Here's our summary of key economic events overnight that affect New Zealand, with news of bouncebacks but none at a level that reverse the downward track.
American house sales bounced back in May from April, as expected, but also a bit better than expected. But compared with the same month in 2019 they were -5.1% lower and that took them back to levels of 20 years ago.
The Dallas Fed's factory survey for June also recorded a gain from the dismal May result. But the bounceback from three consecutive deep declines is relatively modest and both current expectations and capital spending plans are still negative. These Texas businesses are not signaling they are willing to invest yet.
Also bouncing back, and slightly better than expected, are Canada's May building permits which have also been in the doldrums.
Bouncing back worse than expected however were Japan's retail sales in May. Yes, they rose from April, but they are a grunty -7.7% lower than the same month a year ago and for a country as large as Japan, that is a -NZ$13.4 bln fall in one month's trading.
In Europe, economic sentiment is remaining very low in June. The bounceback was very tepid and business sentiment is lagging consumers in quite a marked way.
The battle between India and China is heating up on the commerce front with India banning about 60 popular Chinese apps due to security concerns.
And in China, they are using their central bank and the financial system to be integrated into their "social credit" systems. They are creating "a credit system covering all of society” as a “core development goal”. As they say, the work will include “driving improvements to the social credit system and expediting the sharing of enterprise credit information,” as well as the “full use of new technology and new methods to strengthen credit information security.” All very Orwellian as a method of social control.
And all is not well for savers in China, and the threat of social disorder is growing as shadowy wealth management companies start to fail and savers press to get their money back.
The American home sales data is what Wall Street is clinging to today, and the S&P500 is up +1.0% so far. They follow Europe where equities were up by a similar amount. Yesterday Asian markets were weaker, with Shanghai down -0.6%, Hong Kong was down -1.0% and Tokyo was down -2.3%. The ASX caught the negative trend too, down -1.6%. But the NZX50 had an up day on the back of F&P Healthcare and A2Milk and was up overall by +1.1%.
The latest compilation of COVID-19 data is here. The global tally is 10,199,800 and up +155,100 in a day. Global deaths reported now exceed 503,000.
A quarter of all reported cases globally are in the US, which is up +32,500 since yesterday to 2,564,200. US deaths now exceed 126,000. The number of active infections in the US is now up to 1,753,100, up +26,400 in a day. Authorities who rejected the threat earlier are now recognising it's damage - but it is far too late. The rest of the developed world now needs to quarantine the USA with travel bans to protect themselves.
In Australia, there have been 7767 cases, another +81 since yesterday and most of them in Victoria. Their death count is still at 104 but their recovery rate has slipped back to just on 90%. There are now 655 active cases in Australia (up +66 overnight).
The UST 10yr yield is little-changed at just under 0.64%. The bond market is ignoring the equity mood. Their 2-10 curve is unchanged at +48 bps. Their 1-5 curve is marginally flatter at just under +13 bps, while their 3m-10yr curve is holding at +53 bps. The Aussie Govt 10yr yield is unchanged at 0.87%. The China Govt 10yr is up +1 bp at 2.90%. And the NZ Govt 10 yr yield is down -3 bps at 0.91%.
The gold price is marginally softer today, down -US$3 to US$1,768/oz.
Oil prices have firmed by about +US$1 today. It is now just over US$39.50/bbl in the US and the Brent price is just over US$41.50/bbl.
The Kiwi dollar is softer in a minor move down, now just on 64.1 USc. On the cross rates we are also slightly softer at 93.5 AUc and against the euro we are lower at 57.1 euro cents. That means our TWI-5 has slipped to 69.1.
The bitcoin price has stayed down, and is unchanged at US$9,157. 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 ».
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BBC Coronavirus: Worst is still to come on pandemic. "WHO chief warns. The World Health Organization (WHO) has warned the world that the "worst is yet to come" in the Covid-19 pandemic.
WHO head Tedros Adhanom Ghebreyesus said the virus would infect many more people if governments did not start to implement the right policies.
