Crypto divided
By Justin Pyvis – Delivered on 26 Nov 2021

Good morning! The NSW government made some changes to the next phase (15 Dec) of its reopening plan yesterday, relaxing its mask requirement to only include public transport, planes, airports and unvaxxed indoor hospo staff. Density limits were scrapped entirely and COVID-safety plans will be optional for businesses, with check-ins only required at "high-risk venues" such as hospitals, gyms, pubs and so on.

So, pretty much back to normal. It's going to be interesting to see how the government handles itself when vaccine transmission efficacy fades and cases rise at the end of summer, as we're now seeing across Europe.

Moving on, the NT's Chief Minister Michael Gunner unleashed on the "insane and unhinged... tinfoil hat-wearing tossers", who are spreading "ridiculous, untrue rumours" about his government's response to the recent outbreak.

He has a point – certain international pundits certainly give the impression that "Australia" is living in a military/police state (the troops involved are unarmed and powerless), despite the fact that the entire country is living free other an unlucky 0.025% of the population currently locked down in a few small remote NT towns, where the vaccination rate is still below 80%.

Nothing that's happening in Australia hasn't already happened in the Americas or Europe (other than the duration – sorry Melbournites). We're just a few months behind the rest of the world due to the, ahem, 'delay' in acquiring vaccines.

Fully vaccinated population (aged 16+)


Daily % change







AU Yield (%)



US Yield (%)









Brent (bbl)



Gold (oz)



Iron ore (t)









Note: Brent oil, gold bullion and iron ore prices are the second futures contract. Bond yields are 10-year Treasuries. The S&P500 is a snapshot 30 minutes before close.

The ASX200 gained 0.11% as tech (+2.40%) followed a strong lead in the US, where bond yields fell on the back of Thursday morning's positive 'reopening trade' data, such as extremely-low weekly initial jobless claims. The next best was the materials sector (+0.87%), with gains for the big mining companies due to the solid recent run in iron ore prices.

The US S&P500 was closed for the Thanksgiving holiday. 🦃


Building boom: While Australia's private capital expenditure fell 2.2% in the September quarter largely due to the lockdown in NSW (-8.5%), expectations for the 2022 financial year rose a massive +8.7% from the previous estimate, the majority of which was driven by non-mining (+10.3%). If that's even close to being realised the RBA is going to have its work cut out for it.

An unhappy Christmas: According to market-research group GfK's forward-looking consumer sentiment index, Germany's consumer confidence is set to move negative in December rising coronavirus cases that could lead to further restrictions and "high inflation and an associated reduction in the purchasing power of income".

More tightening: South Korea's central bank raised interest rates for the second time in three months, opting for another 25 basis point rise taking the cash rate to 1.0%. Like Australia, Korea faces an election in early 2022 (March) meaning inflation – currently running at decade-high 3.2% a year – is a political hot potato.

It's already late: ANZ warned that the market might be "underestimating how high the [Australian] cash rate might go - especially if the RBA is both late to move and then slow".

Just raise rates: Following a warning from Canada's central bank last month that it might raise interest rates in mid-2022, "Canadian housing prices are set to surge again in the coming months as investors and first-time buyers scramble to buy before interest rates go up". 🤦‍♀️

Fun fact: Since Prime Minister Justin Trudeau took office in 2015 pledging to improve housing affordability, prices have climbed another 77%.

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Crypto divided

The world's governments are increasingly divided in terms of how they're approaching private cryptocurrencies (crypto). China was the first to move, effectively purging the country of crypto entirely to pave the way for the e-CNY, a much less exciting central bank digital currency (CBDC). Earlier this week India's government signalled its intention to basically do the same.

But it's not just heavy-handed, overly controlling governments that are banishing crypto. The Swedish government earlier this month lobbied the European Union to ban all "energy intensive" crypto mining, because it was "threatening Sweden's ability to meet its obligations under the Paris Climate Agreement".

Breaking it down: While the official motives differ, the result will be the same. Crypto mining will simply move to where the next best balance between power costs and government hostility can be found. That could be anywhere from El Salvador's new volcano-adjacent city, to Australian hydrogen or most likely places like Kazakhstan, already big beneficiary (see chart above) of the Chinese crypto mining ban.

