Dawn chorus Friday November 6

Given new unfettered power to govern alone, Jacinda Ardern plays it safe with no talk yet of big policy or spending shifts. Her DNA is set for MMP, not FPP. Investors celebrate a weak Biden win

TLDR: A newly all-powerful Jacinda Ardern stuck to Labour’s manifesto script in her first big speech of her second term, simply confirming already foreshadowed spending increases and previewing fast-tracked approvals for a couple of projects before Christmas. But there was no transformational talk. Her political DNA is set for MMP, not FPP. The IMF’s call for fiscal stimulus went unheard.

US markets rallied this morning on hopes the Federal Reserve will print more money to offset a lack of fiscal stimulus from a Joe Biden-led Government that can’t get much done because the Republicans look likely to retain control of the senate. The Bank of England expanded its money printing and bond buying programme by another £150b overnight. That will just boost existing asset prices and make the rich richer, rather than pump real cash into the actual economy to get it circulated. It is being stored.

A newly powerful PM won’t flex her muscles

Jacinda Ardern gave her big agenda-setting ‘acceleration’ speech yesterday to a business audience ahead of today’s swearing in of her ministers and the first formal Cabinet meeting of Labour’s second term.

Ardern confirmed Labour would proceed with its manifesto promises for expanded wage subsidy and training schemes to help unemployed people back into work, and the already-flagged extension of the Small Business Loan Scheme. She also announced Cabinet would look to use the Covid-19 fast-track powers the Government has to jump-start some projects past the RMA before the end of the year, but did not detail them.

Possible candidates include the $620m Manawatu Gorge project (stuck in the Environment Court since March) and the $250m Awakino Gorge to Mt Messenger project linking Taranaki to the King Country (stalled awaiting High Court approval and a deal with one intransigent land owner).

Ardern also announced she would lead a trade delegation overseas, without detailing when. Legislation to double sick leave to 10 days a year will also be introduced before Christmas.

There was no indication of new spending or investment initiatives, using Labour’s unexpected one-party majority in Parliament, which is a first under MMP, and a stonkingly powerful balance sheet, which the IMF has recommended Governments such as New Zealand use to help out central banks with more expansive fiscal policies.

Ardern now how the power to be much more transformational around issues such as housing affordability, climate change and welfare reform, but is choosing (so far) to be much more incrementalist. She has repeatedly said through her political career, which has been learned and lived completely under MMP’s assumptions about never having total power, needing coalitions and making policy changes stick through consensus and gradualism.

So far, her political DNA has yet to unjust to running a Government that is more akin to an ‘elected dictatorship’ some of us older voters (I’m 52) remember from the pre-MMP days. There are no signs yet she can or will adjust the Government’s ambitions or approach.

News breaking this morning

‘We always win’ - US stock markets rallied this morning on expectations the Democrats will not win the Senate, making it more difficult for Joe Biden to engineer big fiscal stimulus. That puts the onus back on the Federal Reserve to print yet more money and drive down interest rates even further, which pushes up asset prices. Somehow, even bad news is good news in markets land. (Reuters)

‘Here’s more invented cash’ - The Bank of England expanded its money printing and bond buying programme by a bigger-than-expected £150b overnight. The pound fell. There is no limit to the money printing as independent central banks targeting inflation just keep flogging the dead horse with money printing that hands cash to banks, fund managers and the rich to push up asset prices. But the cash is not circulating and the medicine is simply worsening the inequality that is grinding global growth and productivity to a halt. (Guardian)

Landbankers’ tax? Todd Niall reports Auckland Council is considering targeted rates on undeveloped or undeveloped land to raise $28m for climate change measures and to accelerate the building of affordable homes. More than 15,000 properties could face rates rises of at least 35% per cent under the plan. (Stuff)

A winter of discontent - Thomas Coughlan reports National Party Central North Island chair and Bay of Plenty regional councillor Andrew von Dadelszen posted on Facebook blaming Todd Muller’s leadership for costing National the election. Judith Collins is expected to reshuffle her caucus next week. Von Dadelszen is Muller’s regional party chair. (Stuff)

Back to basics - Hamish Walker, the disgraced former National MP for Clutha-Southland, has announced he is joining Harcourts in Queenstown as a real estate agent. Walker resigned this year after leaking confidential medical records. (Stuff)

“Trust, community and shared values are at the heart of doing business in Queenstown and throughout the Harcourts Highland Group’s six offices in Otago, and Hamish’s deep ties to the region make him an ideal addition to our brand.” Harcourts Queenstown managing director Warwick Osborne

Courage? - Despite warnings from the Reserve Bank about further branch closures, ASB announced plans to close 23 branches nationwide, with a further 13 branches permanently moving to reduced hours. (Stuff)

‘Get me outta here’ - 40,000 Americans looked on Immigration NZ’s website this week at how to emigrate to New Zealand (Stuff)

