013.
A more nuanced update of business conditions in the US will be released by the US Fed at 8am NZT via their Beige Book. Update: "Modest to moderate" activity levels were reported for February.
Interestingly, overall car sales in the US look like they had small growth in February.
Following the US Fed, Hong Kong was the next to cut rates, dropping them by -50 bps to 1.50%. Again, they failed to give any reason why it was necessary, other than being a follower.
And then Canada also cut its benchmark policy rate by -50 bps to 1.25%. They have inflation at their target and economic growth "close to potential", but they cut because of what they expect Covid-19 impacts will do and "global monetary and fiscal authorities are responding".
The latest compilation of Covid-19 data is here. There are now 13,981 cases outside China, a rise of +1125 overnight as the numbers keep on rising in South Korea, Italy and Iran. 11,045 are in those three countries (80%). A week ago that outside-China number was 2930 so it is still quadrupling in a week. An odd and unique feature of Covid-19 is that very few children seem to succumb.
China's slowdown is less about how their factories have been affected than how their giant service economy has retrenched. More evidence came today from the private sector Caixin services PMI which dived to a fierce contraction of 26.5 which is from the February level of an expanding 51.8. This is even more fierce as the official Government services PMI which fell to 28.9. The difference hardly matters, it is almost a complete stop - apart from the FIRE sub-sector. That is the only bit still working, it seems.
However, in the huge Pearl River delta industrial zone, over 90% of workers are said to have returned to work and that involves more than 6 mln people. But there are major doubts about how much work is actually being done. And more than half of all SMEs still haven't reopened.
Home sales in China fell -40% in February, and maybe more.
In Australia, their economy grew faster in Q4 than most analysts were expecting. It grew +2.2% pa and above the 2.0% rate expected and well above the Q3 rate of +1.8% pa. Of course, all this was before both the bushfires and coronavirus. It won't be repeated for a long time. And there are widespread expectations that major fiscal stimulus is about to be unleashed in Australia to avoid it falling into recession.
The UST 10yr yield is now under 0.97%, a new record low and down another -4 bps overnight. Their yield curves are still jerking around trying to find a signal. The 2-10 curve is more positive at +33 bps. Their 1-5 curve has suddenly turned positive at +11 bps. and their 3m-10yr curve has held negative at -8 bps. This is a market in the middle of a confused transition. The Aussie Govt 10yr is down -2 bps at 0.74%. The China Govt 10yr is also lower, down -4 bps at 2.76%. The NZ Govt 10 yr is down -1 bp at 1.04%.
Gold is just on hold today at its higher level, down -US$3 to US$1,642/oz.
US oil prices are little-changed, now still just under US$47.50/bbl. The Brent benchmark is at just under US$51.50/bbl.
The Kiwi dollar starts today weaker at 62.8 USc. On the cross rates we are softer at 95.1 AUc. Against the euro we unchanged at 56.4 euro cents. That means our TWI-5 is a little lower at 68.1.
Bitcoin is lower, now down -2.0% since this time yesterday at US$8,686. 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 ».
130 Comments
Take from this what you will: "Medical staff reporting 1000+ dead in Iran which at a CFR of 2% = 50,000 cases. With a doubling rate of 3.5 days that means 12.5 million infected in a month from now with 256k dead, although CFR goes up to 10-20% once hospitals are overloaded so more like 1.8 mil dead."
but but but "it's just the flu". Intensive care units are overwhelmed at about 0.01% infected (~500 infected in NZ). Likely less than a month from now unless govt gets extremely aggressive about stopping it. They wont. Paralyzed by concern that they will look uncool or immoderate - they're culturally incapable of taking decisive action. https://www.youtube.com/watch?v=ee6-sI9rdtA
It's fairly obvious Iran is withholding facts given the number of exported cases plus the level of contagion amongst prominent members of government.
The world's problem is what do you do when the world's biggest state sponsor of terrorism has hundreds of thousands of bio terror weapons (infected citizens) wanting to go anywhere but Iran...
2008 GFC looks like a picnic now...
Breaking News! More Provinces In China Reporting Reinfections Among Recovered Patients
Source: Thailand Medical News Mar 04, 2020 12 hours ago
While China has been claiming that it death and infected cases have been dropping while the are no real audits or international entities to prove that it is so with the exception of it staunch ally WHO, which themselves have no access to the real conditions of the country except on hearsay, a new problem is gradually emerging which was already reported in the past In Thailand Medical News, ie the issue of reinfections.
