Here's our summary of key economic events overnight that affect New Zealand, with news the restarting American economy is driving some economic expansion worldwide.
In China, they are exporting more to the US (and making their trade surplus higher). July exports to their bitter rival were up more than +12% year-on-year. Shipping is in demand to service the surge, boosting freight rates. US west coast ports report their busiest month of imports for 2020 in July. Punitive tariffs seem to be having little impact on this flow - other than taxing Americans.
And consumer finance is rising fast in China, even if it is from a low base. Customer numbers were up more than +50% in the 2019 year. It is now a NZ$110 bln sector. The surge continued on into 2020.
At the Three Gorges Dam, record high water levels are now receding somewhat as the peak passes. It is the fifth major test of 2020 at this strategically important piece of infrastructure. At its peak, incoming water arrived at the rate of 75,000 m3 per second (and far above its previous peak if 67,000 m3). It was released at the dam at a rate of less than 50,000 m3/sec. This was enough to cause massive flooding downstream but no emergency. Upstream, major cities were inundated and 100,000s were evacuated.
It's not the only threat China is facing. In the city of Leshan in Sichuan province on Thursday, a leak at a chemical plant sparked a huge spontaneous mass exodus of the city - after authorities said there was nothing to worry about.
In Thailand, youth-led street protests are growing against the government and its military rulers.
In Australia, retail sales rose at a +3.3% month-on-month pace in July, up +12% year-on-year with a bounceback effect, with household goods sales up +30% from a year ago. And this was with data for Victoria declining in their lockdown.
And an inability to pay the rent on time has seen landlord Westfield move in and board up 129 stores run by Mosaic Brands in Australia. Landlords are getting as desperate as tenants.
In the US, rehiring laid-off workers is a trend that will bolster demand in the rest of 2020, but a quarter of the 22 mln laid off will unlikely find employment soon. That is more than 5 mln people, and surveys suggest at least 2 mln of them will never get re-employed. In fact, survey data shows workers are increasingly pessimistic that they’ll return to their same job. That is an expansion of a disappointed and frustrated underclass.
It is two weeks from their summer Labor Day holiday, which marks the end of their summer break and hiring generally picks up. But for companies looking to never have to go through such large-scale redundancies like they have in the past six months, and the pain they cause, they are looking to restart with much more automation, even in service jobs. It is a fast emerging trend that makes rehiring prospects even harder. It may not be long before concepts like the UBI become regularly discussed as a policy tool. These are issues sure to be canvassed privately at the Fed's Jackson Hole talkfest later this week.
The latest global compilation of COVID-19 data is here. The global tally is 22,781,000 and that is up +284,000 since when we last checked this time yesterday. Global deaths reported now exceed 795,400.
A quarter of all reported cases globally are in the US, which is up +79,000 since Saturday to 5,856,000 and a slowing rise. US deaths are now just over 180,400 and a death rate of 545/mln (+7/mln). The net number of people actively infected in the US rose +30,000 overnight to 2,523,900, so a rising number of new infections more than recoveries. There is no sign of improvement there yet.
In Australia, there have now been 24,812 COVID-19 cases reported, another 405 since Saturday, and still very much concentrated in Victoria. Australia's death count is up to 502 (+30). Their recovery rate is up to 77%. There are 5082 active cases in Australia (-398) indicating a turned tide and more recoveries than new infections.
The UST 10yr yield will start the week at under 0.64%. Their 2-10 curve is marginally flatter at just under +49 bps. And their 1-5 curve is also marginally flatter at +14 bps, while their 3m-10yr curve is unchanged at +56 bps. The Aussie Govt 10yr yield is at 0.88%. The China Govt 10yr is unchanged at 3.02%. And the NZ Govt 10 yr yield will start today at a soft 0.62% and down -6 bps in a week.
And we should also note that New Zealand swap rates ended the week in record low territory across the curve. In fact the two year fell -5 bps over last week, the five year fell -8 bps and the ten year fell -11 bps in a major flattening move, all triggered by RBNZ MPS signals and banks getting their collective heads around what the potential for what a negative interest rate means.
The price of gold has stayed low but up +US$3 since we last checked to US$1,943/oz.
Oil prices have stayed soft. They are still just over US$42/bbl in the US and the international price is now just over US$44/bbl.