Sweden's a county where 75% of energy is generated from clean hydroelectric and nuclear power. If an EU ban forces crypto mining to move to Kazakhstan, it means crypto will instead be mined in a country where coal fuels around 70% of its electricity generation.

Hardly an environmentally friendly outcome. But out of sight, out of mind, right (gotta hit those Paris goals)!?

Why this matters: Governments have proven they can turn on crypto in an instant. In Australia, politicians appear to be either ambivalent or positive towards crypto. However inside the bureaucracy it's a different story, with the RBA recently calling cryptos a "fad".

In its submission to the Select Committee on Australia as a Technology and Financial Centre, the RBA warned that once central banks issue CBDCs ("superior payment instruments"), "cryptocurrencies are likely to have only niche uses and that current valuations of many cryptocurrencies are unlikely to be sustained".

Looking forward: There are better ways to meet emissions targets than by blanket-banning crypto, such as using a revenue-neutral emissions trading scheme (ETS), thereby avoiding the mess of picking winners and losers. As a member of the EU, Sweden happens to have one of those already along with a separate carbon tax.

We suspect there are more sinister forces at work, which are alluded to in the article – "Sweden's renewable energy is diverted away from industrial, transport and domestic uses, and into Bitcoin and other tokens".

In other words, the unelected Swedish bureaucrats lobbying for a ban on crypto mining in the EU – the Swedish Financial Supervisory Authority and Environmental Protection Agency – are simply trying to circumvent the ETS by picking winners and losers.

This feels a lot like a test case. No doubt when other governments and central banks eventually take a formal position on crypto – including the increasingly hostile RBA – they may draw from similar rent-seeking rhetoric.

The Wrap Up
    🏉World Rugby announced Australia as the 'preferred candidate' for Rugby World Cup 2027, with final confirmation to come via a formal World Rugby Council vote in May next year.
    ⛈️La Niña is messing with England's Ashes preparations, washing out their intra-squad Ashes warm-up match in Brisbane with only 29 overs bowled over three days.
    💊Antiviral pill logistics – "Within three days, could you get an appointment with your doctor, get COVID-19 test results, and fill a prescription?"
    🥐France's foreign minister said it still has a "trust crisis" with Australia, because it "acted behind our back on military, on strategic issues... we found out all about it [the cancelled submarine deal] by listening to a press conference".
    🚦Germany will finally have a new government after two months of negotiations between a "traffic light" coalition involving the red centre-left Social Democrats, yellow pro-business Free Democrats and green environmentalist... Greens.
    🧒China's government undercounted the number of people born between 2000 to 2010 by at least 11.6 million, perhaps because of "some parents failing to register births to avoid punishment if they breached the one-child policy".
    🌵Best toy ever? An "educational" dancing cactus was pulled from Walmart's shelves because a Chinese manufacturer inadvertently used a Polish song that uses swears and talks about using cocaine.
    🧳Singapore and Malaysia will allow quarantine-free travel across their border from 29 November, capped at 2,880 per day. Does that mean Australia will now open to Malaysia?
    👶India's fertility rate has fallen to 2.0 (2019-21) from 2.2 (2015-16), meaning it's now below replacement levels (2.1).
    😱China's government said Lithuania will "pay a price" for allowing Taiwan to open an embassy in its capital Vilnius, and that it "must bear all consequences that arise from this".
    💉Australia's new human rights commissioner Lorraine Finlay weighed in on mandates, saying once vaccination rates are high enough "the need for mandates changes because the proportionality calculations change... [such orders should be] tailored to risk rather than broad-based, blanket approaches".
    🏝️Australia will send troops to the Solomon Islands "to provide stability and security" amid two days of rioting "over government services, corruption, and disputes over the government's move to more closely align itself with China".
    🙊Earlier this week JPMorgan CEO Jamie Dimon said he would "make a bet that we last longer", in reference to the fact that his company and the Chinese Communist Party had both been around for 100 years. Days later Dimon had "issued two separate apologies to China".
    🎅Indonesia's government banned people from taking leave over Christmas and New Year to avoid triggering "a third wave" of COVID-19.
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