Too many fries with that? - MBIE has launched an investigation into dumping of frozen fries into the New Zealand market by producers in Belgium and the Netherlands. Exports from there have risen 50% from there in the last year. (Stuff)

Sign ‘o the times

‘Just build them’ - Susan Edmunds reports economists would prefer more state house and community house building than new Kiwibuilds. (Stuff)

Landlord vs tenant - One for the anti-landlord and property manager backlash file. It’s what happens when inequality widens. There is less solidarity and more division. Quinovic is being targeted again by angry tenants after sending them a letter inviting them to snitch on badly-behaved fellow tenants. (Stuff)

K shaped recovery - This recovery is not equal for all. Women, the young, renters, Maori and Pasifika and anyone in the gig economy are faring worse than men, salaried workers and property owners. Here’s a good piece from Liz Kendall on why almost three quarters of the jobs lost are those of women. (Stuff)

Growing houses instead - Villa Maria announced it planned to sell 31ha of prime vineyards at Mangere to use the funds for expansion elsewhere. (Stuff)

“Today, the land value has increased to a point where it is not possible to generate a reasonable return on these vineyards.” Villa Maria CEO Justin Liddell.

Same same - Matthew Hooton writes today that Jacinda Ardern is the rightful heir to John ‘smiling assassin’ Key. (NZ Herald-$$$)

“The elephants in the room remain tax, fiscal and monetary policy, with the words not even in her speech. On one hand, this is good news since it confirms Labour's election promise of no new taxes except for the 39 per cent income tax rate on income above $180,000. On the other, it suggests the Government is not yet focused on the need to chart a medium-term path to fiscal surplus, address the utterly out of control housing market and find a way to meet its redistributive objectives. Yesterday's reach out to the business community was welcome. But silence on these fundamental issues won't be politically sustainable for long.” Matthew Hooton

‘Don’t keep flogging’ - Brian Fallow writes in his column today challenging the Reserve Bank’s money printing plan. (NZ Herald-$$$)

“The question is whether the marginal benefits to be gained by engineering even lower retail interest rates through unconventional monetary policy tools outweigh the costs and risks of doing so. One of the costs — the fuelling of house price inflation with its attendant effects on inequality and intergenerational grievance — has already garnered a lot of attention.” Brian Fallow

Capitalism with Chinese Communist Party Characteristics - Here’s a good explainer of the big news in global stock markets this week — the shock cancellation of Ant Group’s giant float three days before the start of trading. It was supposed to be the biggest IPO in world history, but Alibaba founder Jack Ma offended the CCP bosses and paid the price. (Reuters)

Coming up…

Today at 8am - US Federal Reserve Open Markets Committee to make monthly monthly policy decision

Today at 10.30am - Chorus to hold AGM

Today around 2pm - Official final NZ election and referendum results to be published by Electoral Commission after counting of special votes. Trump is not expected to challenge these ones in our Supreme Court.

Today - Ministers to be sworn in at Government House mid-morning and then hold first formal Cabinet meeting this afternoon, followed by post-cabinet news conference.

Today at 3pm - Reserve Bank to publish results of its December quarter Survey of Expectations for inflation and of monetary conditions. Another big drop would change views about next Wednesday’s MPS decision.

Sat Nov 7 - US non farm payrolls jobs data for October due overnight

Mon Nov 9 - First working Cabinet meeting of the new term. PM expected to hold a news conference in Wellington around 4pm.

Tues Nov 10 at 10.45 am - Stats NZ to publish electronic card transactions data on retail spending in October 2020.

Weds Nov 11 at 9am - Contact Energy AGM

Weds Nov 11 at 2pm - Reserve Bank quarterly Monetary Policy Statement (MPS) and news conference at 2pm. Details expected of the Reserve Bank’s $30-50b Funding for Lending Programme (FLP) of Reserve Bank money printing and lending to banks at or around the Official Cash Rate (currently 0.25% and expected to fall to minus 0.5% next year).

Thurs Nov 12 at 10.45 am - Stats NZ to publish travel and migration data for September.

Thurs Nov 12 around 8.30 am - Sanford to publish full annual results to NZX, but it gave an early indication on Nov 5 of a 46% fall due to Covid-19.

Fri Nov 13 at 10 am - Business NZ-BNZ Purchasing Managers Index for October

Fri Nov 13 at 10.45 am - Stats NZ to publish rental price indexes for October.

Mon Nov 16 at 10.45 am - Stats NZ to publish wellbeing statistics for September quarter.

Sat Nov 21 - National Party AGM due to vote on re-election of President Peter Goodfellow.

Weds Nov 25 2pm - Reserve Bank to publish six monthly Financial Stability Report (FSR) . Expected to warn of re-imposition of high LVR lending limits from May 1, 2021.

Ngā Mihi

Bernard

PS: Hope you enjoyed this pic above via Troy from Martinborough. A glorious dawn.