In the last 48 hours, five provinces have reported cases of recovered patients in isolation testing positive for the SARS-CoV-2 coronavirus. Cases were first reported in Tianjin then followed by Guangdong, Sichuan, Hubei, Hunan and Zhejiang.
The first cases for the last 48 hours were initially reported in the Northern city of Tianjin that had no new cases for previous four consecutive days. First two “recovered patients’ who had been discharged from hospitals tested positive for the Covid-19 disease but then more gradually emerged.
Health officials also revealed that more recovered patients from the other five provinces also tested positive in the last 48 hours.
On another note, Chinese health officials have not made adjustments in all their daily coronavirus figure reporting to accommodate all these reinfected cases.
https://www.thailandmedical.news/news/breaking-news-more-provinces-in-c…
I’ve been following Dr John Campbell’s daily COVID19 updates. Very informative without the main stream hysteria. https://youtu.be/5Tlmfss3Piw
I find it quite irresponsible that the Minister isn't identifying what part of NZ the third case is in. I can understand not being too specific and risking identifying the person, but we should at least know the city, or the district if they are from a smaller town.
Sooner the govt stops reacting and switches to being proactive (as it should have a month ago) the slower the disease will progress. But they won't - they will continue to dither in inaction, fiddling while Rome burns, and condemn tens of thousands more to die as a result. 2 weeks quarantine for arrivals should have been mandatory for weeks and pretty certain that non-essential contact with strangers will be ended within a month. How about moving that forward a few weeks to when it might actually achieve something (a universal 2-week quarantine could, maybe, nip spread in bud).
You are keen for decisive action. Quote from an article about the black death: ""Italy perhaps suffered the worst, with up to 60% dead. Venice lost as many as three-quarters. In contrast, Milan perhaps had higher survival rates, because its rulers, the ruthless Visconti family, ordered that any house where the plague was identified be boarded up and its inhabitants left to starve.""
How do they decide 14 days for quarantine - what if the incubation period is sometimes longer? The origin of the word "" the city of Dubrovnik, now in Croatia, initiated the rule that all ships stay anchored for 40 days""
NZ has 10's of thousands of campervans and caravans or even tents to string out along quiet roadsides where they can be serviced from buses without any contact. Dig long-drops and string out power and water supplies to each. Vehicles can be sterilized easily by throwing a tent over them and heating to 60°C We can provide meals and laundry services without contact. It doesn't strain medical system at all to do this. This can work if done ASAP, but not in a month or two after it is everywhere.
The end of tourism is already baked in and unavoidable as is colossal economic disruption despite institutions still trying to pretend otherwise. Iran and China both illustrate the reality of economies shut down for a month or more (despite what they are trying to pretend and propagandize)
Accept it and focus on saving lives with decisions made now.
Mainstream media saying do not talk about it online and not telling us where the third case is located. Is it to cover up MOH mistakes and advice they must now be scrambling to save face. Isolating people for 14 days when virus is known to take longer than this to show and yes it does spread before you know you have it yet they said students at Westlake etc have nothing to worry about.
We will soon be facing a Wuhan situation full lockdown.
It's like chinese govt lies that lead to uncontrolled spread. Clear honest information is necessary to get people to alter their behavior to prevent spread. Govt are evil if they won't provide data - it causes deaths. We need to know everything about where patients have been to reduce risk of transmission! Korea/Singapore have map apps to show where patients have been. Best thing everyone can do at this point is self isolate as much as possible. Avoid contact with strangers. Schools and will be closed within weeks - but would be better to do it now when it will take less time and have more impact on spread.
Also think of the case on the Palmerson North flight.
Have they traced the people over the next 2 days who sat in her seat on on the aircraft to isolate (could be upto 50 people as you share the armrests).
What about taxis/security staff/airport staff and wherever she visited for 5 days.
Good luck is needed now.
Bit like a cracked record, it becoming is........
With 5-6 billion too many on the planet, stats say if it wasn't this, it will be something else, and soon.
Just check your directed anger isn't tinged with avoidance - shooting the messenger is a common method (or shooting a dratted 'other'). We see that with another hereabouts talking of 'eco-facists'. In that case, the persona obviously needs the status-quo to continue, so that the persona's mana/standing can too. The fact that the status-quo is temporary for biophysical reasons (be they overpopulation or habitat-degradation) cannot be avoided by castigating this or that echelon.
It's in the past now he's probably be same as Oz.
Mind you look at the here and now.
You can imagine he will be more effective (have a functional & functioning relationship) with Australia & Scott Morrison.