And the Kiwi dollar will start the week unchanged at 65.4 USc which is at the lower end of a two week range of +/-30 bps. Against the Australian dollar we are unchanged too, at 91.3 AUc. Against the euro the story is similar at 55.4 euro cents. That means our TWI-5 is still at 68.6 and where it was a week ago.
The bitcoin price is unchanged from this time Saturday, and still at US$11,641. 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 ».
Daily exchange rates
Select chart tabs
56 Comments
Does it matter? The enthusiasm for "We can beat this!' seems to have evaporated. Whatever number comes with the announcement won't stop the increasing number of New Zealanders who no longer want to 'do their bit' from ignoring any rules put in place.
Just like the rest of the world, we're headed back into 'everyone for themselves'.
Perhaps people have a better predisposition to judge risk than given credit for.
"People <65 years old have very small risks of COVID-19 death even in pandemic epicenters and deaths for people <65 years without underlying predisposing conditions are remarkably uncommon. Strategies focusing specifically on protecting high-risk elderly individuals should be considered in managing the pandemic."
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7327471/
It is not just surviving. The information coming from COVID survivors and the medical community is that there is significant legacy damage from having the disease, even if it didn't kill you. That damage may well make you vulnerable to either a second infection, or other illness's that would otherwise not be fatal. So not very good at judging risk, just blissfully believing that bad shit only happens to other people! Then they will ask - why me?
In a study, 80% of people who had COVID (up to the age of 55) were found to have some level of damage to their heart, and there didn't seem to be any correlation to the severity of their illness for how much damage they suffered.
Hard to know at this stage how important that heart damage is and whether it'll be permanent etc. Better not to be amongst the guinea pigs who find out, I think.
Thanks, I wasn't aware of those qualifiers. I checked several articles and many don't have that higher level of analysis, this one does though: https://www.health.com/condition/infectious-diseases/coronavirus/does-c…
Anyone who believes we can beat COVID in terms of wholesale eradication has their head in the clouds. It is here to stay, and we need to learn how best to live with it. https://medium.com/@staceyrudin/anti-lockdowners-take-a-stand-23250fec0…
Don't worry any scrutiny of the $200 bill spend and border omnishambles has been shelved. Electoral cancer has been cured by the canning of the Epidemic Response Select Committee
https://www.stuff.co.nz/national/politics/300087522/coronavirus-coaliti…
That 1 case was off the back of 7,000 tests, as opposed to 25K per day when they were reaching to find the cluster's boundaries. I'm prepared to put money on the fact that if we go back down a level, some of the people currently isolating will just go back to normal life and we'll end up back in L3 before the election when some of them end up being Covid19+.
Here is the bus bit.
http://www.arphs.health.nz/news/further-auckland-bus-journeys-under-inv…
The two cases travelled together on the 22N bus for around 2.5 hours on Wednesday 12 August, as announced earlier. Auckland Transport advises there was very bad traffic congestion that morning as people were heading home before the midday lockdown. The situation was made worse with traffic queuing for the COVID testing centre by the St Lukes shopping centre.
2 & 1/2 hours to travel:
From the Symonds Street Overbridge (Stop 7162) to New North Road (Stop 8200).
NZ gives China more production ability with live cow exports
https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12…
Stupid. After all we are giving them the kitchen rather than cooking the meal for them.
Our agriculture industry has been doing this for years, teaching our potential competitors, and selling our technology to them so that they can compete with us. Sooner or later they will become self sufficient and our market is gone. Really very stupid.
As expected, the entire article is about the potential unfair treatment of animals in the destination country without a peep about NZ losing its competitive advantage of exporting high-quality milk to China.
After years of stealing IP from Apple, Huawei has managed to significantly expand its market share among Chinese and South Asian consumers at the expense of iPhone sales in these major markets.
But the thing that really makes no sense is NZ cows are breed for outdoors grass feed system, but they're going to a concentrate feed housed system used in most northern hemisphere countries. Our cows do not compare well at all, so maybe it's a good con on our part to keep Chinese competitive production low.
It surprises me how much we have neglected manufacturing and carved this critical sector out of every policy decision since 1984.
Some political leaders initiated a dialogue on promoting a small, specialised industrial complex in NZ to shake-off the ill-effects of border closures on our economy.
As usual, nothing actually eventuated, our ministers couldn't even table these discussion properly without bringing a migration, housing and tourism led recovery back on the cards and soon we will back to our old ways.
