Talking about the future

Delivered on By Justin Pyvis

Good morning! Australia’s deputy Prime Minister Barnaby Joyce contracted COVID-19 somewhere on his tour of the US, where he’s trying “to find support to halt the power of Facebook”.

We’re sure he’ll be OK, seeing as he’s double vaxxed and a spritely 54 years old. What we’re more concerned about is why he’s in the US in the first place, given there’s not much to fear about Facebook’s – aka Boomerbook’s – “power”, which will in all likelihood just fade away like all the other social media dinosaurs that came and went before it (Friendster, MySpace, Google+, Vine… it’s a long list).

But enough about Barnaby. Back on home soil, Tassie’s government must have been feeling a little left out (perhaps Cricket Australia gave it some bad news?) because Premier Peter Gutwein decided to spring a vaccine mandate on most of its public servants, despite that cohort already having a 97% vaccination rate.

The public health benefits of such a move must be tiny. Perhaps Gutwein was just envious of the other states and territories that recently managed to trim a few hundred permanent staff with “no impact on service delivery”? πŸ€·β€β™‚οΈ

Moving north, the NT’s Chief Minister Michael Gunner spread some pre-Christmas joy by announcing “our biggest step so far”, doing away with the home quarantine requirement for fully vaccinated arrivals from ‘hotspots’ after 20 December.

The territory’s colour-coded system will be abandoned entirely with all of Australia “treated the same”, the only remaining requirements being a COVID-19 test within 72 hours before arriving, another test on day six and travel limited to “high vaccination zones” such as Darwin for the first 14 days.


Fully vaccinated (aged 16+)

ACT
NSW
VIC
TAS
SA
NT
QLD
WA

Markets

Daily % change

AUD/USD

71.5

+0.4%

AUD/CNY

4.56

+1.3%

AU Bond

1.66

+1.2%

US Bond

1.49

-1.5%

ASX200

7,385

-0.3%

S&P500

4,675

-0.6%

Brent (bbl)

73.9

-2.5%

Gold (oz)

1,777

-0.3%

Iron ore (t)

109.0

-2.6%

Bitcoin

47,530

-5.9%

Ethereum

4,098

-7.7%

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.

At the time of writing theΒ US S&P500Β was down around 0.6% despite weekly initial jobless claims falling to 184,000, their lowest level since 1969, although once again there was a large seasonal adjustment (the unadjusted number was nearly 100,000 higher).

US inflation data are due out later today and if prices continued to rise in November along with a tight labour market, it could force the US Fed to bring forward the withdrawal of monetary stimulus.

Locally theΒ ASX200 fell 0.28%, dipping into the red late in the day on weaker US futures with energy (-1.09%) the main culprit. Much-maligned Vulcan Energy jumped 13.9% after it announced a deal to sell its geothermal-powered, German-mined lithium to Volkswagen from 2026 (provided it ever produces any, of course – you can read our thoughts here).


Food for thought

We're not sure the RBA would be this creative with the name of its digital currency.
We're not sure the RBA would be this creative with the name of its digital currency. Source

Reserve Bank of Australia (RBA) governor Philip Lowe gave a quick speech (for a central banker - it was still over 3,000 words) to the Australian Payments Network Summit yesterday, talking “about the future”.

While Lowe professed not to have “a crystal ball” (his recent monetary policy statements would suggest otherwise), he did humour the idea of the RBA issuing “a form of retail central bank digital currency (CBDC) – or an eAUD – [although] we have not seen a strong public policy case to move in this direction”.

Were such a case to emerge – which Lowe said could happen “quite quickly as technology evolves and consumer preferences change” – it would take the form of either digital payment tokens backed by the RBA or “a form of stablecoin” issued by the private sector but denominated in Australian dollars.

Lowe was sceptical of “a cryptocurrency, not linked directly to the AUD or backed by a particular entity or assets”, outside of use cases such as “where they are linked to smart contracts and used in decentralised finance (or DeFi) applications”.

That was about it. Essentially if the RBA decides to enter the crypto space it will either issue eAUD tokens on its own private blockchain, which is about as unexciting as the name eAUD (and potentially disastrous for privacy), or it will regulate stablecoins issued by the private sector.

Presumably those stablecoins would be issued by the big banks, given Lowe said they would need to be “backed by high-quality assets and that they meet high standards for safety and security”, i.e. would involve large regulatory compliance costs that would limit entry to all but the big end of town.

So… the RBA’s involvement wouldn’t change much from the situation as it exists today, which is probably why Lowe can’t see “a strong public policy case to move in this direction”.

Fair enough – sometimes the best thing to do in such a dynamic sector is nothing, other than setting and enforcing the rules of the game (which may not be a job for the RBA).


Still hungry?

πŸ’” China Evergrande – the world’s most indebted real estate company – is finally in default, after Fitch downgraded it to “restricted default” following the passing of a deadline to pay a missed bond coupon.

πŸ“ˆ Consumer price inflation in China picked up in November, rising 2.3% from a year ago. However, there was a slight deceleration in producer price inflation (what factories charge wholesalers), which ‘only’ increased by 12.9%.

πŸ”Œ US President Joe Biden signed an executive order that will make the US government carbon neutral by 2050 by buying “clean energy, electric vehicles and more efficient buildings”.

πŸ’Š AstraZeneca’s long-acting COVID-19 antibody cocktail received emergency approval in the US, providing a preventative treatment for the ~2% of the population who are immunocompromised and cannot be vaccinated.

❌ Serbia’s government scrapped two laws that let foreign companies mine local resources due to ongoing protests, potentially jeopardising Rio Tinto’s planned $US2.4 billion lithium mine.

🏑 A new survey found that only 14% of European workers want to return to the office full-time and over half thought they had become more productive as a result of working from home.

πŸ’ƒ Finland’s 36-year old Prime Minister Sanna Marin was forced to apologise after she went clubbing until 4am “hours after coming into contact with a COVID-19 case”, against her government’s own guidance.

πŸ’‰ The US Senate voted to overturn President Biden’s vaccine mandate for private businesses with 100 or more employees after two Democrats flipped and voted for the resolution. However, it was more symbolic than anything as it’s unlikely to clear the House and even if it does, Biden can veto it.

⚽ Australian football player Sam Kerr took matters into her own hands during a match against Juventus, shoulder charging a pitch invader and receiving a yellow card for her troubles.

πŸͺ We all want a clean, fair contest. Saudi Arabia banned over 40 “enhanced” camels from the King Abdulaziz camel festival, accusing them of receiving “Botox injections and other artificial touch-ups”.

πŸ…° No child left behind (on paper). Some of California’s largest school districts are dropping “D” and “F” grades and will instead give students do-overs, more time to finish assignments or simple leave it as “incomplete”.

🚬 New Zealand’s government will ban anyone aged 14 or younger when the law passes from legally purchasing tobacco products for the rest of their lives.

πŸ”₯ The bushfires ravaging Margaret River in south west WA have now burnt over 3,200 hectares. 150 firefighters with several aircraft and two large aerial tankers are still trying to contain it.

πŸ’Έ Austria’s government will impose fines of up to 3,600 euros “on people who flout a coronavirus vaccine mandate it aims to introduce in February for all residents age 14 and over”.