Here's our summary of key economic events overnight that affect New Zealand, with news the data can't keep up with the global economic shutdown.
First up, the March US ADP Employment Report came in much less negative than was expected. Analysts had expected it to show a decline in employment of -150,000 US jobs but in the end it only showed a decline of -27,000 jobs, driven by a sharp reduction by SMEs - companies who couldn't hang on in March. Apparently mid-sized and large companies took full advantage of the payroll subsidy programs and held their staffing levels. A burst of hiring in the health sector also kept overall jobs levels up. The other point to note is that this is a snapshot as of the 12th of each month, and things got much worse after than in the US.
There were also two American PMI reports out overnight and both also showed contractions, and both somewhat less than expected. The early-in-the-month timing of these surveys also weighed on the reported results. Both reported sharper falls in new orders than the overall result pointing to impending trouble. The ISM one is here. The Markit one is here.
The depth of the global manufacturing downturn is revealed in a Markit report, with only China's uptick the sole bright spot.
And February aircargo activity slumped, even before the March lockdowns.
Scepticism was high when we reported recently that the official Chinese PMI rose spectacularly to show an expansion. However, now the private Caixin Markit survey showed basically the same recovery even if just marginally less. Meanwhile, Japan, South Korea and other ASEAN economies all posted rather substantial contractions. The exception was Taiwan which is still expanding although they are also downbeat on immediate prospects.
You get our daily news coverage free. Corporates are starting to pull advertising. That is a big problem for us. You enjoy reading our website, and I am asking you to Become a Supporter now. I personally want to say a big Thank You. (If you are already a Supporter, you're my hero.)
There are now 708 Covid-19 cases identified in New Zealand, with another 61 new cases today and very similar to the increase yesterday. The number of clusters has halved to seven. One person has now died here. There were nine people in hospital with the disease yesterday but this number has not been updated today yet.
Worldwide, the latest compilation of Covid-19 data is here. The global tally is now 887,000 with another global pickup in infections overnight especially in the USA where more than 22% of all cases globally are, and up +49,000 in one day to 191,000. Australia has almost 5000 cases, and 20 deaths. Global deaths now exceed 44,000 and more that 4100 deaths have occurred in the USA, 10% in New York alone. Italian deaths now exceed 12,000 and more than 9000 have died in Spain so far. Deaths in the USA are expected to pick up sharply from here and paralyse the country with fear.
Equity markets are starting to realise no amount of 'liquidity' or subsidies will beat the virus, and with a complete shutdown the economic toll will be enormous and long lasting. In New York, the S&P500 is down -4.6% and sinking today. European markets shed nearly -4% in their sessions too. Yesterday the main Asian markets were all down. If there were a bright spots yesterday they were in Australia (the ASX200 was up +3.6%) and New Zealand (the NZX50 Capital Index ended up +1.3%).
The UST 10yr yield is lower today so far by -3 bps at just under 0.64%. Their 2-10 curve is less positive today at +37 bps. Their 1-5 curve is also less positive at +19 bps, and their 3m-10yr curve is at +57 bps completing the trifecta. The Aussie Govt 10yr yield is now at 0.71% which is down another -5 bps. The China Govt 10yr is down -2 bps at 2.65%. The NZ Govt 10 yr yield is still going the other way, up +2 bps at 1.11%.
Gold is down again today by -US$9 today, to US$1,583/oz.
US oil prices are holding at their new low levels today, at just on US$20/bbl. The Brent benchmark is also low at just under US$25/bbl. How long they can last at these levels is unclear - the US reported a monumental rise in unsold petrol inventories, and a WTI price below US$15.50. It is hard to see any of this improving soon. Buyers like China are achieving big discounts because they may be the only buyer at present.
The Kiwi dollar is starting today unchanged from this time yesterday at 59.3 USc. On the cross rates we just a little firmer at 97.4 AUc. Against the euro we are also marginally firmer at 54.2 euro cents. The TWI-5 is unchanged at 65.8.
Bitcoin is now at US$6,182 and down -4.2% since this time yesterday. 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 ».
108 Comments
I hope you are not right. THIS as you referred to it was caused by the CCP.
Rejection of China has started and could become monumental.
