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Long live the Technoking

Good morning! In a sign of how silly markets have become, the subject of today's update refers to Elon Musk, who is now also the 'Technoking of Tesla'. Yes, that is Musk's actual title at Tesla – at least according to an SEC filing made this week. Its Chief Financial Officer, Zach Kirkhorn, is now the 'Master of Coin'.

Right. Moving on...

Market Wrap: Running out of juice

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

US markets were flat overnight, with the Dow and S&P 500 falling slightly from their record highs. US retail sales in Feb were down -3% from Jan, likely due to a couple of nasty storms and Trump's stimmy cheques running out. But sales aren't expected to remain weak, as Biden's cash handouts will start flowing later this week.

Oil prices fell: For a third consecutive session oil was down, with rising coronavirus cases and fresh lockdowns in parts of Europe feeding doubts about whether demand will recover as quickly as expected.

Aussie property is hot: ABS data showed that residential property prices recorded their strongest growth in a year in the December quarter, increasing +3% q/q. There was also a rise in lending to highly-geared home buyers, which will no doubt pique the interest of APRA and the RBA.

RBA minutes: Lower for longer! The RBA said it will need to see sustained wages growth above 3% (not just inflation) before it considers tightening policy, which it deemed was "unlikely" before 2024.

Get real: Interest rates may not rise but there's a good chance 'macroprudential' – e.g. caps on loan-to-valuation ratios – will be rolled out in the coming months to slow the growth in asset prices being fuelled by the RBA's ultra-easy policy.

Econ Wrap: Bubbles galore

Bank deposits have soared.
Federal Reserve Bank of St. Louis

Erin Griffith of the New York Times released a long-ish article (~1,300 words) yesterday documenting some of the market mania that has taken place this past week. Examples include:

  • $US1.3 million was paid for a trading card featuring quarterback Tom Brady.
  • The market cap of Bitcoin surpassed $US1 trillion.
  • Christie's sold the token of a digital artwork for $US69.3 million.

These 'microbubbles' are a consequence of the global response to the coronavirus pandemic. Namely unprecedented, untargeted fiscal and monetary stimulus. Those not working in a Covid-exposed sector are cashed up – deposits in US bank accounts are up 23% since Feb 2020 (see image above) – but interest rates on those deposits are, after inflation, negative.

The endgame: It's hard to see this ending well. However, the party is likely to continue so long as real interest rates remain negative (meaning almost any valuation can be justified) and governments borrow from the future by repeatedly throwing free cash at people. The Fed's two-day meeting concludes tomorrow morning and may shed some light on how long it plans to remain 'doveish'.

Poli Wrap: The struggle to sell AstraZeneca

ScoMo getting some of the good stuff (Pfizer). Lara Pearce/9News

Nationals backbencher Matt Canavan became the first Australian politician to publicly question the AstraZeneca vaccine, asking to "suspend our rollout and just take heed of the evidence that will emerge in coming months". He was supported by crossbencher Craig Kelly and One Nation's Pauline Hanson.

Get real: The AstraZeneca vaccine is perfectly fine, with the clotting issues reported in some European countries indistinguishable from what would be expected among the general population.

Marketing 101: The problem with AstraZeneca is the government's poor marketing of it. There is a global perception that Pfizer – Australia's only other vaccine option at the moment – is the gold standard, and AstraZeneca is the sloppy seconds. You would think that ScoMo, being a former Managing Director of Tourism Australia, would understand that. The 52-year old ScoMo missed a big trick when he opted to receive the Pfizer vaccine, rather than setting an example by receiving AstraZeneca.

Elsewhere: The chaos in the Liberal party continued in Victoria today, with Opposition leader Michael O'Brien comfortably surviving yesterday's leadership spill 22 votes to 9. Challenger Brad Battin has resigned from shadow cabinet and O'Brien confirmed his key supporters will be demoted. Ouch.

Sino Wrap: Remember who's the boss

Katsuji Nakazawa/Nikkei

Xi Jinping's war against Chinese Big Tech escalated yesterday, with the glorious leader "ordering regulators to step up oversight of internet companies, crack down on monopolies, promote fair competition and prevent the disorderly expansion of capital".

Stepping back: China's most famous billionaire, Jack Ma, has been as good as missing since Xi Jinping personally cancelled his planned Ant Financial IPO. Chinese techpreneurs were becoming famous and operating largely independently of the government, with Ma going so far as to criticise regulators. Xi clearly had enough: in China, the Communist Party must always appear as though it's setting the agenda. For the good of the people, and all that.

Looking forward: To the extent that increased oversight stifles development in the tech sector – part of the dynamic South where around two-thirds of output now takes place – it will only slow Xi's stated desire to increase incomes and move away from construction-fuelled growth.


  • US Secretary of State Antony Blinken said in an interview that it "is not prepared to improve relations in a bilateral and separate context [with China] at the same time that a close and dear ally [Australia] is being subjected to a form of economic coercion".
  • China stealth banned encrypted messaging app Signal (it still works using a VPN). By the way, if you don't use Signal, you really should.