Here's our summary of key economic events overnight that affect New Zealand, with news of reports China is blocking frozen meat imports in the southern gateway city of Guangzhou.
But first in the US, pressure on households continues to build. The delinquency rate for residential mortgages rose to 8.2% in the June quarter, up nearly double from the first quarter and the largest quarterly increase on record. Loans backed by the FHA, a program used by many first-time buyers and those with lower incomes, saw their delinquency rate jump to almost 16% - the highest in more than 40 years.
The latest regional Fed survey, this one for the North East region, manufacturing activity grew only slightly in August but the general business conditions index fell fourteen points to 3.7. The new orders index fell even harder to be negative.
In Canada, their housing market was on fire in July. Volumes and prices surged to record highs as both buyers and sellers made up for earlier lost time. Volumes were up +26% with Toronto, Montreal and Vancouver soaring.
In China, they are intensifying their scrutiny of frozen food imports as a coronavirus risk. And the southern city of Guangzhou has banned frozen meat imports.
And there are broadening concerns about China's grain supply. Weather and market pressures have seen growing concerns about whether China will have enough this year. Even Chairman XI is out telling people not to worry. But the fears are growing
Separately, the iron ore price hit a six year high yesterday in China and that is a +50% rise since the start of 2020.
Overnight, European equity markets rose a modest +0.2%. Today, Wall Street is marginally better, up about +0.3% in early afternoon trade and close to a new record high. Yesterday, Shanghai rose aggressively, up +2.3%. Hong Kong was up +0.7%, but Tokyo fell away ending down -0.8%. The ASX200 was also down -0.8% and the NZX50 Capital Index had a much better day, up +1.9% at the close.
The latest global compilation of COVID-19 data is here. The global tally is 21,749,000 and that is up +221,000 since when we last checked this time yesterday. Global deaths reported now exceed 776,000 (+4,000).
A quarter of all reported cases globally are in the US, which is up +37,000 since yesterday to 5,580,000 and a lower daily increase that we have had for a while. But this may be due to a sharp pullback in testing. US deaths are now just over 173,000 and a death rate of 523/mln (+1/mln). And the net number of people actively infected in the US rose overnight to 2,478,200, so more new infections than recoveries.
In Australia, there have now been 23,559 COVID-19 cases reported, another 271 since yesterday, and still very much concentrated in Victoria. But there were cases recorded in other states too. Australia's death count is up to 421 (+25). Their recovery rate is now back up to over 61%. There are still 8605 active cases in Australia (-207) indicating a turning tide and more recoveries than new infections.
The UST 10yr yield has steadily declined today, down -3 bps at 0.68%. Their 2-10 curve is +6 bps flatter at +53 bps. And their 1-5 curve is little-changed at +15 bps, while their 3m-10yr curve is also flatter at +59 bps. The Aussie Govt 10yr yield is also down -5 bps at 0.88%. The China Govt 10yr is still at 2.96%. And the NZ Govt 10 yr yield will start today at 0.69% and +2 bps firmer.
The price of gold is up +US$37 today at US$1,982/oz. That is a +1.2% gain overnight. Silver is up +3.5%.
Oil prices are firmish today. They are now just over US$42.50/bbl in the US and the international price is now just under US$45.50/bbl.
And the Kiwi dollar held overnight at 65.4 USc and has held from there. But against the Australian dollar we are almost -½c weaker at 90.8 AUc. Against the euro we are down marginally at 55.1 euro cents. That means our TWI-5 has dipped to 68.4.
The bitcoin price is up strongly again today, up another +4.6% from this time yesterday to US$12,402. The bitcoin rate is charted in the exchange rate set below.
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135 Comments
Kotare, off topic but back to yesterdays conversation about Collins and integrity.
Check this video of her being asked if she'd accept the election result at 2.25 in.
Tova Obrien asked her 8 times and even then she couldn't give a clear answer.
https://www.newshub.co.nz/home/politics/2020/08/watch-national-leader-j…
The lady is a political ghoul.
Agree we need to push them far harder.
