The great resignation
By Justin Pyvis – Delivered on 29 Oct 2021

Good morning! Australia's Department of Foreign Affairs removed its blanket "Do Not Travel" warning yesterday, flagging seven countries that are open to fully vaccinated Australians without the need to quarantine, including the UK, US, Canada, Italy, Greece, Germany and South Africa. Singapore will be added to the list from 8 November followed by Fiji on 1 December, although the latter will still require two days of self-isolation on arrival.

While anyone can now leave, only residents of three jurisdictions – NSW, VIC and the ACT – will be allowed to return without asking for the government's permission and securing a hotel quarantine spot, so you might want to check your respective reopening plan before booking anything (click the vaccination bubbles below for the most recent updates).

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Note: Brent oil, gold bullion and iron ore prices are the second futures contract. Bond yields are 10-year Treasuries.

The US S&P500 (+0.98%) hit a fresh record high overnight as earnings reports continued to impress despite a below expectations GDP read of just 2.0% in the June quarter. Promisingly, weekly initial jobless claims fell yet again, as the US labour market inches its way back to levels seen pre-pandemic (see the Feature below for more).

However, both Amazon and Apple released disappointing earnings reports after the bell, with both share prices tumbling ~5% in after market trading.

Locally, the ASX200 fell 0.25% after declines to energy (-1.9%) and materials (-1.2%) pulled the index down, although there wasn't much to speak of in the other direction – the strongest sector was financials, which added just 0.2%.


Tiger by the tail: Despite owning the majority of the April 2024 Australian government bond, the RBA elected against defending its 0.1% yield target during its daily market operations yesterday morning. The yield promptly surged to 0.51%, nearly five times the target rate.

Setting sun: The Bank of Japan (BOJ) cut its growth (from 3.8% to 3.4% this financial year) and inflation (from 0.6% to 0.0%) forecasts and committed to maintaining its target for short-term interest rates at -0.1% and 10-year bonds at 0.0%. In an accompanying statement, the BOJ said "Service consumption will remain under pressure from the pandemic, while exports and output will temporarily slow due to supply constraints."

Running hot: A preliminary reading of consumer price inflation in Germany showed a 4.5% annual increase, as temporary price suppressions in 2020 such as a value added tax discount lowered the base combined with "marked price increases during this stage of economic recovery". However, on the month (i.e. without the 2020 base effect) prices still increased 0.5%, which equates to an annualised inflation rate of around 6.2%.

Meanwhile, the European Central Bank met last night and agreed to keep "interest rates at historic lows, including a negative bank deposit rate", and to maintain "its large monthly bond purchases at a 'moderately lower' rate than in the second and third quarters".

Getting closer: US President Biden unveiled the latest version of his spending bill, issuing "a personal plea" for his party to get behind $US1.75 trillion in new spending and a separate $US1 trillion infrastructure bill.

Bolsonaro will be p****d: Brazil's central bank announced its biggest interest rate rise since 2002, increasing its benchmark lending rate by 1.5 percentage points "as inflation continues to climb amid growing concern about government spending".

The great resignation

Harvard's labour economist Lawrence Katz took a look at what has been labelled the "great resignation", a term used to describe the post-pandemic phenomenon where "Americans have quit their jobs and not returned to the workforce at a historic rate... across all job sectors and among workers at all skill levels".

Stepping back: The US labour force participation rate – the share of people either in work or looking for work – plunged 3.2 percentage points during the depths of the pandemic. However, only about 56% of them have returned. There is also a lot of churn by those still participating – last month officially had the highest quit rate since the Job Openings and Labor Survey data series began (December 2000).

Why this matters: According to Katz, "I think we've really met a once-in-a-generation 'take this job and shove it' moment". He lists a few reasons, including:

a demand for remote work and employers responding "pretty slowly relative to the expectations of workers";
people questioning low-wage, high-turnover situations;
an improvement in household finances, "with the expansion of the social safety net and the stimulus payments"; and
for the upper-middle class, they've done "quite well with the stock market boom and have saved a lot".

Katz believes that the "open question" is "Whether this is a temporary phenomenon or whether this is truly a once-in-a-generation change in labour activism... I think there may be something more persistent here."

Looking forward: People can't draw down savings forever and the stimmy cheques will not come again, so there's a chance that "workers can hold out for six months and then the world will go back to the way it was before the pandemic".

On the flip side, "the combination of the high inflation with the fact that workers have a lot of outside options and are a little better off financially will put pressure on employers to raise wages to keep workers".

In short, there's a lot of uncertainty and there's "not a good historical record to look at this one", with many possible outcomes.

The Wrap Up
    🍎Bring back the battery! For the first time since 2012 Apple's MacBook Pro will come with a "reasonably DIY-friendly battery replacement procedure".
    🐘Female elephants are evolving to be born without tusks due to "relentless ivory hunting". Around 32% of newly born female elephants are now born tuskless, up from just 2-4% prior to Mozambique's civil war which saw a surge in poaching.
    💉ATAGI now recommends Pfizer booster shots for all adults 6 months after their second dose, with the programme to officially commence on 8 November. The government will not set targets for boosters and they will not "be tied with restrictions easing".
    🛂The US government "issued the first American passport with an 'X' gender marker, designed to give non-binary, intersex and gender nonconforming people a marker on their travel document".
    🧪Home COVID-19 testing kits will be available for sale at Australian pharmacies from next week, at a price of $A54.50 for a pack of five.
    🕵️‍♀️Not Facebook but the New York Times: "To monetise the insight, the Data Science Group created an artificial intelligence machine-learning algorithm to predict which emotions articles would evoke [and] now sells this insight to advertisers, who can choose from 18 emotions, seven motivations and 100 topics they want readers to feel or think".
    ⚖️The president of the Victorian Bar said the state's new pandemic legislation is "appalling", and the government "grossly misrepresented" the advice it received from barristers' peak body.
    🤔The parliamentary inquiry into the Victorian government's handling of the pandemic was killed after three crossbench MPs could not enter the chamber because they refused to prove they were vaccinated.
    👽The scandal-plagued company that owns Facebook, Instagram, Messenger and WhatsApp will now be known as "Meta", marking a clear shift in focus to Zuckerberg's plans for building a 'metaverse'.
    🏏South Africa's Quinton de Kock said he withdrew from the T20 against the West Indies because he "felt like my rights were taken away", that the kneel mandate was passed "on our way to the game", and that "I would love nothing more than to play cricket for my country again".
    🦗Australia defeated Sri Lanka by 7 wickets (with 18 balls remaining) in its second match at the T20 World Cup.
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