Compared to how people see it this morning's Press joke is our PM has her red high heel firmly up SoMo's bottom.
BREAKING! LatestCoronavirus Research Reveals That The Virus Has Mutated Gene Similar To HIV and Is 1,000 Times More Potent.
Source: Coronavirus Research News Feb 29, 2020 5 days ago
Latest coronavirus research by a team of researchers from Nankai University in Tianjin lead by Professor Ruan Jishou, a prominent virologists and genomicist have discovered that the new SARS-Cov-2 coronavirus that causes the Covid-19 disease has a mutated gene that is found in HIV virus. It is this unique feature that sets it aside from the rest of the known coronaviruses.
https://www.thailandmedical.news/news/breaking-latestcoronavirus-resear…-
One virologist from UK who says he wanted to remain anonymous as he might be accused of causing panic or misinformation warned that the new coronavirus can be described in basic terms as a “slow airborne killer that will never let its victim off, even if it loses the battle the first time”,implying that even in those so called recovered , they might face reinfections or that the existing viral loads in the body will eventually cause some other new chronic disease.
" a rally that seems to be all about domestic US politics and the rise of Joe Biden"
Biden?
It isn't about Biden, but who he picks for VP!
If Biden beats Trump he will either have a 'heart attack', or fall over some other way and 'have' to hand over to the VP. So it's who 'he' picks for his VP that the market is speculating about.
(PS: And as for today's rally? What's the bet that the Plunge Boys are in backing up yesterdays failed rate cut?!)
In my opinion Sanders supporters would vote for ANYONE but Trump. I hate that old creep Biden as much as every normal person would (he's pretty much openly pedophile), but I'd still choose him if the alternative was Trump. Biden might be risky to let near your kids, but Trump is dangerous to half of the globe.
The Federal Reserve is just responding to the bond markets on a lag. These institutions are a sham, they must follow the bond market, or it becomes obvious the emperor has no clothes.
Yes, maybe Jay Powell has a faster response than his dopey academic predecessors. He is, after all, from the private equity world (and has made a $100 million fortune serving his masters there), so he is aware that high yield spreads on dodgy debt really matter. It is just the pantomine of those in high profile positions who are in charge of protecting their tribe and their careers.
Setting overnight interest rates is piss simple, just look at the bond market (eg 2 year Treasury bonds). On this basis, expect another 0.5% emergency cut in two weeks time, unless something changes. The world economy is slowing and the bond markets respond to information as it comes in.
There are huge unseen infections growing through the 3rd world - just not bought to official international notice. Travelers returning from Bali and Egypt are testing positive so you know that it is hugely prevalent there, and Iran has orders of magnitude more infected than reported. Every country in the world has it now, and it is growing at at least 10x every fortnight. But only in OECD do you get a moderately clear idea of extent.
People are not happy.
https://i.stuff.co.nz/national/politics/120003679/coronavirus-kiwis-wan…
This I knew last night, but won't tell you till later this afternoon is not a sign of wellness.
https://i.stuff.co.nz/national/health/120025480/coronavirus-third-confi…
A third case of coronavirus has been confirmed in New Zealand.
Director-General of Health Ashley Bloomfield told RNZ's Morning Report he got a report of a third positive test on Wednesday evening.
"We're getting all the information together and we'll update everybody at the same time at the update this afternoon," Bloomfield said.
It's not yet known which part of the country the newly infected person was in.
- what if no.3 was a worker in the beehive, or in Dr Bloomfield's executive office, would information flow & comms be so relaxed.
- more importantly operatives in the health system need be informed.
The good Dr's bedside manner is not feeling so good. Unless these are his KPIs.
Not telling is not working.
https://i.stuff.co.nz/national/health/120025480/coronavirus-third-confi…
Prime Minister Jacinda Ardern says there will be more information released this afternoon about the third confirmed coronavirus case.
A third case of the virus was confirmed by the Ministry of Health early Thursday. At this stage details were scarce but Ardern said more information would be made available to the public at about 1pm.
Travellers from Iran (grandparents) to a non traveller (son & father of school kids).
MoH now consider asymptomatic carriers/infectious...
Person to person transmission in Auckland.
Lids now out of school in isolation/quarantine
(Auckland Grammar & Ormiston).
The case went to a medical centre, one medical operative now in quarantine.
Other patients of that centre, at there at the time are being evaluated.
Case no3 had been going to work
Get this.
The grand parents came back from Iran.
Developed mild symptoms.
The son has become case no. 3.
MoH sees no reason to test said grand parents (the source of no. 3 case).