His message remained "Test, Trace, Isolate and Quarantine", he said. https://www.bbc.com/news/world-53227219
Lets hope that the Americans take notice of that advice; Mike Pence humiliates himself as he’s called out for holding rallies against OWN guidelines.
https://www.youtube.com/watch?v=n1jQcXYcpHk
We get a massive influx of Kiwi's and their families returning. What if 100,000 Kiwi's return and bring their wife and an average of 1.5 kids with them 350,00 enter the country. Maybe 300,000 kiwis return bringing their families with them. The country goes into even more debt to pay their quarantine costs and then a portion goes on a benefit. The housing market goes into hyper drive.
Emergency housing goes through the roof. The madness rains down hard and fast.
The thing people keep overlooking is that a vaccine is not the only advance that will help.
Effective medical treatments to COVID-19 will be developed that are likely to reduce the fatality rate as well as reduce the severity and complications for those who wouldn't have died from it.
Estimates of the case fatality rate (percentage of those infected who then die) is around 0.5% worldwide. If effective treatments can drop that down to 0.05% then it is likely we'd open our borders up, and apply strict and careful isolation for vulnerable populations (rest homes etc).
I'd argue that the main problem with COVID-19 is that because it was a brand new disease, it seems very few people, if any, have any real resistance or immunity to it. That's not the same as the 'flu which has been around for thousands of years and most people manage to shake it off fairly quickly (and the flu itself has selectively evolved to spread effectively without causing much death). COVID-19 patients need to be hospitalised at much higher rates than 'flu patients, and for much longer, putting the health system under much greater strain. There's also no vaccine for COVID-19 so the health workers themselves would then become sick and put further stress on the system, unlike the flu.
Apart from the initial infection and recovery, CV-19 causes permanent damage to the lungs and respiratory system which is forever. Returnees who arrive, having recovered in their overseas jurisdiction, or arrive with the infection, go into quarantine and subsequently recover here in NZ, become a permanent future debt (strain) on the NZ health system
Where would we be without Negative News. The tv medium generally spends a total coverage of 22 minutes before they get to a Positive item. No wonder the public becomes disinterested. I tend to record the bulletin so I can fast forward the Trash.
All this hype about Covid, we will recover when a vaccine is established. Then we can get back to some normality but the world economic outcomes will be different. One major aspect will be the pullback of trade with China, internationally, which could mean an adjustment of our exports to China but they still have to feed their population.
House. Just to be cheeky, how's that two month until the Ozzy / Kiwi bubble thing looking mate?
I was calling house prices to drop but not so sure now. We've got to house the Kiwi returnees somewhere.
Heard yesterday that a couple that returned are living in Alexandara and commuting to Dunedin for work. 2.5 hours each way as they can not find a house to rent.
A lot more evidence has been gathered since the start of the pandemic. You're out of date.
It was always known that N95 and other purpose-made masks were effective, the problem is there was never anywhere near enough supply for everyone to use these masks as it would leave none left for the hospital workers. There was no evidence as to whether cloth or other types of masks were effective.
Now the evidence exists that cloth masks are effective at preventing an infected person from spreading the virus to others. One unusual trait of COVID-19 is that you are most infective for the 24-48 hours before symptoms develop (and sometimes symptoms can be mild, so people don't even realise they're sick), which is exactly when these people would be out spreading the virus to others because they aren't isolating at home and consequentially the best time to be wearing a mask.
So if everyone always wears masks all of the time in public, the spread of the virus can be greatly impeded, enough that other measures such as testing, contact tracing and isolation should be able to get R0 below 1 and have the virus die out.
Have you ever seen someone wash their hands before putting on a mask or taking it off?
Plenty of people getting interviewed on TV with masks, they all use their hands to take them off and no handwashing in sight. Hardly anyone just leaves it on and talks through it.
What was one of the first things we learnt about Covid-19? Don't touch your face.
Masks are primarily to prevent yourself unknowingly spreading COVID to someone else. If you're touching your own mask, which is most likely going to be covered in your own secretions and germs, rather than someone else's, touching your mask when taking it off is not going to put you at huge risk (the person you're talking to, on the other hand...).
Having said that, yes, the point of masks is not to take them off, and when you do, do it properly and wash your hands afterwards at least.
The majority on the TV with masks on do not know how to fit them and the effectiveness diminishes.
There is a thin wire across the bridge of your nose, pinch this and it will form to your face. Only wearing it across your mouth and neglecting your nose potentially allows virus particails to travel up your nose infecting you.