"...we must now treat China like a hostile state"
"...nothing less than a fundamental breach of trust between China and the rest of the world"
https://www.telegraph.co.uk/politics/2020/04/01/coronavirus-means-must-…
Corrupt politicians in Pacific Paradise? https://www.youtube.com/watch?v=BzCqQKnF9Oo&fbclid=IwAR2BW20zpmtFurc9iE…
The narrative towards China is souring rapidly across MSM and social media. When this is all over, everything will be scrutinised.
https://www.nationalreview.com/2020/03/coronavirus-pandemic-china-must-…
I think this has shown the folly of importing as much as you can and have a very small manufacturing industry in country, I expect after this more countries to become more protectionist after this, time like this trump looks good about closing borders and bring manufacturing back home
Indeed. The government has sourced 40 mil face masks after "weeks of confusion and fear about the supply". I guess it is because the majority of them were from China. And there is still a possibility that the Chinese authority could "clamp down on PPE exports ". It is insane that we as a sovereign country cannot supply ourselves basic medical consumables. China will never allow it to happen.
Meanwhile, in China:
Owner of Haofeng Electronic Technology Co. in Dongguan, Zhang Xuandong, suggested in the group (circled in red on screenshot) that they should "produce some counterfeit thermometers which would read a temperature of 39°C as 36.5°C to Americans so they'll infect each other and no longer able to go harm other countries". Proud of his "genius", Zhang described his idea as "restoring world peace without sending any troops while making buckets of gold."
The screenshot soon generated pure criticism, and Zhang's phone was turned off when RFA called. Nonetheless, during his interview with Da Bai Financial Observer (under China Marketing, first marketing industry magazine in China) on Mar 29, he stated he was "joking out of his patriotism, without thinking of causing negative consequences", and that he apologizes for the "unforgettable incident for which local government officials have reprimanded him."
Former lecturer at the Department of Political Science of Tsinghua University Wu Qiang, explained to RFA on Mar 31, that "patriotism" has been actively developed since youth in China. Particularly in the past three months, nationalistic public opinion warfare inside and outside the country, including blaming the US as the virus' origin, is waged as a part of China's anti-pandemic effort. To a large extent, the Politburo wants to avoid instability from resolving its infection control or public health crisis; or it wants to deflect through nationalistic Newspeak. Wu continued, "I believe the rising nationalism pushed by the CCP has also cast a shadow on China's credibility to the world - a fruit of its own labor."
On the other hand, there has been much fraud and price gouging of thermometers after face masks in China, since corporations bought them all in order to discover anyone potentially infected. Mr. Ou from Guangzhou complained to RFA that he has a hard time buying disinfectants or protection items after a bottle of overpriced alcohol at 20 RMB smelled funny, like it was made with bleach powder, and irritated his hands. He also questioned the government's quality control regulations as it shifted the blame for recent multiple recalls of medical supplies made in China to individual companies.
That sort of extremism will not go unnoticed. It probably already exists. Who needs suicide bombers. Virus pre-load any number of martyrs, jet them off to any part of the worlds cities, have them travel the subways, trains, buses, wander round malls etc etc and bingo that recipient country’s citizens and economies are are their knees.
The consequences of toeing political lines. The US has coerced NZ Governments to sign agreement where we respect and observe US patents, and buy our drugs from them. India refuses and it's drug companies manufactures copies and markets them at very low prices by comparison. We cannot of course, source our drugs from India. We should be asking our politicians why not!
China County in lockdown
https://www.zerohedge.com/markets/here-we-go-again-china-puts-entire-co…
Ah yes. US intelligence alleging China lied about their infections and deaths.
I’ve no doubt they’ve concocted the most peculiar definitions of ‘infection’ and ‘Death’ to distort the figures, but I’d also remind you the US not only has a motive to release such info, it also has a track record of making sh!t up when it suits their political agenda; weapons of mass destruction? Iran bombing oil tankers? Trust them, they have evidence of these things, they just can’t show it to anyone.
This is supposedly from a confidential report to the White House that’s been leaked. This tells just as much about their security and intelligence as it does China.
History shows that the US is eager to have wars in countries over resources (with or without the truth)
You just have to look through the Bushes - Bush Senior = 1990 Gulf War, Bush Junior = 911 (+WMD lies) 2001 Iraq war
Basically both in the middle east for control over oil
"this is a snapshot as of the 12th of each month, and things got much worse after than in the US." So next months data could be really ugly?
With that kind of delay, this report's relevance tends to wane somewhat, telling people what they already know from other sources.
a taste of what's coming in the service sector
https://wolfstreet.com/2020/03/31/heres-a-foretaste-of-the-lockdown-dri…
This Gov't needs to move, cut civil service wages take back the teachers pay rise, this is going to get ugly, they are steering us straight in to vortex.
Can anyone look at this and see a future that looks anything like the past decade?
https://www.finviz.com/futures.ashx
Heres where we need to follow Oz on something. They are now sropping (commandeering) all Virus PPE from export as reported on the Credlin show last night.