I would also like to see more civics education in schools (might also need an element of education on how to critically evaluate propaganda too). It's pleasing at least that the government did put money into civics education, so you might hope that this over time helps create a more politically active and engaged population.
Ok Kezza we have heard you make the same comment for the last 3-4 months. Can you please switch to Spring mode were you tell us your solutions for the country and what you would like to see from the Government. Lets try and solve some issues rather than rinse and repeat?
July Business recorded a expansion surely you can give some credit to the government here?
I have outlined that I view the current system as crap and I would like a unified approach.
I'll park my 'for the greater good' view and deal with the current crap system and work it to my own personal advantage like our politians do. You may have created a monster but let's face it the system won't change so its gloves off and look after number one from now on. Over and out.
There's growing competence from the government. Hipkins, Woods showing their worth, GR and JA leading from the front and then some decent performers including the ever solid David Parker, Andrew Little, Ph... Ok in getting carried away. But in general there are enough signs that with a bit more freedom (ie. Not encumbered by NZF) that a second term Labour Govt could make a real positive impact.
Who tests the frontline staff? The government doesn't. Sure, if you want to take this whole "The buck stops with the Government" position that's your perogative, but if the Government has (i dont have evidence to say they have) done all they can to communicate the rules/guidelines around testing and these aren't followed what more can they do?
Strap people who won't commit to testing to gurneys and force the samples out of them? Fire them despite the lack of provisions in their employment contracts for testing? We already have shrieks of "communism" over the lock down.
Yeah mate they are on fire. Instead of $500k for the Beehive slide they maybe be able to cut a couple of hundred off that now.
http://wellington.scoop.co.nz/?p=123911
Pretty good at promoting roads with cost benefits ratios of less than 1, and promising roads without any plans to fund them.
Also announcing the same road multiple times - I believe Muller's announcement of 4 laning Ashburton to Christchurch was the 3rd time National had announced it.
Heard of the sky path? Labour up to 3 on that one.
And while we are debating integrity: The latest version extended the project (360m) and was done to obfuscate the fact they horribly undercosted the initial project (65m).
Anyone on here debating integrity of one political party over another is naive. All polititicians cultivate the appearance of integrity people. Smarten up.
Why don’t the “reporters” the Red Donkey the same question ? I think JA ignoring the nonsense and sticking to the issues. We have a government that have failed at everything, have not delivered on on election promise and can’t manage the border. There must be some debate around the plan for 2021 and competency to execute the plan. Slogans without substance don’t cut it.
Bwahaha. Oh don't. I suspect the answer is ABJ (based on blind ideology). There really isn't an alternative though. The other mob are worse than a rabble. I saw a poll on CNN this morning that said that 56% of Biden supporters under the age of 35 who were asked why they were going to vote for him said "Because he isn't Trump". The next highest answer at 19% was "Integrity". I don't think we are anywhere near that level of dissatisfaction yet in NZ. Most people I speak with think Jacinda and crew have done an OK job (and I am a white collar worker).
We have the biggest issues that NZ and the globe has ever faced looming.
What I would like to see is National and Labour realise that neither one of them has the answer or the ability to confront them alone and decide this is about NZ and much bigger than their ego's.
What they could do is combine for one term and work together to confront what is coming instead of working against each other.
At present we have slightly more than half MP's working on helping NZ and the others not doing much. Get them ALL working and earning their money for NZ.
In short, we have no clear cut Party that has the answers, a plan and can deliver. Meanwhile the population of NZ bickers away and not demanding action and accepting failure.
What ever is going on, it is not working. JA & JC needed to pull their big girl panties up, park their egos at the door and work together, or well and up like the US.
Yes, the main proposals were dropping the threshold to 4% and getting rid of coat-tailing.
IMO a 3.5% threshold and coating on a 1-for-1 basis would be fine, eg if you won 1 electorate seat you could bring in 1 other list member, or 2 electorate seats could bring in another 2 list members, if your party vote was large enough.
But we cannot be for cooperation and against cooperation at the same time. The weight of numbers required to pass laws keeps the nuttiest flavours from dominating policy. Once upon a time both major parties agreed to disband the upper house. It's imaginable that they could cooperate on laws again were it the nature of the beast. Hey, they voted cross party on recent policies.
