A conflict is brewing

Delivered on By Justin Pyvis

Good morning! If you’re travelling over the Easter break be sure to allow plenty of extra time at the airport – reports are that Melbourne has joined Sydney in utter chaos:

“Melbourne Airport this morning… delays and cancellations, people forced to sleep here overnight with baggage issues today due to sheer volume. Staff doing their best to help families, kids having meltdowns all morning…”

Qantas CEO Alan Joyce said travellers were “rusty in travelling”, which would explain some of it, but the real culprit is probably the 20% absenteeism rate for airport security staff due to COVID-19 and very average pay, “which has meant security lanes are unable to open at full capacity”.

Bottlenecks occur at the narrowest point. In airports, that’s almost always security.

Sydney and Melbourne airports look a bit like this at the moment.
Sydney and Melbourne airports look a bit like this at the moment. Source

Reading the tea leaves

Daily % change







AU Bond



US Bond









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 US S&P500 fell -0.35%, giving up early gains of as much as 1.3% after Brent crude oil surged back above $US100 per barrel following Putin’s comment that peace talks had reached a “dead end”, and news that US inflation for March had come in at 1.2% month-to-month and 8.5% annually, the fastest pace of price rises since 1981, with price spikes widespread across the economy.

The elevated inflation reading almost certainly locks in multiple 50-basis point rate hikes from the US Fed for at least the next couple of months.

Locally, the ASX200 fell -0.42% following a very weak lead from the US the night before, with all 11 sectors finishing in the red led by tech (-0.9%) and healthcare (-1.4%).

Buy now, pay never firms such as Zip Co (-5.7%) were hit particularly hard after Afterpay’s parent Block reported that it notched up a net loss of $345.5 million for the six months to 31 December, with Afterpay’s bad debts amounting to $176.8 million – or around 27.4% of its total revenue.

Food for thought

People are slowly returning to the office but it remains to be seen if we'll ever get close to pre-pandemic occupancy rates. Click the image to zoom.
People are slowly returning to the office but it remains to be seen if we'll ever get close to pre-pandemic occupancy rates. Click the image to zoom. Source

A conflict is brewing between workers who overwhelmingly prefer to work from home, at least on a hybrid basis (e.g. a 2/3 split) and managers, who hold the opposite preference:

“About 77% of managers said they’d be willing to implement ‘severe consequences’—including firing workers or cutting pay and benefits—on those who refuse to return to the office, according to a recent survey by employment background check company GoodHire of 3,500 American managers.”

It’s not clear how this will play out. Right now the labour market is extremely strong, giving workers the advantage. However, with the US Fed now tightening monetary policy and expectations of a ‘hard landing’ recession rising to 40% next year, that could quickly reverse.

But it’s also hard to imagine there not being a permanent shift due to the pandemic, which forced many firms to adapt to a flexible working environment out of necessity. The US has been ‘living with COVID’ for several months now and yet office occupancy rates remain well below half of what they were at the start of the pandemic.

The likely outcome is that, as with pay and other benefits, it will become just another variable workers will use to weigh up when considering their employment options – part of their total compensation. But we would be surprised if any moderately sized firms operating in a competitive market ever went back to a pure 100%, no exceptions, only in-the-office model.

Chewing the fat

Bits and bytes

😁 Aussie consumer confidence edged up 1.3% last week for the second time in a row, according to ANZ/Roy Morgan, although it remains below neutral. Inflation expectations remained at 5.8%.

📈 According to NAB, Aussie business conditions in March “surged higher”, notching up the largest one-month jump since June 2020. Inflation likely surged, as “cost pressures are very broad-based across industries”, and “it appears businesses have had little trouble passing on higher costs to consumers with prices – including retail prices – also rising at record rates”.

💸 There are more people on unemployment benefits in Australian than before the pandemic, despite the unemployment rate hitting a record-low 4.0% in February.

💊 A new paper found that between 9-26% of the fall in prime-age (25-54) US labour force participation during the pandemic was due to increased substance abuse.

💃 Anthony Albanese said in terms of his cash rate/unemployment gaffe on “day one of the campaign … here is a Taylor Swift comment for you – my theory is ‘shake it off’”.

⭕ Full circle: The US Justice Department asked a federal appeals court to allow the government to resume enforcing its federal employee vaccine mandate, while in Philadelphia the government “will begin enforcing the mask mandate again”.

😷 South Australia’s government will remove its indoor mask mandate from Good Friday and “mothball” its QR code check-in regime.

🕵️‍♀️ France’s secret service “uncovered… a clandestine operation by Russian intelligence services in our country”, expelling “Six Russian agents operating under diplomatic cover.”

🤖 A driverless car in San Francisco was pulled over by police for not having its headlights on, then drove “away before pulling over to a stop a few hundred feet away”. It did not receive a ticket.

🏊 Regional Victoria will host the 2026 Commonwealth Games, with events to be held across Geelong, Ballarat, Bendigo and Gippsland.

⚰️ The mayor of the besieged port town of Mariupol in Ukraine said that 10,000 civilians have died and that another 120,000 were still trapped in the city.

🚘 Honda will spend $US40 billion on electrification over the next ten years, with the goal of launching 30 EV models by 2030.

⚔️ What about the Nazis? Russia’s Foreign Minister Sergey Lavrov said the “special military operation is meant to put an end to the unabashed expansion [of NATO] and the unabashed drive towards full domination by the US and its Western subjects on the world stage.”

🤔 The word efficiently must not translate well into Russian: “President Vladimir said on Tuesday that Russian forces carrying out Moscow’s military campaign in Ukraine were acting bravely and efficiently.”

🏉 Gillon McLachlan will step down as AFL CEO at the end of the season after nine years in charge.

👮‍♀️ UK PM Boris Johnson was fined “for attending a birthday party thrown for him during a Covid lockdown”.

❌ Germany’s President Frank-Walter Steinmeier cancelled a planned trip to Kyiv after admitting he would not be welcome there because of his “close ties to Russia”.