We have no “call to action” we do not “honor struggle” we have no national philosophy that admires struggle or work or the long hard road taken.
We do not promote this, or encourage this.
We have no strategic plan we have nothing. Or will eventually have nothing….
If I analysed this country as a business proportion, the biggest and most immediate thing on my “to do” list would be a culture change. The second would be an immediate cut in wages or closing down of non-performing departments.
It’s pathetic.
Take the tech road? Get with the play, do these young people we are producing have the steel to go one on one and work like the hives of highly coordinated, highly motivated, highly educated young people working through out eastern Europe and Asia in this industry?
I hope our people can compete but, I’m not convinced with what I am witnessing.
Monday morning blues... sorry
You wish to see the 'I want everything done yesterday' culture in those places become normal here? Who will this really benefit? I've seen how this affects the mental and physical health of workers who are expected to have no real commitments or interests outside of their work, who break themselves honoring the struggle... in pursuit of profits they hardly see any benefit from. We already have a low wage economy. There are people who would love to see that culture grow here and still desire to slash wages regardless. I know many of you who just love bringing people over from certain cultures, because they are likely to remain loyal to your company no matter how poorly they are treated. Should our people have to compete with workers forced into what amounts to slavery in other parts of the world too?
Manufacturing can't save us - as most countries can do it more cost effectively than us. We have high labour costs, slow expensive international transport, high regulatory costs, small talent pool and small internal markets make it a terrible place to do export manufacturing for anything other than minor niches that others don't care to take off us, and value added food stuff trading on off NZ's brand.
I see your point but I hardly meant building an industrial/manufacturing base in the traditional sense of producing here and exporting elsewhere.
Manufacturing Alliance NZ laid out a report on how a nationwide strategic push could help us grow or invite more globally-focused companies like SCOTT and F&P Healthcare in NZ. Our economy could greatly benefit from the presence of more such companies that hire hi-value workers locally to research and develop innovative products which can then be efficiently produced elsewhere.
A local presence of these companies will have a flow-on growth effect on our service sector: industrial construction, tertiary & vocational education, technical & professional services, banking & insurance, etc.
China is not gong to be pleased with a lady by the name of Cai Xia, a former member of the elite, currently 'trapped' in the US by COVID restrictions, but giving interviews to CNN. She is quoted as saying China plans "to replace the free and democratic system of modern mankind represented by the United States, and the values and order of peace, democracy, freedom and justice, with its own model of governance." She will not be able to go home. A link to the article is HERE
China plans "to replace the free and democratic system of modern mankind represented by the United States, and the values and order of peace, democracy, freedom and justice, with its own model of governance."
Hmmmmm........
Throughout the world today, there is no effective international law in any instance in which the U.S. Government doesn’t want international law to apply. If the U.S Government doesn’t want international law to apply, then international law doesn’t become applied to that particular instance. The U.S. Government, and any of its allies, is immune from international law — stands above it (not nominally, but actually) — though all nations that are not allied with the U.S. are, in fact, subject to, and must adhere to, international law. This is today’s international reality. By this means, with this zombie-U.N., the aristocracy in any nation that isn’t yet a U.S. ally (vassal-nation) has a significant incentive (immunity from international law) to become one. Today’s U.N. therefore ends up increasing the U.S. regime’s ability to impose its will upon the world and to assist to become impossible the democratic global republic of nations that FDR had aimed to lay the foundations for and to emerge in the future. Today’s U.N. is therefore more the anti-U.N. in the view of FDR’s intention. By filling-in for the real one, it actually helps to prevent the real one. Link
ICYMI: How govt depts really work – Explaining the border control debacle https://democracyproject.nz/2020/08/21/tony-burton-govt-depts-debacle
I wonder how much silt arrives in the 3 gorges dam per year. Should go research I suppose. Maybe later. Presumably all calculated and factored into build. That volume of water is huge and it must be incredible what's carried in suspended in the water and settling out.
More Super City news:
Emergency food providers have warned their toughest winter yet is set to get even tougher.
The return to alert level 3 has left thousands of Aucklanders desperately seeking help.
That need was evident on Sunday as hundreds of families queued outside a Sikh temple, many getting food parcels for the very first time.
https://www.newshub.co.nz/home/new-zealand/2020/08/sikh-community-stepp…
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.