The Reserve Bank currently estimates the total construction cost of the rebuild to be about $40 billion (in 2015 dollars), comprising $16b Residential, $16b Commerical and $7b infrastructure.
As at 30 September 2015, insurers had paid out $26 billion.
Government debt increased from $10b to $60b from 2008 to 2015, yet insurers have picked up $26b out of the $40b estimated rebuild cost. Where did that $50 billion go? The GFC????
https://www.rbnz.govt.nz/-/media/ReserveBank/Files/Publications/Bulleti…
Jumping in here because Kezz will take this the right way; no party is prepared for the current situation. However Labour got in is currently irrelevant to the current situation. The problem we face is how do we keep an economy going when almost the entire basis of it has been kicked out from under us? Labours problem is that they have to figure this out while driving. Nationals advantage is they can do it in the backroom, while up front they are critiquing the Governments efforts that are done on the fly. And there are always the armchair critics who know better! With traces of COVID appearing on imported goods, and no science that conclusively states whether or not it can be caught from those traces, despite opinions, expert and otherwise, even trade becomes at risk when there is a need to keep the virus out of the country.
So the question facing our current and next prospective Governments, is how do we support the people of this country at a reasonable standard of living until such time as the new normal is understood? This problem is complex because it needs to deal with the flawed policies from the past and transition into an uncertain future while ensuring all the population is carried forward. The reset is happening whether we like it or not. And it is clear that many of the so called 'experts', especially the economic ones are out of their depth and struggling to understand all the impacts.
Cheers Mazza.
Time for our politians to park their egos at the door and work together and confront what is coming instead of playing their little school yard games.
What we seam to forget is that they all work for us and we should be utilising all of them instead of slightly more than half.
Put Minister's in that can deliver, supported by the others running the small stuff. Red, Green, Blue, Black, penis, no penis, turban, burka or whatever, put the best person in that can get the job done.
'This politian is a liar, that one is not' Seriously NZ WTF? They are politians, they are all liers but somehow we forget that.
One of the things that surprises me is the lack of discussion around Far UVC lights. These have been proven to 'inactivate' airbourne virus and bacteria (a report HERE). i don't know if it is equally effective on bacteria and virus' on surfaces, but would think it is reasonable to assume so. With like quite an up front cost, the downstream savings could be massive.
"not delivered on an election promise"
Really? So, government has not invested anything in new or improved schools or hospitals ?
And child poverty not been reduced
And beneficiaries not been given more?
And minimum wage not been raised.
V fair account by you. Kiwibuild is real failure.
Child poverty has moved within the margin of errors for most indicators. In some it has gone backwards.
National also increased benefits, lifted the minimum wage. So what?
Kiwibuild failed. Light rail failed. The ridiculously partisan CGT working group was doomed to fail. The FBB was passed, but we did not renegotiate FTAs like Labour said they would, so Aus and Hong Kong were exempted - like people said they would have to be. So...fail. It would be shorter to list what they actually achieved.
The things I just said were their flagship election policies - their big sexy bait-and-switch vote-winners. I take it you're just as forgiving for National for making a bunch of stupid pointless changes around tinkering around the edges while the housing crisis exploded - despite them promising to fix it when they were campaigning? Of course you're not.
Aussies use their Super COVID hardship funds for a first home deposit
https://www.domain.com.au/news/first-home-buyers-withdrawing-superannua…
.
Kiwis now living in NZ who have an Aus Super account likely to be doing the same thing.
(For those who disbelieved my comment on this weeks ago)
5% deposit required for marginal buyers and probably marginal properties. Yeah, that's not going to see people go into negative equity in a downturn.
Although Aussie are now counting non-performing loans as performing, so everything is fine. More printed money will be incoming to paper over the cracks.