I posted a while ago that sanitizer is not available now in NZ. Yet ZOONO who have had some complimentary write up on Stuff that pumped their shares are doing this.
https://i.stuff.co.nz/business/120571748/zoono-sanitiser-strikes-multim…
I have contacted several MPs on this.
This govt are economic idiots. Always have been, covid19 is just highlighting that again.
And they will continue to play politics.
They won't cut govt staff salaries because of the political fallout. Don't want to disenfranchise their hoards of worshipping bureaucrats
'The Washington Post began this week by noting how the US economy seems to have lost its purported zip just when it needed that vitality the most.
Instead, more and more it looks as if everything just crumbled like a sand castle exposed in the rain. '
https://alhambrapartners.com/2020/03/31/chinas-back/
Well it's certainly not looking like a First World country anymore: BBC Coronavirus: US 'considers cloth face masks for public'. "US health authorities are debating whether to recommend face coverings for everyone when they go out in public.
One internal memo for the Centers for Disease Control and Prevention says that even simple cloth masks could help reduce the risk of virus transmission, the Washington Post reports. President Donald Trump has suggested that individuals could "use a scarf".
https://www.bbc.com/news/world-us-canada-52126183
Never mind cloth face masks for USA public. Yesterday told by a USA ED doc that they are being asked to reuse their PPE gear. Some have resorted to making their making their own [even out of welding gear]. Let's face it, no one is prepared for this. And the economic decisions are an experiment [let. alone the health ones].....I worry that we have lost the real voice of the public.....
From an objective point of view I thought his piece was good this morning. Why are we guaranteeing tourism companys' loans with taxpayer money when tourist numbers will be plummeting for the foreseeable future? It is rough but the prospects are terrible and unfortunately the best option would be to let most of these fold?
you mean lower than beer?
https://reutersherald.com/world-news/a-barrel-of-oil-is-now-cheaper-tha…
I'm waiting to see how many weeks it takes for oil to reach a negative value. All we're seeing is typical bear market behaviour and even the latest bad news has caused the Dow to fall today. There are plenty of people on Wall St. that believe what Donald Trump says, and they seem to lack the ability to determine when someone is lying which makes them ill-equipped to interpret his speeches.
"I'm waiting to see how many weeks it takes for oil to reach a negative value."
Already there.
https://www.bloomberg.com/amp/news/articles/2020-03-27/one-corner-of-u-…
Not happy in the ranks.
Saying it, doesn't make it so...
https://i.stuff.co.nz/national/health/coronavirus/120749592/coronavirus…
I'm still thinking about the hitchhiker I picked up outside a hospital 2 1/2 weeks ago. He'd been in two days with "pneumonia". He had a facemask around his neck and was wearing rubber gloves. The district is not showing many cases just yet, I suspect they are just not testing.
I'm hoping he had it, that I got exposed, and that I am one of the 50% that show no symptoms, and that I am now immune.
Well I am competitive in another sport at a national level & learning to surf was suffering. With the "Nats" cancelled the glass half full approach is time to develop my surfing. Exercise is a cure-all for just about everything. Get out & sweat 4-5x a week, there are few downsides.
They are brilliant tacticians, aren't they? Time after time they run rings around the plodding strategists. The trick seems to be to do things that make no sense to the game theory obsessed strategic thinkers and then steal their lunch while they are trying to figure out what you will do next. Stunning.
Bloody hell, this is big. Publisher of a whole lot of NZ's favourite mags, closing:
https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12…
May have new business owners ...
Businesses with revenue models based on advertising are going to have a fall in revenues as companies cut back on their marketing budgets.
Interest.co.nz is very likely to be affected and needs paying subscribers or donations from readers to be cashflow neutral. Hopefully the business manager has lots of cash put aside for a rainy day and economic downturn to survive.
Well done Eaqub. Grilling the numpties who lead us:
https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12…
It seems knitting is essential
https://www.stuff.co.nz/business/120729929/coronavirus-knitting-and-yar…
Never thought I would see this
https://www.worldoil.com/news/2020/3/31/oil-selling-below-10bbl-at-key-…
What are the health effects of the shutdown? Are they benign, overall? Maybe people will get more rest and exercise more, as well as getting fewer infectious diseases. On the other hand, there could be more heart attacks and family violence. I ask because one of my business owner customers has just had a heart attack.
Murdoch to shutter 60 newspapers in Oz. They're moving online.
The suspension of our community print editions has been forced on us by the rapid decline in advertising revenues following the restrictions placed on real estate auctions and home inspections, the forced closure of event venues and dine-in restaurants in the wake of the coronavirus emergency,
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.