A prominent New Zealand businessman’s regular reports on the global economy.

by The REJIGIT Blog

John Ryder, M.Com (Hons); CA; CMA, is a well known New Zealand Company Director, Investment Analyst, Property Investor and Writer etc. He is the author of “Global Investing: A Guide for New Zealanders”, published in 2016 by David Bateman Ltd (ISBN : 9781869539375).

He was one of the two founding directors of Ryman Healthcare Ltd and his present numerous company directorships include Executive Chairman of Qestral Corporation Ltd, Chairman of NZ King Salmon Ltd and Director of Tuatara Tours NZ Ltd.

Mini Global is reproduced verbatim and with the consent of the author and will be updated by Rejigit as further Mini Global reports become available.

For further information about Mini Global, go to https://www.globalnews.co.nz/

3rd August 2020

Here come the economic figures.

US growth figures released on Thursday pointed to the highest recorded decline in activity in the world’s largest economy. The 32.9 per cent annualised fall in national income in the second quarter was three times the previous post-war record. The Eurozone’s gross domestic product fell 40.3% on an annual basis.

In a shock finding based on a survey run by the Australian Bureau of Statistics, one in ten companies currently securing the wage subsidy have revealed they plan to shut up shop when the wage subsidy runs out, forcing workers on to the unemployment queues. Nearly half of all businesses have revealed they are relying on coronavirus measures to survive.

As New Zealand closed its borders and prepared to go into level 4 lockdown, predictions of economic doom flew. But four months on, economists say the situation is better than expected and many of those predictions have already been revised (upwards).

Anthony Fauci, a high-profile member of the White House coronavirus task force, told Congress that the surge in Covid-19 cases in the US was due to states not following official guidance, in a tacit rejection of Donald Trump’s insistence that it was the result of widespread testing.

America is not winning the war on the pandemic. It barely even seems to be fighting it. There seems to be very little prospect it can turn the corner before early 2021.

Boris Johnson has slammed the brakes on the reopening of the English economy at the end of a week in which spikes in coronavirus infections in the UK, Europe and the US have battered hopes of recovery. The prevalence of the virus in the UK has increased week on week, according to data from the Office for National Statistics. To make matters worse, British holidaymakers have been heading to the Continent in droves, leading to fears that they will bring the virus back home in their suitcases. There is an absence of decisive leadership.

Halfway into Victoria’s six-week lockdown, Premier Daniel Andrews has conceded that the state’s renewed virus purgatory is nowhere near over. The peak of 723 new overnight cases on Thursday subsided just slightly to 627 on Friday: numbers which say lockdown is likely to be extended past August. Melbourne is nearly a quarter of the Australian economy.

A recent poll found that only half of Americans definitely plan to take a coronavirus vaccine. Other polls said that between a quarter and a third of the nation would never get inoculated. At least three-quarters of the population would need to be vaccinated to reach herd immunity.

The New Zealand Government has announced $311m in tourism funding to save 126 key businesses and protect about 3000 jobs.

Prices for Australian consumer goods dropped by 1.9 per cent in the June quarter, the largest quarterly fall in the 72-year history of the Consumer Price Index.

Momentum is working against the US dollar. Being a contrarian is usually a smart investment strategy, but that is not the case when it comes to trading the dollar. With the dollar, you want to follow the herd.

US stocks rose Friday as a slate of technology giants buoyed the S&P 500 and offset disappointing earnings from some industrials and weak economic data.

President Donald Trump drew immediate rebukes from Republicans and Democrats alike on Thursday after floating the prospect of delaying the November election and claiming without evidence that widespread mail balloting would be a "catastrophic disaster" leading to fraudulent results. Joe Biden had predicted in April that he would try that move.

Rio Tinto says China's heavy industry is working at full speed and the Chinese economy could grow at up to 8 per cent next year, fuelling demand for Australian commodities like iron ore.

Gold was close to a record high on Thursday after the US Federal Reserve signified its commitment to use all tools at its disposal to support the American economy, underscoring the market's belief that real interest rates will remain negative.

Investors have focused on a rise in record prices for gold, but silver’s up about 25% in July—the metal’s second-biggest monthly gain on record—and it’s still undervalued compared with the yellow metal.

Melbourne is set to lead a further plunge in Australian capital city property prices in July, as investor-driven apartments fall out of favour and demand for houses in regional areas surges.

It is what it is.

Take care out there.

Kind regards,

John Ryder and Devon Ashby