Excellent paper in top journal examining the Swedish Covid experience, particularly in relation to their Scandinavian peers:
https://journals.sagepub.com/doi/full/10.1177/0141076820945282
Take home points:
1) Sweden suffered much worse outcomes in terms of disease (Figure 1b)
2) Contrary to what is often claimed Sweden was not just 'open for business' - in fact by June both Norway and Finland had less stringent lock down restrictions in place (Figure 1a)
3) There is no evidence that the rate of seroconversion (used as a proxy for immunity and hence herd immunity) is significantly 'better' in Sweden than in several other nations (Table 2).
4) It's estimated in this paper that herd immunity for covid would only be achieved anyway when 70% of the population had become immune (not at the much lower figures often bandied about)
5) Not in this paper but added: GDP rates for Q2 for Scandinavian nations a) Sweden -8.6%, b) Denmark -7.1%, c) Finland -3.2% d) Norway -8.5% (est). So not much difference there.
Virus minimizers aren't interested in hard data though. They just want their narrative supportive with any scrap of news.
Remember when this crowd went on and on about annual flu deaths? In 2017 WHO revised up flu related deaths (including people whose flu infections had exacerbated other health issues i.e. diabetes, heart) to 650k. Covid19 has already killed way over double that in less than a year. We haven't even got through one northern hemisphere winter with the pandemic yet. But this crowd would use the upper limit of the flu "related" deaths but exclude all the Covid19 "related" deaths and pretend that Covid doesn't have massively debilitating long term effects or damage the body and escalate fatality from other causes. They cherry pick data because it's emotional for them. Only news that confirms their belief is valued.
https://www.who.int/news-room/detail/14-12-2017-up-to-650-000-people-di…
Curled up in that too is how well geared Sweden is/was with hospital capacity/ICU and already a proven tracing system available. What was overlooked here quite wilfully by some, is the fate of existing patients, cardiac, oncology, accidents if the hospitals have an overwhelming influx of CV19’s. Also my experiences of being in Scandinavia, the culture is settled and usually compliant, people just have to be sensible & cooperative to get through the hard dark winters all together.
Even years down the line, it will be difficult to compare apples with apples in term of pandemic response. There are too many variables. Population density, age, underlying health, obesity levels, trust in authority figures, intimacy and touching culture, compliance to health policy, hospital beds, staffing levels, health promotion, treatment and R&D spending. Even the quality of incubator! Different countries are fiddling with their numbers up and down. I rarely see any of this discussed rationally and yet it will impact the pandemic. As I keep saying on repeat, it's much too soon to make any conclusive claims about the pandemic or the virus. We need to be patient and wait for more data and for science to do what science does.
The rolling 7 day average infections are slowly growing again in much of Europe. Slowly building is managable. But if in a few months the weather turns colder and everyone starts spending more time inside again and this coincides with flu season in the northern hemisphere, the numbers could take a very nasty turn. NZ managed to avoid this seasonal issue. Even if we can't eradicate the virus again, we will have more or less managed to reduce the risk of a winter disaster for this year. It's not to be sniffed at (pardon the pun).
This is a very important point (largely over-looked in NZ) - as we shall shortly see as the virus takes off again in the Northern Hemisphere winter. Here in NZ we might be fortunate to enter next winter with one or more at least partially effective vaccines in our arsenal.
If we can manage this new outbreak (which is looking increasingly likely), go another month or two without community transmission and from now on be thorough with our testing after learning our lesson we should be able to make it through to summer and enjoy it mask free. Let's hope 2021 brings some better news...
@King of the whiners, some counterpoints to your points
1) Total deaths's in Sweden in 2020 may not be hugely different from 2019. What may have happened is the bringing forward of deaths of very frail, many of whom would have .died later this year anyway
3 & 4) There's quite a lot of evidence now that IgG antibodies don't hang around for very long, and the T-cell response may be a better indicator of covid exposure. Just taking a step back and simply looking at the daily deaths it becomes pretty obvious that Sweden, New York, and a bunch of other place around the world have already more-or-less achieved herd immunity.
5) If you're insinuating that lockdowns have zero economic impact, then that is so nonsensical I don't know where to begin.
I am not insinuating anything of the sort - don't put words in my mouth. I repeat - here is the data - GDP rates for Q2 for Scandinavian nations a) Sweden -8.6%, b) Denmark -7.1%, c) Finland -3.2% d) Norway -8.5% (est).