Wouldn't you think NZ has 4 cases?
Is the grand parent still infectious?
Why not test and confirm the viral genetics and path of transmission.
So much for quality data. Quality science.
The good Dr gets rattled when explaining why grandparents untested but counted as probable case.
Note NZ can do 550 tests per day currently.
The Dr comments about modeling and planning.
Impression given is much to do, and less has been done than previously suggested by PM etc, as looking to work in Australia done (note: PM please be diplomatic to Australian friends)..
Dr also says modelling depends on assumptions and constantly changing. He can model for planning inputs, but he can't predict the future.
Maybe he should chat to the climate change folk who live by their frightening models as absolute.
The contrast here is amazing, will Shaw & Co gain any awareness?
Responsible parenting.
Govt is asleep at the wheel - should have been quarantining arrivals for weeks. But in abrogating their responsibilities to protect NZ they have condemned us to suffer through an epidemic. Our reward for allowing a bitter septuagenarian to select the muppet show cast as NZ's govt. Deservedly he is one of most likely casualties of Wuflu.
Foyle are you a virus expert? nah. All you can do is post rants.
This you...read it!
Open letter to Bridges from Siouxsie Wiles, an associate professor in molecular medicine and pathology.
"I can’t quite believe I need to tell you this, but during a serious outbreak of a new infectious disease, the last thing we need is for our elected representatives to be undermining the important messages coming from the government, scientists, and public health officials".
https://thespinoff.co.nz/politics/04-03-2020/some-advice-for-simon-brid…
The irony is that Wiles comes across as a techno-optimist.
Yet she is the wrong side of the math........... as is all the medical profession, in the face of global overpopulation. After all, they contributed to the problem, one which has the potential to wipe us all out. Sir Peter Gluckman launched his far-seeing club yesterday, but it will avoid the LTG question too. Same background.
Funny old world
When the 'government, scientists, and public health officials' have failed to deliver accurate advice and effective decisions then they should be ignored and criticized. The govt has bungled their way into this situation, and now the population is going to be largely on their own in trying to survive it, public officials telling parents at westlake school that: "While this is concerning for everyone, there is no risk to students, staff or others at the schools." are just lying - WuFlu has asymptomatic transmission and enduring surface contamination and tests have low reliability during early infection. The risk might be low, but there is still a risk.
his assertions that he knows more about managing a pandemic than those advising govt. Pretty simple.
We need to leave politics and listen to science. If science steps up and criticizes politicians we should listen.
But listen to the ravings of a clearly politically biased Foyle! Nah.
Ok, I see you haven't but if you could can you list the top 3 things Foyle has suggested that you think outlandish.
How do you see the science and the politics being separated?
For example do you think the grandparent from where no.3 got infected should be tested?
This goes to testing and the definition of the disease.
How do you feel when you see the peak prosperity guy?
https://youtu.be/s9FjX2b0SAk
See this and the 4 or 5 previous days posts.
Appeals to argument from authority when said authorities have lead us to precisely this dark place through ignorance and colossally poor judgement are just laughable. The mechanisms of transmission have not been in doubt for a month, nor the high infectiousness, CFR or rate of spread, the rest is just math and stats. But the advice and actions of our govt even now are poor - they are going through the motions of trying to combat the spread while it accelerates unseen. This pied piper govt will not save us, they are still in denial about the scale of the problem.
This is a market in the middle of a confused transition
Hmmmm...
Three rate cuts were enough, Powell said, a signal of insurance to get the strong economy on to its 1998 scenario. Now an additional fifty, and unscheduled double, and its an even stronger signal for an even stronger economy. It was dubious last summer, only more so in March 2020.
But a signal to whom or what? Link
From Sydney, sky news, the number of health workers with virus.
Also death toll 2.
The markets are unable to comprehend the downside risk.
Reality is that only a China style shutdown will halt the uncontrolled spread. Hence there are only 2 outcomes until a vaccine is available:
1. Virtual total shutdown - travel only with quarantine, social distancing etc
2. Total pandemic - affecting 40-70% of the population estimated by Harvard epidemiologist Marc Lipsitch:
https://thehill.com/changing-america/well-being/prevention-cures/482794…
Even at the WHO estimated death rate of 3.4% this leads to potentially 200 million deaths.
Within a month closing the borders will have looked like a no brainer - but it will be too late.
It only takes 33 doubling of cases to go from 1 to 9 billion.
In uncontrolled situations ie early Wuhan, on the Diamond Princess, in Iran, Italy and South Korea we have had doubling occurring in just 2 to 3 days.