6 June 2020 - BLM mass marches in Melbourne.
20 June 2020 - Melbourne, VIC WuHuFlu cases rise causing authorities to consider tightening.
29 June 2020 - Granuiad tries and fails to connect the multifaceted dots as cases spike to highest ever daily increment.
Check it out
https://www.indiatoday.in/amp/india/story/china-is-attacking-india-beca…
50 cents army have to try hard though will be tough as China stands exposed and getting more offencive to defend themselves and by doing getting deeper in the hole.
Think so KR. Seems this is a international incursion of damage and destruction that has not been seen from this region since the 12/13th century courtesy Ghengis Kahn. Still he had done in most of eastern europe and surrounds before he and then Khubla Khan mopped up China. Thus the Yuan dynasty, long conditioned memories and practices, long harboured world domination ambitions, apparently.
What I find interesting about the Chinese enterprise credit system as enforced by a massive public surveillance regime, is how does the CCP think it can adapt to change if values are pre-determined? Having transitioned to capitalism over the last 25 years and opening its markets to international exchange, it's hard not to read their belt and road expansionism as anything other than imperialism redux. How ironic.
The Ark strategy.
Opening borders dangerous:
https://i.stuff.co.nz/national/health/coronavirus/300044787/todd-muller…
Ardern said the idea of opening New Zealand up to Covid-19 any time soon was untenable and dangerous.
"Any suggestion of borders opening at this point, frankly, is dangerous."
And borders opening up now:
https://www.rnz.co.nz/news/world/420121/eu-to-allow-in-visitors-from-14…
The European Union has named 14 countries whose citizens are deemed "safe" to be let in from tomorrow, and the list includes New Zealand.
Who remembers east Berlin pre 89?
Stop being a selective troll
https://nzhistory.govt.nz/culture/1918-influenza-pandemic/samoa
Some of us have longer memories....... and wider, less prejudiced views.
Be up to date.
The current Government and MoH were heavily criticized for last years effort.
https://en.m.wikipedia.org/wiki/2019%E2%80%932020_New_Zealand_measles_o…
The New Zealand Government has been criticised for its response to the epidemic, particularly due to shortages in the supply of vaccines.[14][15] Scientists have also criticised the Ministry of Health for not acting on previous recommendations to conduct national 'catch-up' campaigns with the MMR vaccine prior to the outbreak.[16] Although New Zealand has had a high demand for the MMR Vaccine, resulting in a shortage, there has also been an increase of .5% of people who have declined the vaccine since 2017.[17]
- remember the flu vaccine troubles from March & April.
I see community transmission is a big issue for you.
Is it the thought of community transmission, or the thought of how it would be dealt with here that gives you concern.
Confidence in the people and systems that "do" contact promixity track, trace, test, isolate is pretty important.
Some northern European countries, Taiwan, South Korea and Singapore seem to have people's confidence.
They have been lucky so far but the law of averages would have prevailed and it would have got out if they continued with the lax quarantine measures.
The big question is, in a world that has massive infection number / economy fall out, can we continue to pay $3200 per person to quarantine. 100,000 people $320m, 200,000 people $640m 500,000 people returning $1.6b. Then we would have serious housing / infrastructure issues. What portion need to go onto a benefit and further borrowing is needed on top of the already ballooning debt?
We can't have people living in substandard conditions.... I'm with you, pay for what you get. A caravan if supplied by the tax payer, if you can afford it you can upgrade to whatever star accommodation you want to.
That figure is what it is costing NZ per person. It's not only the room, it is the staff that monitor the quarantine as well.
How is the 0.5% arrived at. Was that 0.5% nationally, or 0.5% AKL, or 0.5% Counties Manukau. Then, where were 0.5% located. The table in the linked wiki page shows an over-whelming 860 measles infections came from Counties Manukau. Last Sunday night PI specialist reporter Barbara Dreaver on TVNZ1 revealed there are known to be at least 5000 PI overstayers (in South Auckland) who are being hidden by locals, who then shift from house to house to avoid detection, who don't register with the National Health NHI system, who don't get medical attention, and don't get tested for CV-19
TBH, I sort of admire the pragmatism. Looks like the EU is letting in people where the virus is suppressed. I wonder of Australia will reciprocate? I can see a suppressed COVID19 club forming. That sort of destroys the Trans-Tasman bubble idea . Don't really know where that leaves NZ, all alone in the world I guess. How long is that really tenable for is any ones guess. I mean can our toursim industry surviving the winter. But I would say if they arn't open for business next summer it will wither & die.