If that GDP data doesn't fit your narrative, then tough. It's data - deal with it.
RBNZ most recent forecast NZ GDP Q2 -14.3 percent in the baseline scenario "Overall, annual GDP is assumed to drop by 5.8 percent in 2020" assuming no further lockdowns
https://www.rbnz.govt.nz/-/media/ReserveBank/Files/Publications/Monetar…
Massey GDP tracker forecast GDP to fall 15.8 percent Q2 .http://gdplive.net/Dashboard.
Finland was in a recession end Q1 , Denmark GDP had fallen 2 percent Q1 , its data , it has to been seen in context.
Sweden and New York deaths are dropping as they are in a self imposed lock down. This dream that they have reached herd immunity is BS. You imagine they are all walking around licking each others faces and laughing how they're all immune. Truth is they're locked up in their houses and slowly bleeding deaths each day as Covid bubbles under the surface. A big soccer stadium full of Swedes in the middle of winter would do the trick, back to a 100 a day dying.
5) Of course lockdowns have an economic impact, but so does social distancing and people's fear of the virus. For example we had 7 weeks of very expensive lockdown followed by no social distancing or fear for 100 days. Sweden has had ~6 months of social distancing and fear (e.g. elderly are probably not going out much). So far it looks like those two options have a similar GDP cost (although our option would have a much higher government debt cost).
I generally enjoy this site because it is about economy and business and has interesting comments and lines like from AndrewJ is it., Can we please leave the political rhetoric for other less credible sites like the one above on JC. Equally could be said about JA weak answers on the border with Hosk this morning, and then we'll get a stream of diatribe here for the rest of the day.
How about comments on how create jobs in our regions, towns and cities.
I think the China food shortage could be a big deal, mates in usa have empty silos, first time they ever dumped grain straight to railway wagons, all silos empty.
China has huge grain stored but very poor quality,
https://video.parler.com/7K/47/7K47ECtUW9Uu.mp4
China looks well and truly in the jaws of a dilemma. Being short of food and under siege with rainfall and flooding, is not opportune for bellicose sabre rattling. As commentators here have explained the world is not viewing them as favourably as it once did, for obvious reasons. Reminds me a bit of Allo Allo, of Herr Flick’s comment to Von Smallhausen, “lately it has come to Berlin’s attention, that the Gestapo have become unpopular.”
yes J.A. was dodging the Covid test questions and at least 3 times clearly blamed the border workers for being reticent and not coming forward for tests which according to her were freely available to all, that has been shown to be nonsense already, clearly there was no testing because none was provided.
To effectively monitor any potential for the virus to escape through border workers we would need to be testing them on an ongoing basis every 3 days/shifts.
Really, if you keep the borders open you are inviting outbreaks. Doesnt matter what party is in power, this will be ongoing until a vaccine is found.
This whole Government response has been an after-the-fact sleight of hand, masked with phrases like 'hard and early' which require heavy doses of revisionism and ignore the cynical responses to opposition proposals and suggestions, until they're suddenly adopted and earnestly explained as the 'moral' thing to do.
She used the same tactic (blame foot soldiers for general's actions) at the early stages of the crisis when she was questioned about people not being tested (she blamed the front line doctors saying they refuse to test when everyone in NZ knew that the MoH had issued a very specific criteria for who the GPs can refer for testing).
When you are popular, you can get away with anything. She asks everyone to be united (and gets massive praise for asking others to be united), yet when it comes to be accountable for actions, it is always others who did not perform.
Lets be honest here - Peters put in place a PM who has never had a real job, has zero commercial acumen or training and has spent the majority of her adult life as a VERY average Labour back bencher. She is the Emperors new clothes! Her and her circle of equally shallow MP's are going to go down in history as one of, if not the worst government in NZ history!
Jacinda did a good'ish job at CV control, we have to give her that.
What she can not do is inspire others that do not have the ability to manage.
National's history shows they are not the best either.