Immediate world action is needed - even if it means full closure of passenger airline services and tourism sectors.
But the sheeply western political classes don't grok exponential growth, have no clue about risk management, and can't contemplate the possibility of behaviors or action outside of what they have direct experience of. Why are east asian cultures so much better at this? Japan, Korea, Taiwan, Singapore all display massively more competent and effective government response. Technocratic achievers rather than womble arts grad leadership? An incredibly expensive way to teach voters not to not elect superficial airheads and low-achievement student politicians into government.
Your concerns the govt is not fully across this thing are unfounded. Ardern has leapt decisively into action by announcing the cabinet will be meeding regularly but 'more often' (than regularly, presumably) no madder what time of day, if needed. So lots of meetings, which is good. She told us officials are making progress on understanding how this virus is transmidded. Meantime she is instructing us to stay home if we are sick, catch our sneezes and wash our hands. That audda do it.
If you groked (?) exponential growth, you'd not be making those remarks.
As I said, we are grossly overpopulated and that will not continue - it's just physical fact. By some means, 8 billion will reduce to 3, 2, 1, or less, and within a generation. Perhaps withing the next decade. That outweighs your nearside panic by several orders of magnitude.
It's all a matter of keeping perspective......
My advice to the government: find someone with personal, professional and public credibility to lead a national coronavirus response, and resource a substantial multi-disciplinary team in his or her support. Where is the National Risk Unit? Current handling between MoH, Finance, the PM, Uncle Tom Cobley and all is a management fiasco. And act with urgency. Right now, the virus is outstripping current muddled structural capability. Credible, responsible action needs a new single-point management framework..
A request to the key people involved in dealing with Covid -19: Put your hand on your heart and ask if your are the best person for the job. If you can think of someone better please tap them on the shoulder and step aside. If you have some influence over who will be running the show ask the same question. There are some extraordinarily talented people out there and there are others, which, well, are not.....
https://i.stuff.co.nz/national/health/119714399/dishonest-doctor-bungle…
Immigration is so good.
She must be bad not to have got name suppression like all the other doctors who destroy lives but are free to carry on with an unknowing public.
The virus is very bad and will have significant economic, social and health impacts. Nevertheless, for long-term investors (not speculators), not a bad idea to take a look at good travel-related stocks now and in coming days, months. I just don’t like airlines but I see Buffett’s Berkshire bought some more Delta Airlines in the past days on its plunge. I on the other hand bought some Berkshire around $202 (for the B shares), which was significantly lower than their own last share average buyback price. I’ll buy more if it goes lower.
History shows that emergency interest rate cuts precede a bear market.
https://www.ccn.com/wp-content/uploads/2020/03/Federal-Reserve-emergenc…
Granny Herald reporting the hospitality industry has suddenly turned from capitalists to communists, now seeking state subsidies. This obviously the "good" type of communism, not the "bad" form of giving money to unworthy poor people.
https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12…
Puala Bennett was on the Breakfast political panel was endorsing the effectiveness of "universal health care".
We're all socialists in an emergency. In the US it'll cost couple of hundred dollars to get tested for Covid-19 even with insurance. So, the infection rate figures out of the US are basically meaningless.
Public Health care is the most efficient system when the sh*t hits the fan.
Was interesting to observe the supposedly dysfunctional Canterbury DHB during the EQ. It responded very well with many improvisations created under extreme urgency. An exhibition of Kiwi self sufficiency and innovation characteristics rather than a statement on the merits of private vs public health systems.
10's of percent of workforce are going to be innactive for months this year. Retail, Hospitality, Travel, Shipping and many many others. We can't just let everything fall apart. People and businesses will need a lot of income support to survive and allow us to bounce back fast after the epidemic has passed.
Going towards Zero and minus interest rate is disaster in making as by delaying the normal correction creating / waiting for future bloodbath.
https://www.livewiremarkets.com/wires/a-virtue-signalling-rate-cut
Nature / Economy cycles cannot be avoided.
I've long argued that as we went over peak net energy and peak resource-per-joule-expended, that interest-rates woud trend to zero, then below.
It's the only way to fit money into the Limits to Growth chart (google: World3)
Otherwise there's just an unrepayable debt overhang.
Highly recommend watching Dr John Campbell’s Youtube video for COVID19 updates. Sensible advice and discusses outbreaks country by country. Includes statistics on number of confirmed cases and an age group associated death rate. https://youtu.be/5Tlmfss3Piw
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