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Hit by a rainbow

Good morning and happy Friday! In what should surprise no one, it turns out an untargeted, one-size-fits all government subsidy programme with limited oversight was like a "hit in the bum by a JobKeeper rainbow" for shareholders of some companies. Full details in the Econ Wrap below.

Market Wrap: Jobs galore

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Note: Brent oil, gold bullion and iron ore prices are the front month future contracts.

Oil crash: Rising US oil inventories, lower crude demand from Asian buyers ahead of refinery maintenance and poor EU demand expectations due to the inept vaccine rollout have all taken a toll of late.

Key data release: Australia's unemployment rate fell to 5.8% in Feb (from 6.3% in Jan). Hours worked increased by a whopping 6.1%. While there's still a fair way to go before we get back to pre-COVID levels (unemployment was 5.1% in Feb 2020), there will no doubt have been high fives in Canberra yesterday.

Inflation watch: Only last month the Reserve Bank of Australia (RBA) forecast unemployment to fall to 6.0% by December 2020, so things are heating up much faster than the central bank expected. No doubt the board members are thinking long and hard about what it might mean for wages, inflation and their stern committent to ultra-easy monetary policy.

Econ Wrap: JobKeeper was the gift that kept giving (for some)

Corporate subsidies are great if you can get them.
Bill Schorr/Cagle

Corporate governance advisory firm Ownership Matters revealed that of the 66 companies in the ASX's top 300 that received JobKeeper in the six months to the end of December 2020, 58 also reported "positive profit figures" relative to the same period in 2019.

No excuses: Times were crazy back in March 2020 but that was a year ago – the government had plenty of time to adapt. Indeed, initially most payments went to the the hardest-hit businesses, such as Qantas, Crown Resorts and Flight Centre. But it became clear by the middle of the year that the scheme was far too broad-based, and that's what the data show – for around 88% of the ASX-listed companies that claimed JobKeeper after June 2020, it did nothing but boost their profits. However, we will never know the true extent of the waste – 97% of the total amount paid as part of the $83 billion JobKeeper scheme went to private companies. JobKeeper ends a week Sunday.

Elsewhere: New Zealand's GDP fell 1% in the December quarter of 2020. With multiple lockdowns in Auckland and declining electronic card transactions in Jan and Feb, there's a good chance the Kiwis are already back in recession.

Corona Wrap: The Digital Green Certificate

A COVID passport app coming to your phone soon.
Baker and Patel/Bloomberg

The European Union plans to introduce digital certificates offering proof as to whether a person has been vaccinated, recovered from COVID-19 or recently tested negative. It hopes to have the scheme implemented by the middle of June.

The future of travel: This isn't new. For example, many countries have required passengers to carry proof of vaccination against the mosquito-borne yellow fever for decades. Governments already track every international trip you make so there shouldn't be serious privacy concerns, either.

However, the challenge of interoperability still lingers. Governments botched it with COVID-19 track and trace apps, so the bar is set pretty low. For example, how does someone with a vaccine issued from outside the bloc verify themselves? Who stores the the data? How is it protected? A global standard will be required before travel can return to anything resembling pre-pandemic levels.


  • Our Kiwi friends may soon permit Australians to travel to New Zealand without the need to quarantine. The New Zealand Cabinet will meet on Monday, with a decision expected next week. In normal times tourism contributes somewhere between 5-10% towards New Zealand's now-shrinking economy.
  • The EU's medicines regulator concluded the Oxford/AstraZeneca vaccine is "safe and effective". It actually found that the 37 reports of blood clots out of more than 17 million people vaccinated in Europe was "much lower than would be expected to occur naturally in a general population of this size". Use it or lose it already, Europe!

Random Wrap: Work smarter, not longer

Dilbert knows what productivity means.
Scott Adams/Dilbert

Microsoft introduced a program in Japan called the "Work Life Choice Challenge", during which shut down its offices every Friday in August and gave all employees an extra day off each week. Sales per employee went up by almost 40% compared to the same period the previous year.

Trimming the fat: It turns out that managers – worried about the fewer available employee hours – hacked away at the margin, restricting all meetings to 30 minutes and getting rid of some entirely by using online messaging instead.

The pandemic forced everyone to think long and hard about how they do business, whether it's remote work or eliminating an entire work day. But old habits die hard and so effects of this magnitude are unlikely to persist if it were a permanent change. That said, some of it is bound to stick.

Elsewhere: In a classic 'Not the Onion' moment, NSW Police proposed to use phone apps to record sexual consent. Government in the bedroom? Please. All this pandemic-power has clearly gone to their heads. But the fact the Commissioner felt confident enough to even mention the idea in public should give some cause for concern.