As a population we are being offered two main choices that are frankly bloody useless and we swallow the PR hope that the old dog will learn new tricks.
a lot have now come forward to national Mp's to let them know what was happening
https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12357416
National leader Judith Collins has slammed the testing of border workers as a "complete failure" and says the public has been misled.
Collins said she had heard from border workers who weren't offered tests. Some workers who asked for tests were even refused them, she said.
if you were not symptomatic you were told you didnt need one, even if you wanted one for peace of mind and to make sure you family was kept safe from your work
lets not talk politics? - unfortunately the statist society we have procured for ourselves over the decades is inextricably entwined with the economy and business.
how to create jobs - start a business and employ someone? provide a service and sell it to someone? or is this a political question? expand the state?build roads? plant trees? pump water? put up windmills?
Fair comment. I enjoy this site too because of generally informed and intelligent debate.
Although regarding your question about "how [to] create jobs in our regions, towns and cities" - that is where I believe the Govt (and opposition and commentators) need to focus on macro policy. Too long NZ has focused on micro-managing parts of the economy and has not been willing to let the market work and for good, productive businesses to thrive and poor businesses to fail etc. I could give many examples but here are two that may provoke debate.
1. You want jobs in towns and regions? Look at all the horticulture (vineyards, kiwifruit, apples etc) that has gone in, in recent years. Heaps of jobs there - but many low-paying, low-skilled, seasonal jobs - not the jobs we want or need to make NZ wealthy and hence many business owners (horticulturalists in this case) plant up expecting they can lobby the govt to micro-manage their self-inflicted labour woes by providing them with cheap plentiful labour via RSE, working holidayers, work visas etc.
2. Another is the PGF (and don't just blame NZF for this because subsidising zombie businesses in the regions has existed in various guises under previous Govts too). If the regions can't stand on their own two feet they need to fall over and then get up themselves before they learn to walk and run (btw - I live in the regions). When the coal-mine and prison closed in Ohura the worst we could have done was to prop up a bunch of zombie businesses there.
Many months ago I commented along with others on the need for a shift to a sustainable enconomy, the need to shift jobs in that direction. Part of sustainable is shift to a local focus, quit with the "just in time" economy we have so it has fat in the system to handle the hits.
According to the latest Trump utterances New Zealand tried to make him look bad - indefensible. How many are still twisting into dissonant knots over this grifter?
Although he is making tremendous savings in the USPS and making it the greatest it's ever been.He would have been the fastest pony express rider if we still used horses. Is there a way we could bring that back?
But the average price data in the article linked in this post clearly shows that prices of all types of properties (apartments, townhouses and houses) have moved up in mirroring proportions. If that was the case, shouldnt there be a faster pace of price inflation for houses than apartments?
MMT states that unrestrained Government spending will cause inflation. This is why the question of tax should be debated. why do we tax, and for what purpose. Under MMT tax is used to control inflation, and manage behaviour.
Proof is in the private banking sector and housing; the banks have essentially had an unlimited licence to create credit/money which they have loaned out primarily into the property market. In the last 20 years this has resulted in unrestrained inflation in the property/housing markets. The consequence that is now up front under COVID is a fear of collapse of that market.
Murray86, the banks never had the license to issue credit as much as they wanted. Central banks have all the tools needed to create as much barrier as they liked to in the banks way. In NZ the RBNZ is the banks prudential supervisor, they can (and have) determine the appropriate risk appetites a bank can assume, who they can lend to and by how much etc. The central banks have decided that what is going on is appropriate and does not warrant their intervention. You may disagree with that notion and state that the current circumstances clearly shows that intervention was needed, and you may be right. But that is a totally different story. Again, banks never had any license to create as much money they like, they needed (and received) the RBNZ (in NZ and equivalent institutes overseas) blessing and permission.
Could ask the same about Auckland.
I suspect it's fear of an asset and/or currency collapse -- you might make a loss on a property, but it doesn't risk going near zero like equities or FX. Current crisis also indicates that no central bank anywhere is going to raise rates. It's Japanification - but unlike the Japanese in the 90s, we can't send our capital overseas to earn some interest. There's no safe arbitrage. Hence gold, hence property, even if it's already horribly overpriced.
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