Big banks turn sour
By Justin Pyvis – Delivered on 13 Sep 2021

Good morning! Unfortunately we're not going to be able to provide quotes from NSW Premier Gladys Berejiklian anymore, as on Friday she announced that she will no longer be holding daily COVID-19 media conferences.

That makes sense, we suppose – she probably has better things to do than uphold her government's commitment "to the open government principles of transparency", right before case numbers spike and the state's hospital system starts to come under pressure. 🙄

But never fear, other state Premiers are still here! While Dan Andrews is being cagey about what Victoria's government will do when his state reaches the 70-80% fully vaccinated mark (he won't produce a road map for another week), Steven Marshall of South Australia revealed that he's keen on following the National Plan.

Commenting on Sunday, Marshall said "once we get to double dose 80% vaccination across South Australia we will certainly move away from state lockdowns", and that while businesses may insist on people being vaccinated, his government will avoid mandates unless it's agreed at national cabinet.

Finally, ScoMo announced that Australia had secured another 1 million Moderna doses from several European Union members, due to arrive this coming weekend. That means Australia will receive around 11 million mRNA vaccine doses this month alone, well above what was initially expected. By October, ScoMo said, "we're going to have enough vaccines in the country to have offered ­everyone a jab".

Finally! 👏 Now for some incentives.


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Note: Brent oil, gold bullion and iron ore prices are the second futures contract.

The US S&P500 fell for a fifth straight day on Friday, dropping 0.77% to mark its longest losing streak since February. Tech stocks were hit particularly hard, led by Apple (-3.3%) after a judge ruled that it can't block developers from linking to external payment methods, allowing them to work around Apple's 30% transaction fee (~20% of Apple's profit).

Locally the ASX200 added 0.50%, led by the mining and energy sectors. The big news for the day was Santos and Oil Search finally agreeing to terms on a $A21 billion merger, with the combined entity set to become one of the world's top 20 oil and gas producers.


A boost for Trudeau: Canada's unemployment rate fell to 7.1% in August, adding 90,200 jobs for the third consecutive monthly increase. The news will have been welcomed by PM Justin Trudeau, who is staring down possible defeat after calling a federal election two and a half years before it was required.

Reopening euphor...wait: Britain's economy grew just 0.1% in July, the smallest monthly increase since January when the whole place was locked down. Meanwhile, inflation is running at over 2% per year – is that a whiff of stagflation we smell? A worrying sign for politicians and central bankers betting on a quick economic rebound.

Deep in debt: Between July and September, the NSW government handed out more than $A8 billion in support measures to businesses and individuals. Combined with shrinking revenue, that has left the state's budget $A19 billion in the red, more than double the $A8.6 billion deficit projected in the June state budget.

Junk: Rating agencies Moody's and Fitch warned that "some kind of default appears probable" for China's Evergrande, downgrading the long-term debt of the world's most indebted property developer. We covered the story in some detail last Tuesday – you can read all about it here.

Big banks turn sour

Bank of America, Goldman Sachs, Morgan Stanley and Citigroup all warned about "increased market fragility", downgrading their respective outlooks for equity prices.

Stepping back: Equity prices are at record highs in absolute terms but also on so-called value metrics, such as the global Buffett indicator. According to Citigroup, conditions are extremely bullish – longs on the S&P500 outnumber shorts by nearly 10 to 1 and "Half of those bets are likely to face losses on a drop in the index of as little as 2.2%". That means even a "small correction could be amplified by forced long liquidation".

Why this matters: Bloomberg Intelligence warned that "there is very little buffer left if you get large negative surprises". One of those surprises could be surging inflation at the same time as growth disappoints – data on Friday showed that producer prices in the US (the prices factories charge wholesalers) increased 0.7% in August from the month prior and 8.3% from a year ago, the biggest annual gain since these data were first recorded back in November 2010.

Looking forward: Fears of inflation could start to convince central banks that they need to either raise rates or at least start talking about doing so, which is what "hobbled another raging bull market in 2018".

The Wrap Up
  • 🏉 The Wallabies knocked off the world #1 Springboks 28-26 thanks to a kick on the siren by the once-exiled Quade Cooper.
  • 🏎️ Australia's Daniel Ricciardo won the Italian Grand Prix, his first win since Monaco in 2018 and McLaren's first win in nearly nine years.
  • 🎭 The federal government launched a new vaccination advertising campaign yesterday, called 'First things first', highlighting the freedoms vaccinated Australians will enjoy.
  • ⏩ UK Prime Minister Boris Johnson will set out a "winter plan" on Tuesday, expected to do away with vaccine passports and lockdowns forever.
  • 😷 Tasmania's government now requires people to wear masks at any event with more than 1,000 people – indoor and outdoor – despite being COVID-free.
  • 🤫 Former PM Tony Abbott, who once provided advice on how to dob in colleagues criticising his government, was dobbed in for not wearing a mask and said "I never thought dobbing and snitching was part of the Australian character".
  • 🏆 The Melbourne Demons will play the Western Bulldogs in the first ever AFL grand final to be held in Perth on 25 September.
  • 🛂 "Australia's vaccination certificates can be easily forged with fake documents available for $270."
  • 😑 The last known missile fired by a US drone in Afghanistan may have mistakenly killed 10 innocent people with no links to ISIS.
  • 🎾 The UK's teenage qualifier Emma Raducanu won the US Open women's final, becoming the first player in the professional era to come through the qualifying rounds and win a major.
  • 🚦 A bunch of antivax protesters attempted to "bring London to a stand still", by pressing traffic light buttons at the same time. It failed – they're all automated during the day.
  • 💉 Three preliminary studies released by the US Centers for Disease Control and Prevention on Friday found that unvaccinated people are over 10 times more likely to be hospitalized with COVID-19 than those who have been vaccinated and 11 times more likely to die of the virus.
  • ❌ France's government banned "nonessential" travel to France for unvaccinated visitors from the United States.
  • 💊 Australia's Therapeutic Goods Administration placed restrictions on oral ivermectin, a possible treatment for COVID-19 spruiked on social media, due to "national and local shortages for those who need the medicine for scabies and parasite infections".
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