Guess the PM is fingers crossed on the Oxford vaccine being 80% effective with few side effects!!
Wirecard transactions have been halted in the UK. Another article refers to Wirecard as the Enron of Germany.
https://www.cnbc.com/2020/06/29/wirecard-scandal-hits-users-of-uk-finte…
Just quoting from the most reliable source of information on the planet - the NZ Herald....
https://www.nzherald.co.nz/world/news/article.cfm?c_id=2&objectid=12344…
But probably more seriously:
“Black Swan: The Impact of the Highly Improbable” author Nassim Nicholas Taleb offering his view on the risks swirling in the market and a growing lack of clarity about the future in the era of a deadly pandemic that has created a public health and economic crisis.
“We are printing money like there’s no tomorrow,” Taleb said.
"Like there's no tomorrow. Let's hope that's not as prescient as his most famous call....
Even if we do have to accept Covid eventually, this delay is fantastic news. The rest of the world is conducting hundreds of clinical trials, testing different levels of lockdown to achieve an acceptable R value, and ramping up production of required drugs and equipment. If we ever have to live with Covid in NZ, we will benefit from the experience of the rest of the world and save hundreds of lives.
Yep. Infection fatality rate has already dropped from about 4-5 months of your normal risk of death to about 3 months of your normal risk of death with dexamethasone. It will for sure drop further over coming months as better treatment protocols are developed. And evolution is steadily selecting for less dangerous strains of the virus (that don't wind up isolated in sick patients). The longer we delay the better for eventual minimization of death.
Worst is still to come, huge percentage of people in the USA now missing their mortgage payments. This can only end really, really badly. Still not enough people forward thinking on the effects of this virus and still using the rear view mirror and thinking the worst is behind them. I guess its the modern world we have got used to speed and everything happening in a flash. Well bad news this is a slow burning fuse that runs until September/October this year.
Judging by the current virus spread we will soon have to reduce inbound flights as the virus will continue to grow and we will risk bringing in planeloads of infected passengers which will overload healthcare/hotels/hospitals and incraese the risk of spread outside these facilities.
Time frame late August when virus ramps up again to next level so say 2 people per day today we will on current levels have 20-40 people per day with virus arriving unless we see a peak of Kiwis returning home sooner to beat the viruses spread.
Yeah I don't think so, they tend to be reactive not proactive. Jacinda was on the news last night not knowing the legality of makeing people wear masks..... WTF sign here that you will wear a mask, if not you can swim home and then you pay your own quarantine costs. Not forcing them to wear a mask at all, it is their own choice. You can't keep everyone happy Jacinda.
I doubt it. Death's per day throughout the west seems to be dropping pretty steadily - and that is the clearest indicator of true number of new infections. 3rd world is unfortunately still climbing fast - perhaps just limit travel from there. Regardless we need to develop cheaper quarantining, because looks like it will be required for months/years to come.
One thing that was abundantly apparent, listening to our Foreign Affairs Minister this morning commenting on the EU allowing travel from New Zealand, was that New Zealand policy is still being out-paced by developments internationally.
The travel advisory notice not to travel abroad has been in place since March but it's unlikely to be politically palatable to tell people in six months time that they can't be with their families at Christmas? More than a quarter of New Zealands countries population where born abroad so it's going to become a very acute issue.
Jacinda Ardern has been abundantly clear in advising locals to seriously consider NOT travelling overseas, but if they do so they can expect to pay for their managed isolation or quarantine should they return. Crystal Clear. She is not saying they can't travel overseas. Crystal clear.
The issue is that, even if you wanted to perpetuate the current approach and government where willing to wear the criticism in the long term, there will always be mitigating circumstances (sickness, death, legal matters, family emergencies etc.) It's likely that thousands of New Zealanders who will need to travel every month. As a stop-gap what we've done has worked well but it is flawed.
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